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Failure to File

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10.00 FAILURE TO FILE, SUPPLY INFORMATION OR PAY TAX

Updated May 2001

10.01    STATUTORY LANGUAGE:  26 U.S.C.  7203


 
10.02    GENERALLY


 
10.03    PERSON LIABLE


 
10.04    FAILURE TO FILE

10.04[1] Elements

10.04[2] Required by Law to File

      10.04[2][a] Income Tax Returns

      10.04[2][b] Section 6050I (Forms 8300)

10.04[3] Return Not Filed at Time Required by Law

      10.04[3][a] What is a Return

      10.04[3][b] Return Not Filed at Time Required by Law

10.04[4] Proof of Failure to File

10.04[5] Willfulness

      10.04[5][a] Proof of Willfulness

      10.04[5][b] Willful Blindness or Deliberate Ignorance

10.04[6] Tax Deficiency Not Necessary

10.04[7] Venue - Failure to File

10.04[8] Statute of Limitations


 
10.05    FAILURE TO PAY

10.05[1] Elements

10.05[2] Required by Law to Pay

10.05[3] Failure to Pay

10.05[4] Willful Failure to Pay

10.05[5] Venue

10.05[6] Statute of Limitations


 
10.06    SENTENCING


 
10.07    DEFENSES

10.07[1] Intent to Pay Taxes in Future

10.07[2] Absence of a Tax Deficiency

10.07[3] Delinquent Filing

10.07[4] Negligence

10.07[5] Civil Remedy Not Relevant

10.07[6] Inability to Pay

10.07[7] IRS Required to Prepare Returns

10.07[8] Marital and Financial Difficulties

10.07[9] Fear of Filing

10.07[10] Claim That Returns Were Mailed

10.07[11] Complicated Records

10.07[12] Paperwork Reduction Act

10.07[13] Other Defenses


 
10.08    LESSER INCLUDED OFFENSE/RELATIONSHIP TO TAX EVASION


 




 
        10.01 STATUTORY LANGUAGE:  26 U.S.C.  7203


 
      7203.  Willful failure to file return, supply information, or 

      pay tax


 
            Any person required under this title to pay any estimated tax or 

      tax, or required by this title or by regulations made under authority 

      thereof to make a return, keep any records, or supply any information, 

      who willfully fails to pay such estimated tax or tax, make such 

      return, keep such records, or supply such information, at the time or 

      times required by law or regulations, shall, in addition to other 

      penalties provided by law, be guilty of a misdemeanor and, upon 

      conviction thereof, shall be fined* not more than $25,000 ($100,000 in 

      the case of a corporation), or imprisoned not more than 1 year, or 

      both, together with the costs of prosecution.  In the case of any 

      person with respect to whom there is a failure to pay any estimated 

      tax, this section shall not apply to such person with respect to such 

      failure if there is no addition to tax under section 6654 or 6655 with 

      respect to such failure.  In the case of a willful violation of any 

      provision of section 6050I, the first sentence of this section shall 

      be applied by substituting "felony" for "misdemeanor" and "5 years" 

      for "1 year."


 
            *For offenses committed after December 31, 1984, the Criminal 

      Fine Enforcement Act of 1984 (P.L. 98-596) enacted 18 U.S.C.  

      3623 [FN1] which increased the maximum permissible fines for both 

      misdemeanors and felonies.  For the misdemeanor offenses set forth in 

      section 7203, the maximum permissible fine for offenses committed 

      after December 31, 1984, is at least $100,000 in the case of 

      individuals.  As to corporations, the maximum permissible fine is at 

      least $200,000.  For felony offenses in section 7203 involving willful 

      violations of section 6050I, the maximum permissible fine is at least 

      $250,000 for individuals and $500,000 for corporations.  

      Alternatively, if any person derives pecuniary gain from the offense, 

      or if the offense results in pecuniary loss to a person other than the 

      defendant, the defendant may be fined not more than the greater of 

      twice the gross gain or twice the gross loss.


