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98.3 Tax Evasion

    98.3.3 Tax Evasion: Defenses And Defense Theories

    98.3.3.1 Willful Failure To File Tax Return: Lack Of Intent To Evade Taxes As Defense Theory
    98.3.3.2 Failure To File Tax Return: Mistake Of Law As Defense Theory
    98.3.3.3 Failure To File A Tax Return: Lack Of Intent To Violate A Known Duty As Defense Theory
    98.3.3.4 Tax Evasion: Additional Defenses And Defense Theories

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PRACTICE NOTE: There are two essential elements of the crime of willfully attempting to evade or defeat the payment of income tax. The first element the government must prove is that a tax is due and owing by the defendant. (Koontz v. U.S. (5th Cir. 1960) 277 F2d 53.) The second, the defendant must willfully attempt to evade or defeat the tax which is owing. (Spies v. United States (1943) 317 US 492, 498 [63 SCt 364; 87 LEd 418]; People v. Roper (CA 1983) 144 CA3d 1033, 1038 [193 CR 15].) The mere understatement of one's tax liability is not enough. (U.S. v. Alker (3rd Cir.1960) 260 F2d 135, 148.) It must also be proven that the defendant had a specific intent to defeat the tax. Both these elements must be proven beyond a reasonable doubt. (Government of the Virgin Islands v. Hays (D.V.I. 1964) 235 FSupp 765, 766.)

    "For the attempt to evade or defeat the tax to be willful it must be an attempt made voluntarily and intentionally, and with the intent to keep from the government a tax imposed by the income-tax laws, which it was the legal duty of the defendants to pay and which the defendants knew was their legal duty to pay." (U.S. v. House (W.D. Mich.1985) 617 FSupp 240, 244.) In connection with this offense, willful means a "voluntary, intentional violation of a known legal duty." (United States v. Pomponio (1976) 429 US 10, 12 [97 SCt 22; 50 LEd2d 12.)

    The conduct of defendant is not willful if he or she acted through negligence, gross negligence, inadvertence or mistake, or due to their good faith misunderstanding of the requirements of the law. (U.S. v. Aitken (1st Cir. 1985) 755 F2d 188, 191; U.S. v. Burton (5th Cir. 1984) 737 F2d 439, 441-42; U.S. v. Grumka (6th Cir. 1984) 728 F2d 794, 797.)

See generally, FORECITE National™ 305.20.2 [Tax Evasion].

See FORECITE National™ 98.3.1.2 [Tax Evasion: Federal Circuit Model Instructions And Notes].

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PRACTICE NOTE: Mistake of law may be a defense theory to failure to file a Federal tax return where willful violation of a known legal duty is an element of that charge. (See e.g., U.S. v. Whiteside (5th Cir. 1987) 810 F2d 1306, 1311; see also U.S. v. Gaumer (6th Cir. 1992) 972 F2d 723 [error to exclude tax protestor articles, portions of Congressional Record and old Supreme Court decisions to show basis of defendant’s belief in no duty to pay taxes]; see also FORECITE National™ 252.9 [Mistake Of Law].)

    Accordingly, various tax protest articles, books and congressional reports may be admitted to show the defendant acted in good faith, with precautionary instructions that the conclusions reached in those materials were contrary to the law. (See U.S. v. Flitcraft (5th Cir. 1986) 803 F2d 184, 187 [instruction that defendant could not act in good faith in failing to file tax returns if "settled law" was disobeyed constituted plain error].)

    See also FORECITE National™ 98.3.3.3 [Failure To File A Tax Return: Lack Of Intent To Violate A Known Duty As Defense Theory].

See generally, FORECITE National™ 305.20.2 [Tax Evasion].

See FORECITE National™ 98.3.1.2 [Tax Evasion: Federal Circuit Model Instructions And Notes].

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RATIONALE: Without an explanatory instruction the jury might improperly convict the defendant for failing to file a tax return even if the defendant was not aware of the duty to file.

POINTS AND AUTHORITIES: It has been suggested that the failure of a tax statute to include a scienter requirement makes the failure to file a tax return a strict liability offense with but a single element: the individual must have failed to file a return. (See People v. Jones (CA 1983) 149 CA3d Supp 41, 47 [197 CR 273].) However, the due process clause of the federal constitution, as construed in Lambert v. California (1957) 355 US 225, 229 [78 SCt 240; 2 LEd2d 228], has been held to require the prosecution to prove that the defendants knew they had a statutory duty to file the tax return. (See U.S. v. Pomponio (1976) 429 US 10, 12 [97 SCt 22; 50 LEd2d 12] ["willful" must be defined as "voluntary, intentional violation of a known legal duty"]; U.S. v. Doyle (5th Cir. 1992) 956 F2d 73, 76 [defendant entitled to instruction on lesser-included offense of misdemeanor failing to make return, where defendant testified that he did not willfully falsify W-4 forms and that he believed in good faith, albeit incorrectly, that his income was exempt from withholding]; State v. Avery (AZ 1994) 876 P2d 1158, 1164; see also State v. Osborn (IA 1985) 368 NW2d 68, 70 [willfulness was established by proof of a voluntary and intentional violation of a known legal duty]; Dover v. Baker, Brown, Sharman & Parker (TX 1993) 859 SW2d 441, 448 ["willfully" as used in federal tax evasion statute means voluntary, intentional violation of known duty, and it is improper to charge taxpayer with knowledge based solely on fact that he signed return]; State v. Olexa (WI 1987) 402 NW2d 733, 737.) Moreover, Cheek v. U.S. (1991) 498 US 192, 203-04 [111 SCt 604; 112 LEd2d 617] gives the defendant a due process right to present evidence in support of a claim that they did not know of the duty to file. (See also FORECITE National™ 45.1.3 [Presumption That Silent Statute Requires Criminal Intent].)

FEDERALIZATION: To federalize this request, click here. [Constitutional Macro 2.3; 4.1].

See generally, FORECITE National™ 305.20.2 [Tax Evasion].

See FORECITE National™ 98.3.1.2 [Tax Evasion: Federal Circuit Model Instructions And Notes].

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PRACTICE NOTE: The defenses and defense theories discussed in this chapter are offered to provide ideas which may be helpful in developing a defense strategy and are not intended to be a complete checklist. Depending on the jurisdiction and the factual circumstances, other theories may be available. (See generally FORECITE National™ Volume 11: Affirmative Defenses And Defense Theories (Ch. 250-264).) For example, in any given case defensive theories may be available as to one or more of the basic elements of criminal liability. (See generally FORECITE National™ Volume 5: Basic Elements Of A Criminal Allegation And Defenses Thereto (Ch. 43-62).)