Criminal Tax Representation FAQ

Criminal Tax Representation FAQ

Is it possible to be guilty of “tax obstruction” (IRC § 7212) by “backdating” documents? Or what about concealing assets from the IRS? How serious of a crime is this?
A person “backdates” a document when he or she dates a document an earlier date than the date that the document was originally drafted. Usually, when it is done for...
To be found guilty of “tax obstruction” must a person actually be successful in impeding the IRS’s functions?
The crime of “tax obstruction” exists when someone (anyone) “in any way corruptly . . . obstructs or impedes, or endeavors to obstruct or impede, the due administration” of the...
Help! The Document I Gave the IRS Had False Information
No, but as explained below, you might be in violation of other statutes. For the government to find that a person committed tax perjury, it must show, among other things,...
What is the tax crime known as “aiding or assisting a false return” (IRC §7206(2))? How does that crime differ from the more general crime of “aiding and abetting” a non-tax crime?
There are various tax crimes and, upon initial review, some of them appear very similar. However, there are important differences. This website discusses the main tax crimes—for example, tax evasion,...
What is the crime known as “tax obstruction” (§7212)?
The crime known as “tax obstruction” is found in IRC § 7212, which actually lists several crimes. However, there is one clause in this statute—known as the “Omnibus Clause”—that is...
What is the difference between “tax perjury” and “tax evasion”? They both involve making an actual false statement to the IRS about my taxes, right?
A careful reading of the criminal statutes for “tax perjury” (IRC §7206(1)) and “tax evasion” (IRC §7201) reveal that these two crimes a very similar. However, despite their similarity, there...
What is the tax crime commonly known as “tax perjury”?
In a sentence, the crime commonly known as “tax perjury” occurs when a taxpayer makes a false statement (e.g. on a tax return) when it was made under the penalty...
The Difference Between White Lies and IRS Tax Perjury
The short answer is that there is no minimum threshold amount. While tax perjury requires that the defendant (taxpayer) knowingly make a false statement that was “material,” this does not...
What is a “Klein” Conspiracy?
In a sentence a Klein conspiracy exists when one conspiracies to “impair or impede” the lawful functions of the federal government. But, as explained below, the real scope of a...
Is there the increased possibility of civil action when the IRS is investigating me criminally?
I make my client’s aware that most criminal investigations are certain to be followed by civil action on the subject of the investigation. Moreover, entering a guilty plea to a...
Am I Guilty of Tax Evasion if the Law is Vague?
Unfortunately, this question cannot be answered in the abstract. However, what can be said is that some courts have ruled that a defendant lacks the willfulness element of tax evasion...
What is the worst that can happen to me if the government or the IRS thinks I committed a “tax crime”? What exactly is a tax crime? And what is the criminal tax system’s purpose?
The short answer to this question is that you could be criminally prosecuted. There are all sorts of ways to actually commit one of these crimes: Payroll Fraud Tax Evasion...
What are some technical ways to defend against a tax evasion charge?
There are several rather technical defenses against a tax evasion charge. There is no general way to describe all of these defenses, so by way of example, we consider a...
The Difference Between Criminal Tax Evasion and Civil Tax Fraud
A criminal tax fraud offense under IRC § 7201 and a civil tax fraud offense under IRC § 6663 are very different. As explained below, they have different (i) burdens...
When the IRS investigates me for tax fraud, what method of accounting will it use to evaluate my financial documents?
In general, the IRS is required to use the same method of accounting as the taxpayer when they determine their income. See Fowler v. United States, 352 F.2d 100, 103...
I Used the Cash Method on My Income Tax Return. The IRS Audited Me. Can I Change My Accounting Method to the Accrual Method?
As a general rule, no you may not. If you used a particular accounting method in reporting your income, then you are bound to that same method when challenged by...
What is the “willfulness” requirement for tax evasion?
The IRS must prove three basic factors beyond a reasonable doubt for a tax evasion conviction: attempt, willfulness, and that the taxpayer had a tax liability. Willfulness is defined as...