 



 

                   10.02 GENERALLY


 
      Section 7203 covers four different situations -- each of which 

constitutes a failure to perform in a timely fashion an obligation imposed 

by the Internal Revenue Code: (1) failure to pay an estimated tax or tax;  

(2) failure to make (file) a return;  (3) failure to keep records; and, (4) 

failure to supply information.


 
      With the exception of cases involving willful violations of any 

provision of section 6050I of the Internal Revenue Code, all of the offenses 

under section 7203 are misdemeanors.  Therefore, except for section 6050I 

felonies, section 7203 prosecutions may be initiated either by information 

or indictment. Reference should be made to Section 25.00, infra, for 

additional discussion of violations of section 6050I.


 
      The charge most often brought under section 7203 is the failure to 

make (file) a return.  A  number of cases are also brought under section 

7203 for failure to pay a tax.  Note that the attempt to evade or defeat the 

payment of a tax is a felony under section 7201 of the Code.  Willfulness is 

the same for both misdemeanor offenses and felony offenses under the 

Internal Revenue Code. The difference in the offenses is that failure to 

file or pay under section 7203 involves merely a failure to do something (an 

omission), whereas there must be an affirmative act or a "willful 

commission" to raise the offense to a section 7201 felony.  Sansone v. 


United States
, 380 

U.S.

 343, 351 (1965). Note also that, by its express 

terms, section 7203 does not apply to a "failure to pay an estimated tax" if 

there is no "addition to tax" pursuant to the rules provided for in section 

6654 (Failure By Individuals To Pay Estimated Income Tax) and section 6655 

(Failure By Corporation To Pay Estimated Tax).


 
      Some cases have also been brought charging a failure to supply 

information and these are noted below.  The charge of failing to "keep any 

records" is not commonly used and is not treated separately in this manual.


 



 

                  10.03 PERSON LIABLE


 
      Each of the categories set forth in section 7203 specifies a distinct 

and separate obligation.  Failure to perform an obligation in any one of the 

categories may constitute an offense.  See Sansone v. United 

States, 380 

U.S.

 343, 351 (1965).  An offender may be charged with 

failure to perform each obligation as often as the obligation arises.  

See 

United States

 v. Harris, 726 F.2d 558, 560 (9th Cir. 

1984) (defendant who failed to file for three years guilty of three 

separate offenses rather than one continuing offense);  

United States

 v. 

Stuart, 689 F.2d 759, 763 (8th Cir. 1982) (same).  


 
      Any "person" who fails to perform an obligation imposed by the 

Internal Revenue Code and the applicable regulations may be liable for 

prosecution under section 7203.  The term "person" is "construed to mean and 

include an individual, a trust, estate, partnership, association, company or 

corporation."  26 U.S.C.  7701(a)(1).  Internal Revenue Code section 

7343 extends the definition of "person" to include "an officer or employee 

of a corporation, or a member or employee of a partnership who as such 

officer, employee, or member is under a duty to perform the act in respect 

of which the violation occurs."  See 

United States

 v. Neal, 93 

F.3d 219, 223 (6th Cir. 1996)(corporate officers liable under section 7203 

for failure to file employer's quarterly tax return (Form 941)); Ryan v. 



United States

, 314 F.2d 306, 309 (10th Cir. 1963). 


 



 

             10.04 FAILURE TO FILE


 
10.04[1] Elements


 
      To establish the offense of failure to make (file) a return, the 

government must prove three essential elements beyond a reasonable doubt:


 
      1.  Defendant was a person required to file a return;


 
      2.  Defendant failed to file at the time required by law; and,


 
      3.  The failure to file was willful.


 


United States

 v. Hayes, 190 F.3d 939, 946 (9th Cir. 1999);  United 

States v. Vroman, 975 F.2d 669, 671 (9th Cir. 1992); 

United States

 v. 

Harting, 879 F.2d 765, 766-67 (10th Cir. 1989); 

United States

 v. 

Williams, 875 F.2d 846, 850 (11th Cir. 1989);  

United States

 v. 

