Comment by adventured

There is a clear legal distinction in fact between tax evasion and tax avoidance. Tax evasion is illegal. Tax avoidance is not. Tax evasion means you are doing something illegal to not pay taxes, taxes that you would otherwise owe for example if the government had total knowledge of your financial records. Tax avoidance means you are staying within the letter of the law and that your actions taken in the process of doing everything you can to limit the taxes you owe are legal actions.

It's quite simply the difference between taking legal and illegal action. And if the IRS were to be fully aware of what you've done, whether you have broken the law or not. With tax avoidance you do everything you can to not actually break the law (you want to take max advantage without crossing the line). With tax evasion you are breaking the law.

The IRS will almost always try to nail you for tax evasion if they find out what you're doing. The IRS will rarely be able to get you for something related to tax avoidance if you're very careful / strict about it and stay within the letter of the law. Obviously this applies in the US context, however I find that very commonly when people discuss tax evasion vs tax avoidance, they're talking about the premise I'm talking about: one is about taking illegal actions, one is legal and narrowly walks the letter of the law to limit taxes.