S11 Lecture Nov 2012

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Criminal Sanctions:

Criminal Sanctions TA 319 Session 11

Criminal Case Basics:

Investigated by CI, referred to DOJ Case development can be done before or after referral Grand Jury Case filed in appropriate venue Statute of limitations Criminal Case Basics

IRC § 7201 Attempt to Evade or Defeat Tax:

Two kinds of evasion 1. Evasion of Assessment 2. Evasion of Payment Evasion can be performed by an individual, guardian or executor, a corporate officer or employee, partnership member or employee, or a return preparer. Felony Fine up to $250,000 for individual or $500,000 for entities and/or up to 5 years in jail IRC § 7201 Attempt to Evade or Defeat Tax

Evasion of Assessment:

Evasion vs. Negligence vs. Omission Must be tax due Failure to file alone is not enough, but can be evasion if paired with other acts Spies v. United States , 317 U.S. 492 (1943) Evasion of Assessment

Evasion Defenses:

No Tax Due Exception – loss carryback in another year that eliminates the misstatement No willfulness Evasion Defenses

Willfulness:

Voluntary, intentional violation of a known legal duty Cheek v. United States , 498 U.S. 192 (1991) Subjective test based on defendant’s thoughts Takes into consideration the knowledge and experience of the defendant Implied vs. Actual Proof of Willfulness Willfulness

IRC § 7202 Willful Failure to Collect or Pay Over Tax:

Elements: Duty to collect and/or to truthfully account for and pay over; or Failure to collect or truthfully account for and pay over; and Willfulness. IRC § 7202 Willful Failure to Collect or Pay Over Tax

IRC § 7203 Failure to File Return, Supply Information, or Pay Tax:

This statute comprises four separate offenses: Failure to pay an estimated tax or tax Failure to file a return Failure to keep records Failure to supply information Misdemeanor $100,000 fine for individuals, $200,000 for entities Up to 1 year prison time Raised to a felony for willful violation of § 6050I IRC § 7203 Failure to File Return, Supply Information, or Pay Tax

IRC § 7206(1) Making a False Statements:

Elements Making and subscribing a return, statement or other document that was false as to a material matter; The return, statement or other document contained a written declaration that it was made under penalties of perjury; The maker did not believe the return, statement or other document to be true and correct as to every material matter; and The maker falsely subscribed to the return, statement, or other document willfully, with the specific intent to violate the law. IRC § 7206(1) Making a False Statements

IRC § 7206(2) Aiding or Assisting in the Preparation of a False or Fraudulent Document:

Elements The defendant willfully aided or assisted in, or procured, counsel, or advised in the preparation or presentation of a return, affidavit, claim or other document that was fraudulent or false as to a material matter. IRC § 7206(2) Aiding or Assisting in the Preparation of a False or Fraudulent Document

IRC § 7207 Fraudulent Returns, Statements or other Documents:

Elements The delivery or disclosure To any IRS officer or employee Of any list, return, account, statement or other document That is false or fraudulent as to a material matter, and Willfulness or knowledge by the individual that the return, statement, or other document is false or fraudulent as to a material matter at the time it is made or given to the IRS IRC § 7207 Fraudulent Returns, Statements or other Documents

IRC § 7212 Attempt to Interfere with Administration of Tax Laws:

Statute contains three offenses To threaten or forcibly interfere with any U.S. government officer or employee who is acting in an official capacity To attempt to obstruct or impede the due administration of the tax laws. To forcibly retake property that has been seized by the IRS IRC § 7212 Attempt to Interfere with Administration of Tax Laws

18 U.S.C. § 2 Aiding and Abetting:

Elements: Crime was committed by another person, known or unknown; and Defendant assisted or participated in the crime; or Defendant willfully caused the criminal act to be done. 18 U.S.C. § 2 Aiding and Abetting

18 U.S.C. §§ 286 and 371 Conspiracy to Defraud the Government:

18 U.S.C. § 286 – Conspiracy to Defraud the Government with Respect to Claims An agreement, combination, or conspiracy To defraud the United States By obtaining or aiding to obtain payment of any false or fraudulent claim 18 U.S.C. § 371 – Conspiracy to Commit Offense or to Defraud the United States An agreement, combination, or conspiracy To commit any federal offense There must be an overt act by at least one member of the conspiracy to commit the offense 18 U.S.C. §§ 286 and 371 Conspiracy to Defraud the Government

18 U.S.C. § 287 False, Fictitious or Fraudulent Claims:

Defendant knowingly made or presented, or caused another to make or present, a claim to an agency or department of the U.S. The claim was false, fictitious, or fraudulent. The defendant knew the claim was false, fictitious, or fraudulent at the time it was made. 18 U.S.C. § 287 False, Fictitious or Fraudulent Claims

18 U.S.C. § 1001 False Statements and Documents:

Three separate crimes Falsifying, concealing, or covering up a material fact by any trick, scheme, or devise Making false, fictitious or fraudulent statements or representations Making or using any false, fictitious or fraudulent writing or document 18 U.S.C. § 1001 False Statements and Documents