Foster, 789 F.2d 457, 460 (7th Cir. 1986); 

United States

 v. 

Gleason, 726 F.2d 385, 388 (8th Cir. 1984); 

United States

 v. 

Buras, 633 F.2d 1356, 1358 (9th Cir. 1980).


 
 

10.04[2] Required by Law to File


 
      10.04[2][a] Income Tax Returns


 
      Various provisions of the Internal Revenue Code (and regulations 

thereunder) specify the events which trigger the obligation to file a 

return. Section 6012 of the Internal Revenue Code lists the persons and 

entities required to make returns with respect to income taxes. 


 
      The receipt of a specified amount of gross income generally determines 

whether an income tax return must be filed.  See 

United States

 v. 

Middleton, 246 F.3d 825, 841 (6th Cir. 2001) (stating that the assertion 

that the filing of an income tax return is "voluntary" is frivolous because 

26 U.S.C.  6012(a)(1)(A) requires that every individual who earns a 

threshhold level of income must file a tax return.  "Gross income" is 

broadly defined in section 61(a) of the Code to mean:


 
      [A]ll income from whatever source derived, including (but not limited 

      to) the following items:


 
            (1) Compensation for services, including fees, commissions, 

            fringe benefits, and similar items;


 
            (2) Gross income derived from business;


 
            (3) Gains derived from dealings in property;


 
            (4) Interest;


 
            (5) Rents;


 
            (6) Royalties;


 
            (7) Dividends;


 
            (8) Alimony and separate maintenance payments;


 
            (9) Annuities;


 
            (10) Income from life insurance and endowment contracts;


 
            (11) Pensions;


 
            (12) Income from discharge of indebtedness;


 
            (13) Distributive share of partnership gross income;


 
            (14) Income in respect of a decedent; and


 
            (15) Income from an interest in an estate or trust.


 
The amount of gross income which serves to trigger the filing requirement 

has changed over the years.  Consequently, care must be exercised to insure 

that the amount of gross income received by the defendant was sufficient to 

require the filing of a return in the particular year at issue.  For taxable 

years beginning after December 31, 1984, section 6012 provides a formula 

based on gross income to determine whether an individual must make a return.


 
      To meet its burden, the government need prove only that a person's 

gross income equals or exceeds the statutory minimum.  

United States

 v. 


Bell
, 734 F.2d 1315, 1316 (8th Cir. 1984);  

United States

 v. 

Wade, 585 F.2d 573, 574 (5th Cir. 1978)..  Where the government is 

unable to present direct evidence of gross income, its burden may be 

satisfied by means of an indirect method of proof.  

United States

 v. 

Bianco, 534 F.2d 501, 503-06 (2d Cir. 1976) (evidence of expenditures in 

excess of the statutory minimum plus evidence negating nontaxable sources); 

United States v. Shy, 383 F. Supp. 673, 675 (D. Del. 1974) (net 

worth).


 
      Gross income is different and distinguishable from gross receipts.  

"Gross receipts cannot be called gross income, insofar as they consist of 

borrowings of capital, return of capital, or any other items which the IRS 

Code has excluded from gross income."  

United States

 v. Ballard, 535 

F.2d 400, 404 (8th Cir. 1976).  See 

United States

 v. 

Goldstein, 56 F.R.D. 52, 55 (D. 

Del.

 1972).  Nevertheless, gross 

receipts remaining, after appropriate adjustment, may properly reflect gross 

income.  Clark v. 

United States

, 211 F.2d 100, 102 (8th Cir. 1954).  

See also United States v. Wade, 585 F.2d 573, 574 (5th 

Cir. 1978); 

United States

 v. Garguilo, 554 F.2d 59, 62 (2d Cir. 

1977); Ballard, 535 F.2d at 405.  


