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October 02, 2015

Court Reminds the IRS that "Filing" is Essential for a Conviction

The tax attorneys at Nardone Law Group in Columbus, Ohio, continuously monitor the Internal Revenue Service’s efforts to eliminate tax fraud, through civil and criminal investigations. In one of our prior articles on Criminal Tax Convictions, we discussed a recent decision by the U.S. Court of Appeals highlighting the government’s authority to criminally punish certain taxpayers. It is important that taxpayers are aware that the IRS also has the ability to conduct both civil and criminal investigations, which may result in fines, as well as sentences of incarceration. Taxpayers who have committed tax crimes, such as making fraudulent or false statements on personal income tax returns, should contact an experienced criminal tax attorney to reduce their risk of severe punishment. The following case is recent example of the government’s ongoing efforts to criminally pursue tax evaders.

Three Felony Counts of Making False Statements Reversed

In the case of United States v. Boitano, the U.S. Court of Appeals for the Ninth Circuit reversed the defendant’s three felony counts of making false statements under the penalty of perjury. The issue was whether “filing” is an essential element for a conviction under 28 U.S.C. § 7206(1). This court held that filing is an essential element of 7206(1) and that no Supreme Court case holds otherwise.

From 1991 to 2007, the taxpayer failed to file tax returns. In 1992, 1993 and 2004, the IRS conducted examinations, yet the taxpayer still did not file any returns. In 2009 the taxpayer’s case was referred to the IRS’s Special Enforcement Program. One of their agents met with the taxpayer on three different occasions. On the third meeting the taxpayer handed the agent tax returns from 2001, 2002, and 2003. The returns were signed under penalty of perjury by the taxpayer and his wife.

The returns that the taxpayer gave to the agent reported “estimated tax payments” that had not been made. The agent noticed that there were discrepancies between the taxpayer’s figures and the figures that the government had calculated. The agent then contacted the taxpayer by mail requesting that he give an explanation as to why the amounts were different. The taxpayer never responded.

The taxpayer was indicted and charged with three counts of making false statements under 26 U.S.C. § 7206(1). The taxpayer was also charged with three misdemeanor counts of failure to file taxes under 26 U.S.C. § 7203, however, he plead guilty to those counts.

At trial, the taxpayer argued that filing is an essential element of § 7206(1) and that his act of handing the returns to the agent did not constitute filing. The government agreed that filing is an element of the charged offense, but contended that it was satisfied by the taxpayer handing the returns to the agent. The district court found for the IRS and the taxpayer appealed.

In the taxpayer’s appeal, the taxpayer held the same position as he did in the district court. The government, however, switched its prior position. The government argued that there is a single definition of filing that applied in both the civil and criminal context and that “the record does not support that the returns here were filed.” The government’s new argument was that filing is not an element of the charged offense because, by its own terms, § 7206(1) does not require the government to prove filing as defined by the IRS regulations to establish a violation of the statute. The government claimed that the taxpayer violated the statute by completing a return, signing it, and taking actions by which he gave up any right of self-correction.

The court cited U.S. v. Hanson as authority for its decision. Hanson explicitly identified “filing” as an element of a § 7206(1) offense. In Hanson, the defendant argued that his tax returns were not filed because the IRS never processed them. The question on appeal was whether there was sufficient evidence to sustain a conviction. The court held for the IRS, stating that a return is filed at the time it is delivered to the IRS. The government proved delivery by showing that the taxpayer personally mailed the forms to the IRS and the IRS received them.

In conclusion, the Court held that the government failed to prove an essential element of the crime beyond a reasonable doubt. Because precedent established that “filing” is an essential element of a conviction under § 7206(1), and the government conceded that the record does not support that the returns here were filed, the defendant’s convictions were reversed.

Contact Nardone Law Group

Nardone Law Group routinely represents businesses and individuals who are undergoing an IRS audit, examination, or investigation, including criminal tax investigations. If you have been contacted by an IRS revenue officer, or if you are currently facing a civil or criminal tax investigation, contact one of our experienced tax attorneys today. Nardone Law Group’s tax lawyers and professional staff have vast experience representing taxpayers before the IRS. We will thoroughly review your case and determine what options and alternatives are available.

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October 02, 2015

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