Page 26 - Phoenix Vol 11 No 4

From Ordinary
Citizens to the Rich
and Famous
Whether the federal tax prosecution be brought against the ordinary citizen or the rich and famous – ranging from mobster Al Capone, former Vice President Spiro Agnew, and singer Jerry Lee Lewis to professional baseball star Pete Rose, Hollywood star Wes- ley Snipes, and Tax Court Judge Diane Kroupa – just what must a prosecutor prove beyond a reasonable doubt? And what are the viable defenses?
In all criminal tax cases the government must prove speci c criminal intent, a.k.a. willfulness: that the defendant knew and un- derstood the law, and speci cally set out to violate it. As to defenses, generally, as with most white-collar crimes, o en the defense is: admit to the act but deny the crime; i.e., assert that the prosecutor has failed to prove intent. In 1991 the Supreme Court, resolving circuit con icts, made clear in the Cheek case that good faith belief or misunderstanding that the
What Are Your Chances of Being Prosecuted?
With 150 million returns led each year, IRS has a daunting task in its objective of se- curing “voluntary compliance” with the tax laws – deterring those who might dare snub their nose. Each year only 4,000 Americans are recommended for prosecution and only 2,000 are prosecuted. But the conviction rate is high, at over 90%, high because investiga- tors and prosecutors cherry pick their cases while defense attorneys accept their clients as they nd them. Moreover, in order to accom- plish its goals, IRS o en chooses high-pro le cases. Is it mere coincidence that high-pro le
law is not violated negates willfulness, regard- less of whether the belief or misunderstanding is objectively reasonable. As to led returns, the attempted zinger relied upon by prosecutors is the jurat, the statement above the signature line on the tax return: “Under penalties of per- jury, I declare that I have examined this return and accompanying schedules and statements, and ... they are true, correct, and complete.” But for the defense, this portion of the ju- rat: “to the best of my knowledge and belief.” Knowledge and belief. Which opens the door to lack of willfulness for reason of belief based on reliance. Whatever caused the defendant to form the belief claimed is relevant, including what the defendant read and was told, espe- cially if the defendant relied upon the advice of a CPA or tax attorney. e basis for the be- lief is not hearsay because it is not o ered for the truth of the matter asserted but rather is o ered for state of mind.
attorney Michail Avenatti was recently indict- ed on tax charges four days before April 15th? e arsenal of federal tax and tax related crimes includes: misdemeanor failure to le a return plus felony charges of ling a false tax return, attempted evasion of assessment or collection of the tax, interference with IRS, mail fraud and wire fraud, bank fraud if a false return is submitted in e ort to obtain a loan, money laundering, and conspiracy. e main- stay defense is lack of willfulness. Less com-
mon: constitutional challenges ...
ATTORNEY AT LAW MAGAZINE · PHOENIX· VOL. 11 NO. 4 26