 
      For manufacturing, merchandising, or mining enterprises, where the 

filing requirement is predicated upon gross income, gross income is 

determined, in part, by subtracting the cost of goods sold from gross 

receipts or total sales.  Treas. Reg.  1.61-3 (26 C.F.R.); 

Ballard, 535 F.2d at 400, 404-05. To meet its burden, the government 

need prove only that gross receipts exceed the cost of goods sold by an 

amount sufficient to trigger the reporting requirement. 

United States

 v. 

Francisco, 614 F.2d 617, 618 (8th Cir. 1980); Siravo v. United 

States, 377 F.2d 469, 473 (1st Cir. 1967). See 

United States

 

v. Gillings, 568 F.2d 1307, 1310 (9th Cir. 1978).  The burden then 

shifts to the enterprise to come forward with evidence of offsetting 

expenses.  
United States
 v. 

Bell

, 734 F.2d 1315, 1317 (8th Cir. 

1984);  Siravo, 377 F.2d at 473-74;  

United States

 v. Bahr, 

580 F. Supp. 167, 170-71 (N.D. 

Iowa

 1983).  See also 

Gillings, 568 F.2d at 1310;  Garguilo, 554 F.2d at 62;.


 
      The government need not cite in the indictment or information the 

provision of the Code which requires the filing of the particular return 

involved. 

United States

 v. Vroman, 975 F.2d 669, 671 (9th Cir. 1992).  

It is enough that an indictment allege the elements of section 7203 "with 

sufficient clarity to apprise [the defendant] of the charges against him and 

is drawn with sufficient specificity to foreclose further prosecution upon 

the same facts." Vroman, 975 F.2d at 671.


 
      

      10.04[2][b] Section 6050I (Forms 8300)


 
      Effective January 1, 1985, 26 U.S.C.  6050I requires any person 

engaged in a trade or business who receives more than $10,000 in cash in one 

transaction (or two or more related) transaction(s) to file an information 

return (Form 8300).  The return is due the 15th day after the cash is 

received.  


 
      Attorneys are not exempted from section 6050I's requirement that a 

Form 8300 must be filed each time a person engaged in a trade or business 

receives more than $10,000 in cash in the course of such trade or business.  

See Lefcourt v. 

United States

, 125 F.3d 79 (2d Cir. 1997) 

(discussion of attorney's obligation to identify client on Form 8300 in 

civil context). This requirement, as applied to attorneys, does not 

violate the Fourth, Fifth, or Sixth Amendments.  

United States

 v. 

Goldberger & Dubin, P.C., 935 F.2d 501 (2d Cir. 1991).  Nor does it 

violate the attorney-client privilege.  

United States

 v. Leventhal, 

961 F.2d 936 (11th Cir. 1992).  Section 7203 criminalizes the failure to 

file a Form 8300. See, e.g., 

United States

 v. Olivo, 69 F.3d 

1057 (10th Cir. 1995), opinion supplemented on rehearing, 80 F.3d 

1466 (10th Cir. 1996). 


 

 
10.04[3] Return Not Filed at Time Required by Law


 
      10.04[3][a] What is a Return


 
      The mere fact that an individual or entity files a tax form does not 

necessarily satisfy the requirement that a return of income be filed.  For 

example, tax protestors or individuals who receive illegal source income 

sometimes file the correct form but do not provide meaningful or complete 

information.  Such filings may include assertions of various constitutional 

privileges.


 
      Most courts take the approach that a form which does not contain 

sufficient financial information to allow the calculation of a tax liability 

is not a "return" within the meaning of 26 U.S.C. 7203.  See, e.g., 

United States v. Kimball, 925 F.2d 356, 357 (9th Cir. 1991) (en 

banc); United States v. Upton, 799 F.2d 432, 433 (8th Cir. 1986) 

(where taxpayer included bottom line assertion of liability, but did not 

include information from which that figure was derived); 

United States

 v. 

Malquist, 791 F.2d 1399, 1401 (9th Cir. 1986) (Form 1040 with word 

"object" written in all spaces requesting information is not a return); 



United States

 v. Green, 757 F.2d 116, 121 (7th Cir. 1985); United 

States v.  Goetz, 746 F.2d 705, 707 (11th Cir. 1984); 

United States

 

v. Mosel, 738 F.2d 157, 158 (6th Cir. 1984); 

United States

 v. 

