The basic distinction to be made is between "tax avoidance" and "tax evasion.” It's okay to minimize taxes by taking advantage of legal provisions of the tax law, or even taking a sensible position on a vague question of law. But we cross the line into tax evasion, which is a criminal activity, when there's no sincere claim of truth. 

A good way for the average person to distinguish between a prudent plan to save money and an illegal and immoral scam is to ask a reputable tax adviser. If this professional openly advises that you don’t have to declare sheltered income, he or she probably believes your acts are solidly defensible. But an evasive answer such as "nothing will happen to you if you don't report" is a sign of danger.

Another guide is the degree of secrecy called for. Watch out when ordinary, prudent discretion crosses the line into "cloak and dagger" activities like wiring small amounts repeatedly, moving cash or using way stations in moving money, etc.

Of course an accountant, like a lawyer or a judge, may interpret the law in a completely new light - if the interpretation is professional and defensible. One thing we know about the law is that it is not always easy to interpret (hence Einstein’s belief quote above).  But it is unethical to make an audacious claim based on the hope that the tax authorities won't notice.

Personally, I take full advantage of all of the tax deductions the government allows me.  I take deductions for my charitable donations, business expenses, gas mileage, and anything else that is provided for in the tax law.  I have come across quite a few people, Christians included, that cheat on their taxes.  And, in every case, I have been able to show them that by keeping good records and playing the game ethically, they can actually pay less taxes AND honor God.  And a funny thing happens when you honor God:  He blesses you.

This article originally posted March 3, 2008.