The IRS says I committed tax fraud. But I honestly did not know I was supposed to report certain items of income. Can I get off the hook?
One of the things the government must show to prove tax evasion is that the defendant knew of his or her duty, and voluntarily and intentionally violated that duty. In...
Admittedly, I concealed assets from the IRS during a tax collection matter. May I avoid a charge of tax evasion by asserting a good faith defense of ignorance of the law?
No. If one conceals assets from the IRS, or hides sources of income, then the willfulness requirement for proving tax evasion is already present—and one may not utilize a good...
How does the government prove that I “willfully” engaged in the act (or acts) that resulted in tax evasion?
Normally, the IRS seeks to prove the requisite willfulness element by using indirect evidence rather than direct evidence—like the taxpayer’s admission or confession—since direct evidence is rarely obtainable. That said,...
What is the proper venue or court where a tax crime case is heard?
The legal concept of venue determines where a case will be heard. The proper venue in a tax crime case is the judicial district where the tax crime was committed....
Must the IRS Prove Tax Crimes Beyond a Reasonable Doubt?
Yes, each element of a tax crime must be proved beyond a reasonable doubt just like other crimes. According to the Ninth Circuit, the evidence must be reviewed “in the...
Is it a Crime to Make False Statements to the IRS?
Lying to a federal officer is a felony in its own right. Title 18, United States Code, Section 1001 makes it a crime to: 1) knowingly and willfully; 2) make...
Will The IRS Overlook My Tax Evasion if it’s Minor?
The IRS must prove three elements to find you guilty of felony tax evasion. First, you owed tax. Second, you acted willfully in your actions. Third, you made an affirmative...
Failed to Tell IRS About My Nominee Account
Without knowing more, this may constitute attempted tax evasion, which is a felony under IRC 7201. If you use a “nominee” account to avoid paying your tax liability, the government...
Audit Risk with Cash-Based Business Transactions
There is an inherent audit risk with an all cash based business. However, it is by no means a crime to operate a cash business. That said, if you structure...
How to Defend a Client Charged with Tax Evasion
This is a good and important question, and there is no easy way to answer it in the abstract. At a general level, any defense will go to attacking one...
I forgot to file my income tax return. Did I commit tax evasion?
Possibly. The answer turns on knowing more about your specific facts and circumstances. In general, IRC §7203 makes it a misdemeanor for willfully failing to file a tax return or pay one’s...
The government says I attempted to evade my taxes. Now what?
A tax evasion charge is no light matter. A conviction of an IRC 7201 offense, the statute that defines attempted tax evasion, results in a felony, $100,000 fine, and up...
I simply forgot to pay my taxes (or estimated tax). Is this a crime?
The mere failure to pay one’s estimated taxes (or estimated taxes) is not a crime. The failure to pay must be willful. The offense of willfully failing to pay tax has...
How does the government prove that I “willfully” failed to pay my tax bill?
The offense of willfully failing to pay tax has three elements: (1) the taxpayer was required by law to pay tax; (2) that tax liability was not timely paid; and...
How to Respond to Willful Tax Evasion Charges
It appears you have been charged with an IRC 7201 violation, which is the crime of willfully attempting to avoid paying your taxes. As explained more fully in another Q&A,...
The government says I willfully attempted to evade taxes. But I used a tax professional. Can I get off the hook?
The answer is, for better or worse, “it depends.” As explained elsewhere in the Q&A section, IRC Section 7201 makes it a crime to “willfully attempt in any manner to...
Are there any rules that govern what an IRS criminal investigation special agent can and can’t do in investigating me?
BACKGROUND Special agents receive assignments from their managers as to information items or for full-scale investigations. Information item assignments are usually limited inquiries to determine whether sufficient potential exists to...
How can tax preparers, attorneys, or accountants be charged with aiding or assisting the crime of filing a false return? How can they be punished?
To successfully prosecute a violation of the aiding or assisting provisions for aiding or assisting another to file a false form, the government must prove beyond a reasonable doubt that;...
How does the Criminal Investigation Division of the IRS select a tax crime lead for full investigation?