Vance, 730 F.2d 736, 738 (11th Cir. 1984); 

United States

 v. 

Grabinski, 727 F.2d 681, 686-87 (8th Cir. 1984) (taxpayer must divulge 

"sufficient financial circumstances" to determine tax liability); United 

States v. Stillhammer, 706 F.2d 1072, 1075 (10th Cir. 1983); United 

States v. Verkuilen, 690 F.2d 648, 654 (7th Cir. 1982); 

United States

 

v. Reed, 670 F.2d 622, 623-24 (5th Cir. 1982); 

United States

 v. 

Crowhurst, 629 F.2d 1297, 1300 (9th Cir. 1980); 

United States

 v. 

Edelson, 604 F.2d 232, 234 (3d Cir. 1979); 

United States

 v. 

Brown, 600 F.2d 248, 251-52 (10th Cir. 1979) (Forms 1040 containing 

responses of "unknown" or "Fifth Amendment" are not returns); United 

States v. Porth, 426 F.2d 519, 523 (10th Cir. 1970) ("A taxpayer's 

return which does not contain any information relating to the taxpayer's 

income from which the tax can be computed is not a return within the meaning 

of the Internal Revenue Code or the regulations adopted by the 

Commissioner").  See also discussion at Section 40.02[2], 

infra.


 
      When a form is filed containing only constitutional objections or 

asterisks, there is little problem in applying this test and concluding that 

the form does not constitute a return of taxes.  Difficulties arise, 

however, when the document filed contains all zeros or minimal monetary 

amounts.  The Ninth Circuit has taken the position that a Form 1040 with 

zeros on all lines calling for the report of financial information is a 

return because a tax liability, albeit an incorrect one, can be computed 

from zeros.  

United States

 v. Long, 618 F.2d 74, 75 (9th Cir. 1980).  

(Note that under Long, the filing of such a document could be charged 

under 26 U.S.C. 7206(1) as the filing of a false return.  Long, 618 

F.2d at 75-76).  Other courts have  refused to follow Long.  See, 

e.g., 
Mosel
, 738 F.2d at 158 (we align ourselves with those 

circuits which have specifically considered and rejected the Ninth Circuit's 

decision in Long);  United States v. Moore, 627 F.2d 830, 835 

(7th Cir. 1980).  See also United States v. Rickman, 

638 F.2d 182, 184 (10th Cir. 1980) (disagreement with the Long 

decision); United States v. Smith, 618 F.2d 280, 281 (5th Cir.1980).  

Those courts do not reject Long's premise that a tax liability can be 

computed from zeros.  Rather, they focus on the question whether the form 

submitted was intended to convey the sort of information required to be 

submitted to the government.  

Moore

, 627 F.2d at 835 ("there must be 

an honest and reasonable intent to supply the information required by the 

tax code," and "when it is apparent that the taxpayer is not attempting to 

file forms accurately disclosing his income, he may be charged with failure 

to file a return"); Smith, 618 F.2d at 281 (returns which contained 

nothing but zeros and constitutional objections plainly did not even purport 

to disclose the required information).


 
      Some decisions suggest that the determination of what is an adequate 

return is a legal question, and the district court properly may decide the 

question. 

United States

 v. Green, 757 F.2d 116, 121-22 (7th Cir. 

1985); 
United States
 v. 

Moore

, 627 F.2d 830, 834 (7th Cir. 1980); 

United States v. Klee, 494 F.2d 394, 397 (9th Cir. 1974) (a return 

that contained "absolutely no information" about the defendant's tax status 

but merely stated "all details available on proper demand" is not a return, 

and the "court was right in telling the jury so").  Other courts, however, 

have cautioned that such a ruling may improperly invade the province of the 

jury.  See Section 40.02[3], infra.  In view of the Supreme 

Court's reasoning in United States v. Gaudin, 515 U.S. 506 (1995), 

where the Court held that materiality in a prosecution under 18 U.S.C. 1001 

is an element of the offense and must be submitted to the jury, the safer 

practice would be to submit to the jury, under proper instructions, the 

question of whether the form the defendant filed is a "return" within the 

meaning of 26 U.S.C. 7203.


