Alice is a plumber and collector of rare stamps. Instead of always receiving cash payments for her work, she occasionally has her customers send their payments to a stamp broker. The broker then makes stamp purchases on Alice's behalf and mails the stamps to her. Alice never reports the value of the stamps received as income on her tax return.
I.Alice's actions are a form of tax evasion.
II.Alice's actions are subject to payment of tax, interest, and penalty if detected by the IRS.

Question

Alice is a plumber and collector of rare stamps. Instead of always receiving cash payments for her work, she occasionally has her customers send their payments to a stamp broker. The broker then makes stamp purchases on Alice's behalf and mails the stamps to her. Alice never reports the value of the stamps received as income on her tax return.
I.Alice's actions are a form of tax evasion.
II.Alice's actions are subject to payment of tax, interest, and penalty if detected by the IRS.
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Quizplus · Accepted Answer

Alice is not reporting the stamps received as income, which is a violation of tax laws and considered tax evasion. If detected by the IRS, she would be subject to payment of tax, interest, and penalty on the unreported income. Therefore, both statements I and II are correct.

Alice Is a Plumber and Collector of Rare Stamps