What is a consequence of tax evasion?

Tax evasion has serious legal consequences, and one of the primary risks associated with it is the possibility of fines or imprisonment. Engaging in tax evasion means deliberately falsifying information or failing to report income to the tax authorities, which is unlawful. Governments take tax evasion very seriously as it undermines the tax system and reduces public revenue. As a result, individuals found guilty of tax evasion can face steep financial penalties, which may include hefty fines reflecting the amount owed or additional charges. Furthermore, if the evasion is deemed particularly egregious, it can lead to criminal charges, resulting in imprisonment. This consequence serves as a deterrent to ensure that individuals comply with tax laws and fulfill their obligations.

In contrast, the other options do not align with the reality of tax evasion. For instance, eligibility for tax refunds typically applies to compliant taxpayers who have overpaid their taxes, not those engaging in evasion. Additionally, since tax evasion is illegal, it certainly does carry significant consequences, contradicting the notion of "no significant consequences." Lastly, increased tax deductions typically stem from legitimate tax planning and cannot be obtained through illicit means like tax evasion.