 

 
      10.04[3][b] Return Not Filed at Time Required by Law


 
      Section 7203 presupposes that the government is entitled to have a 

required return filed on time.  In the leading case of Spies v. United 

States, 317 

U.S.

 492, 496 (1943), the Supreme Court noted the importance 

given to timely filing:


 
      Punctuality is important to the fiscal system, and these are 

      [criminal] sanctions to assure punctual as well as faithful 

      performance of these duties.


 
      Generally, the Internal Revenue Code sets forth the time when a given 

return must be filed.  Thus, section 6072 of the Code prescribes the time 

for filing income tax returns.  See Treas. Reg.  

1.6072-1, 1.6072-2 (26 C.F.R.).


 
      Individuals on a calendar year basis are required to file on or before 

the 15th day of April following the close of the calendar year.  26 U.S.C. 

 6072(a).  Corporations are generally required to file on or before 

the fifteenth day of the third month following the close of the taxable 

year, i.e., March 15th for a calendar year corporation.  26 U.S.C. 

 6072(b).  Sections 6075(a) and (b) fix the time for filing other 

returns, such as estate and gift tax returns, and windfall profit tax 

returns.  Forms 8300 are due the 15th day after the cash is received.  

See Treas. Reg.  1.6050I-1(e) (26 C.F.R.).


 
      When the last day for filing a return falls on a Saturday, Sunday, or 

a legal holiday, the return will be considered timely filed if it is filed 

on the next day which is not a Saturday, Sunday, or legal holiday.  26 

U.S.C.  7503.  Thus, if a return is due on April 15th and April 15th 

falls on a Saturday or a Sunday, the return would not be due until the 

following Monday, unless the Monday is a legal holiday, in which event, a 

return would not be due until the next day -- Tuesday.


 
      Where the Code does not fix a time for the filing of a return, the 

Secretary is directed to prescribe the time "by regulations" for filing any 

return, statement, or document required to be filed by the Code or by 

regulations.  26 U.S.C.  6071.


 
      Because the time required by law for filing a return is crucial to the 

offense, the government's failure in its charge to properly allege the date 

when the legal duty to file arose may jeopardize a prosecution.  United 

States v. Bourque, 541 F.2d 290, 293-94 (1st Cir. 1976) (IRS regulations 

allow a new corporation to determine its own fiscal year and therefore date 

return due); United States v. Goldstein, 502 F.2d 526, 528 (3d Cir. 

1974).


 
      Pursuant to section 6081(a) of the Code, the Secretary is authorized 

to grant a "reasonable extension of time" for filing any return, 

declaration, statement, or other document required to be filed.  Except for 

taxpayers who are abroad, the extension cannot be for a period longer than 

six months.   A corporation may obtain an automatic extension of three 

months for filing a return if it meets the conditions set forth in the Code 

and applicable regulations. 26 U.S.C.  6081(b).   Section 6081(b) 

requires that, in order to be granted the extention, the corporation must 

"pay [ ] on or before the date prescribed for payment of the tax, the amount 

properly estimated as its tax." 


 
      Because there can be no crime of failing to file an individual return 

by April 15th if the taxpayer has obtained extensions of time in which to 

file,  IRS records must be searched in any failure to file case to determine 

that no extentions have been obtained by the taxpayer.  See, 

Goldstein, 502 F.2d 526, (reversing a conviction where Goldstein was 

indicted for failing to file before April 15th, but at trial it developed 

that Goldstein had applied for an extension and, thus, had no duty to file 

until May 7th).   An attempt should always be made to obtain the filed 

extension form from the IRS.  Many professional return preparers routinely 

keep in their files unsigned extensions on behalf of their clients but an 

extension application signed by the taxpayer provides evidence the taxpayer 

knew a return was due. Moreover, because the extension application bears a 

perjury jurat, a materially false signed extension application can form the 

basis for a felony prosecution under 26 U.S.C.  7206(1).  