From a policy perspective, CID chooses Cases for full investigation with the goal of deterring Criminal Tax violations by covering a wide cross section of taxpayers. CID’s aim is to...
How Does the IRS Prosecute Suspected Tax Crimes?
Tax Crimes are investigated by the Criminal Investigation Division (CID) of the Internal Revenue Service. CID uses a variety of criteria in selecting cases for investigation, the heaviest weight placed...
How does the IRS reward informant leads concerning suspected tax crimes?
The most common informants that lead to CI investigations are former spouses and fired employees. Informants can be paid rewards where the IRS proceeds with any administrative or judicial action...
How will the government attempt to prove a deficiency in a tax evasion case?
The government employs various standard methods of proof however it may offer any relevant evidence in an effort to establish the existence of a tax deficiency in a tax evasion...
Do Prior Tax Crimes Factor into New IRS Tax Convictions?
Under the Federal Rules of Evidence, evidence of other crimes or acts, including prior convictions, is inadmissible solely to prove that the defendant likely acted in conformity with the previous...
Is it a good strategy to request a criminal investigation conference before an IRS special agent’s investigative report is finished?
The Criminal Investigation Division (CID) normally will grant the taxpayer or his representative a conference with the special agent’s group manager, a senior agent not connected with the case, or...
What are My Rights During an IRS Criminal Investigation?
IRS special agents that investigate potential criminal cases must following rules of conduct specified in Internal Revenue Manual. Taxpayer’s under criminal investigation by CID must receive Miranda-type warnings at the...
Is there a method by which I might avoid criminal prosecution where I committed a tax crime in the past? Should I possibly consider making a Voluntary Disclosure?
A taxpayer who suspects a criminal investigation might be under way, but who has not as of yet been contacted by the IRS, can possibly avoid prosecution by making a...
What are the usual defense tactics that make it hard for the government to prove willfulness?
Inadvertence and Negligence Because willfulness requires an intentional violation of a known legal duty, the element of willfulness can be negated by a producing evidence to show that the defendant’s...
How a Tax Attorney Can Stop Your Criminal Tax Case
Every CID recommendation to prosecute taxpayers for a Tax Crime are reviewed by District Counsel attorneys. An opportunity therefore exists for a Taxpayer’s representative to present defenses at a requested...
What Can You Generally Tell Me About Tax Crimes?
The Government has a variety of both felony and misdemeanor tax crimes, including attempted tax evasion, failure to file a return or pay tax, filing a false return, and aiding...
What considerations should be taken into account where I am faced with a continuing filing requirement when I suspect a criminal investigation is pending?
An issue sure to be encountered during a lengthy criminal investigation is whether or not the taxpayer should continue to file tax returns as they become due while the criminal...
What Crimes in the Federal Criminal Code Apply to Tax Issues?
Several crimes set forth in Federal Criminal Code can apply to tax matters, including aiding and abetting, presenting false, fictitious, or fraudulent claim to government, conspiracy, making false statements to...
What’s the Penalty for Making, Subscribing, and Filing a False Return?
Any person who willfully makes and or subscribes a false return, statement or other document under penalties of perjury, or aids or assists in the preparation or presentation of a...
What is commonly contained in a CID special agent’s report recommending criminal prosecution for a tax crime when finished?
The special agent’s report (SAR) normally contains a narrative of the agent’s investigative findings. Attached to the report are commonly exhibits containing statements of witnesses that were interviewed, copies of...
What is the Discovery Process in a Criminal Tax Case?
Discovery is the legal process whereby one party to a legal action goes about learning information known by the other party to the same legal action. From a criminal tax...
What is the government required to include in an indictment or an information in a criminal tax case?
An indictment is required by law to contain the elements of the offense the defendant is charged with and must fairly inform the defendant of the offense so charged. The...
What is usually the hardest element of a tax crime for the Federal Government to prove?
The hardest element of the a government’s case to prove in charging a taxpayer with a tax crime is usually the element of willfulness because of the lack of direct...
What methods of gathering circumstantial evidence does the IRS Criminal Investigation Division commonly employ in proving a tax crime?