 
      The following chart summarizes some of the filing requirements for the 

most common taxpaying entities:


 
 TAXPAYER           RETURN/FORM        GROSS INCOME        DATE DUE          


 
 Individual         1040, 1040A,       1994     $6,250     April 17, 1995     

 (Single)*          1040EZ                                                    

                                       1995     $6,400     April 15, 1996     

                                                                              

                                       1996     $6,550     April 15, 1997     

                                                                              

                                       1997     $6,800     April 15, 1998     

                                                                              

                                       1998     $6,950     April 15, 1999     

                                                                              

                                       1999     $7,050     April 17, 2000     

                                                                              

                                       2000     $7,200     April 16, 2001     

                                                                              

                                       2001     $          April 15, 2002     

                                                                              

                                       2002     $          April 15, 2003     

                                                           

                                                           GENERAL: 15th day  

                                                           of 4th month       

                                                           after close of     

                                                           tax year           

 

 Married Filing     1040, 1040A,       1994     $11,200    April 17, 1995     

 Jointly            1040EZ                                                    

                                       1995     $11,550    April 15, 1996     

                                                                              

                                       1996     $11,800    April 15, 1997     

                                                                              

                                       1997     $12,200    April 15, 1998     

                                                                              

                                       1998     $12,500    April 15, 1999     

                                                                              

                                       1999     $12,700    April 17, 2000     

                                                                              

                                       2000     $12,950    April 16, 2001     

 

 Corporation        1120               N/A                 15th day of 3rd    

                                                           month after close  

                                                           of tax year        

 

 Sub S Corporation  1120S              N/A                 Same               

 

 Partnership        1065               N/A                 15th day of 4th    

                                                           month after close  

                                                           of tax year        

 

 Fiduciary (trust   1041               $600 gross or any   15th day of 4th    

 or                                    taxable income      month after close  

 estate income)                                            of tax year        

 

 Person in Trade    8300 (CTR)         receipt of more     15 day after cash  

 or                                    than $10,000 cash   received           

 Business                                                                     

 

 Employer           941                collected           Quarterly - last   

                                       withholding tax     day of month       

                                       (income and FICA)   following          

                                                           quarter**          

 

 Estate             706                Gross estate of     9 months after     

                                       $600,000 at time    date of death      

                                       of death if after                      

                                       1986                                   


 
*  Note that the minimum amount for a married individual whose spouse filed 

separately is less.


 
** If the corporation has already deposited full amount, there is an 

additional 10 days in which to file.


 

 
10.04[4] Proof of Failure to File


 
      Establishing that there was a failure to file can be done either 

through a witness or by a certification procedure.  A combination of the two 

methods also may be employed.


 
      Witness Procedure  If a witness is to be used, a representative 

of the appropriate 
Service
 
Center
, i.e., one from the 

Service
 
Center

 

having custody of returns for the required place of filing, is called to 

testify.  The witness testifies that he or she is a representative of the 

Director of the 

Service
 
Center

, that he or she has custody of tax returns 

for a given area, that the defendant was required to file with his or her 

"office," that records are kept reflecting the returns filed, and that a 

search of the records revealed that no return was filed by the defendant.  

If this procedure is followed, the witness should personally conduct or 

direct the search of the records.  


 
      In addition, the witness should be interviewed in advance, and the 

questioner should establish during direct examination that the witness is 

not testifying as an expert witness.  This clarification is important 

because failure to establish this fact can lead to confusion and a very 

uncomfortable witness. In some cases, particularly those involving tax 

protestors with experienced counsel, cross-examination concerning Service 

Center procedures and various codes on IRS account transcripts may be 

extensive.  The questioning may also focus on the witness'  knowledge 

regarding whether  the 

Service
 
Center

 has lost or misplaced returns or 

whether the computerized taxpayer account system is faulty. Reference should 

be made to the discussion of tax protestor prosecutions in Section 40.00, 

infra.