The strongest evidence of a taxpayer’s willfulness is typically the size of taxpayer’s tax deficiencies that can be proven to occur over a number of years. Experience has shown the...
What Does a Grand Jury Do in IRS Tax Crime Prosecution?
A federal grand jury must vote in favor of issuing an indictment for a taxpayer to be charged with a tax felony. A grand jury is granted substantial investigatory powers,...
What specifically are the crimes of failure to keep records or supply information and how are they punished?
FAILURE TO KEEP RECORDS Historically, prosecutions for the willful failure to keep records or supply information are very rare. Every person or entity liable for any tax is required by...
What specifically is a failure to make a return, supply information, or pay tax? How is it punished?
Any person who willfully fails to keep records, supply information, make a return or pay tax and who is required to do so commits misdemeanor punishable by up to one...
What is Attempting to Evade Payment of Taxes?
Unlike an attempt to evade taxes, an attempt to evade payment of taxes does not require the existence of a tax deficiency. A tax deficiency exists when the true amount...
What specifically is income tax evasion and how is it punished?
The Term “Income Tax Evasion” actually describes a few different types of criminal tax acts. The most well known, Felony Income Tax Evasion, is defined as a willful attempt to...
What Is Attempted Income Tax Evasion?
To make a case for a charge of attempt to evade tax, the government must prove each of the following elements of the crime beyond a reasonable doubt: a tax...
What specifically is the crime of failure to pay tax and how is it punished?
Ordinarily, when a taxpayer does not file a return or pay any tax, the government will charge for the failure to file rather than for the failure to pay. However,...
What specifically is the crime of making or subscribing a false return or other document? How is this crime punished?
Any person who willfully makes and or subscribes any return, statement, or other document containing a declaration that it is made under the penalties of perjury and who does not...
What tactics does the Criminal Investigation Division commonly employ in conducting an investigation?
BACKGROUND Special agents of the Criminal Investigation Division (CID) understand all to well that the key to proving criminal tax cases is obtain evidence of the taxpayer’s criminal intent. The...
Tax Crimes Related to Employment Tax Forms and Trust Funds
Several criminal provisions surrounding employment tax and withholding exist including willful failure to collect and pay over taxes, failure to collect and pay over taxes after notice, failing to furnish...
Tactics to Defend or Mitigate IRS Criminal Tax Charges
COMPROMISE Under the law, statutory authority exists for the Secretary of the Treasury and the Attorney General to compromise criminal tax cases without prosecution. However, this authority to compromise criminal...
How does the Criminal Investigation Division of the IRS generate leads concerning suspected tax crimes?
The Criminal Investigation Division (CID) trains the rest of the IRS’s employees to be alert for, and to report any indication of, fraud. Each service center has a CID office...
What is the crime ”evasion of assessment” of tax?
According to the IRS’s own Tax Crimes Handbook, there are three elements to the criminal offense “evasion of assessment”—commonly called “tax evasion.” It requires that: (1) the taxpayer “attempt to...
What are some specific examples of “attempting” to evade a tax assessment?
First, one attempts to commit tax evasion when he files a false return. One of the leading cases in California making this point is United States v. Boulware , 384...
What is the so-called “Spies evasion” doctrine?
The “Spies evasion” doctrine is, essentially, one of the ways of committing tax evasion. It is a legal theory that finds a taxpayer criminally liable when he willfully (1) fails...
I overstated my deductions. Does this constitute tax evasion?
Case law has held that an “affirmative act” exists when one consistently overstates his deductions (and thus understating one’s income), constituting tax evasion. For example, in United States v. Trevino,...
Is It Tax Evasion If My W-4 Contains False Statements?
Without knowing more about your specific facts and circumstances, this question cannot be answered. However, IRC Section 7201 finds a person liable for tax evasion when he “willfully attempts in...
Is IRC §7201’s “attempt to evade” the same as the common-law crime of “attempt”? What difference does this distinction make?
No, IRC Section 7201’s definition of “attempt to evade” is materially different from “attempt” crime of common-law. This was one of the holdings of the Supreme Court in the Spies...
What are the Penalties for Spies Tax Evasion?
Spies evasion is a more serious offense than a simple misdemeanor for non-filing your tax return. This is because the mere non-filing of a tax return is typically a Section...
How does the government show that a taxpayer “attempted” to commit tax fraud?
To show that someone is guilty of tax fraud, or evaded his taxes, the government must show that he “attempted” to evade his taxes. Usually, the government will try to...
One of the requirements to prove someone committed tax evasions is that that was a tax that was “due and owing.” This seems straightforward. Are there any nuances?
Like almost all areas of law, especially tax law, there are nuances and exceptions. The government must prove beyond a reasonable doubt three basic things to show someone committed tax...
What is Evasion of Assessment for Tax Liability?
Stated simply, a taxpayer commits the crime of “evading of assessment” of a tax when he attempts to prevent the government—that is, the IRS—from determining his true tax liability. It...
Is the crime “evasion of assessment” different from the crime “evasion of payment”?
This is a very good question. Earlier case law (e.g. Sansone v. United States, 380 U.S. 343, 354 (1965)) said these were two, distinct crimes, but several Circuits have more...
Does the IRS Have a Dollar Threshold for Tax Fraud?
There is no certain, mathematical “threshold” that must be crossed. Rather, most courts hold that the taxpayer understated his tax liability by a “substantial amount.” Again, not all courts agree....
What is the IRS Burden of Proof for Tax Fraud Convictions?
When the government seeks to prove a taxpayer committed tax fraud, it need not prove a precise amount of tax due and owing. It does not need to show it...
I do not think the tax laws are Constitutional. Will this be a valid defense if the government asserts I committed tax fraud or tax evasion?
No, this will not be a defense any more than maintaining that, say, murder is not illegal. Although certain factions have maintained that the tax laws are invalid, the Supreme...
What is the source of law that defines “tax evasion”?
The source of law that defines tax evasion is Section 7201 of the Internal Revenue Code. However, that definition has been expanded, amplified, and interpreted by case law, the underlying...
Does Section 7201 create two distinct criminal offenses, or two means of committing one and the same offense?
Initially, Section 7201 of the Internal Revenue Code would seem to create two criminal offenses. Section 7201 provides that a person commits tax evasion when he or she “willfully attempts in any...
Tax evasion is defined as something a “person” does. But does that include a member of a partnership or LLC?
Section 7201 defines the basic definition of tax evasion. It says that “any person” will be guilty of tax evasion if he attempts to evade or defeat a tax or...
Can I be found guilty of tax evasion for helping someone else evade his or her own taxes?
Yes. It is shocking for some to learn that you can be found guilty for helping another evade his or her taxes. “After all,” they say, “it’s not my tax...
Is it a crime to overstate my deductions on my tax return?
The short answer is Yes, it may be a crime. The more nuanced answer is that it is a crime, tax evasion, to willfully attempt to evade the assessment or...
Is it a crime to conceal some of my bank accounts from the IRS?
It depends. It is a crime, tax evasion, to willfully attempt to evade the assessment or payment of a tax. I.R.C. Section 7201. Case law has explained that it is...
I knowingly overstated my deductions in Year 1, but in Year 2 I sustained real losses—and I carried those back to Year 1. Thus, technically my later loses “justified” my prior deductions, right?
It is a crime to knowingly overstate one’s deductions. I.R.C. Section 7201. The question posed here is whether one’s overstatement of his deductions somehow may be “justified” by his later, fortuitous,...
What is the Mens Rea Component of Tax Crimes?
Tax crimes require a “mens rea”—or “a guilty mind,” in addition to the criminal act (“actus reus”). The Internal Revenue Code, which is one of a few sources of law...
What is a “proffer” agreement? What are the risk and rewards of marking one with the government? And when would I want to enter into a proffer agreement with the government?
A proffer agreement is sometimes made in criminal tax cases. It is an agreement, usually written, between a federal prosecutor and an individual who are under criminal investigation. It is...

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