 
      For two cases where the witness procedure was used, see 



United States

 v. Greenlee, 517 F.2d 899, 902-03 (3d Cir. 1975); 



United States

 v. Wellendorf, 574 F.2d 1289, 1291 (5th Cir. 1978).


 
      Certification Procedure  A failure to file by a given taxpayer 

can be established without a witness by obtaining a certified transcript of 

account from the appropriate 

Service
 
Center

 stating that the taxpayer has 

not filed a return for the year(s) in question.  

United States

 v. 

Spine, 945 F.2d 143 (6th Cir. 1991); 

United States

 v. Ryan, 969 

F.2d 238 (7th Cir. 1992) (trial court's decision to admit IRS computer 

printouts will be reversed only for abuse of discretion);  

United States

 

v. Farris, 517 F.2d 226, 227-29 (7th Cir.1975) (IRS certified computer 

records admissible as self-authenticating documents; Fed. R. Evid. 902(4)); 



United States

 v. Neff, 615 F.2d 1235, 1241-42 (9th Cir. 1980); 

accord, United States v. Yakobov, 712 F.2d 20, 27 (2d Cir. 

1983).


 
      Federal Rule of Evidence 803(10) addresses the issue of the "absence 

of a record, report, statement, or data compilation in any form or the 

nonoccurrence or nonexistence of a matter of  which a record, report, 

statement, or data compilation, in any form, was regularly made and 

preserved by a public office or agency."  The rule provides that proof may 

be in the form of testimony or  a certification in accordance with Rule 902 

of the Federal Rules of Evidence.


 

 
10.04[5] Willfulness


 
      Reference should be made to the discussion of willfulness in each 

section of this manual involving crimes of willfulness, particularly Section 

8, supra, Attempt to Evade or Defeat Tax.


 
      Willfulness is the state of mind which must be proven to establish 

intent, and whether the charge is a felony (e.g., evasion) or a 

misdemeanor (e.g., failure to file),  the willfulness or intent that 

must be established is the same.  
United States
 v. Bishop, 412 

U.S.

 

346, 361 (1973).


 
      Willfulness in criminal tax violations means a "voluntary, intentional 

violation of a known legal duty."  Cheek v. 
United States
, 498 

U.S.

 

192 (1991); 
United States
 v. Pomponio, 429 

U.S.

 10, 12 (1976); 


United States
 v. Bishop, 412 
U.S.
 346, 360 (1973);  

United States

 

v. 
Ferguson
, 793 F.2d 828, 831 (7th Cir. 1986);  

United States

 v. 

Shivers, 788 F.2d 1046, 1048 (5th Cir. 1986);  

United States

 v. 

Grumka, 728 F.2d 794, 796 (6th Cir. 1984);  

United States

 v. 

Gleason, 726 F.2d 385, 388 (8th Cir. 1984);  

United States

 v. 

Rothbart, 723 F.2d 752, 754 (10th Cir. 1983);  

United States

 v. 

Moon, 718 F.2d 1210, 1222 (2d Cir. 1983);  

United States

 v. 

Dahlstrom, 713 F.2d 1423, 1427 (9th Cir. 1983);  

United States

 v. 

Verkuilen, 690 F.2d 648, 655 (7th Cir. 1982);  

United States

 v. 

Drape, 668 F.2d 22, 26 (1st Cir. 1982);  

United States

 v. 

Edelson, 604 F.2d 232, 235-36 (3d Cir. 1979); 

United States

 v. 

Buckley, 586 F.2d 498, 503-04 (5th Cir. 1978);.  Particular reference 

should be made to the discussion of the subjective standard for willfulness 

in Sections 8.00 and 40.00, supra.


 
      Thus, in a failure to file prosecution, the government is required to 

establish that the offender voluntarily and intentionally failed to file 

returns which he knew were required to be filed.  

United States

 v. 

Quimby, 636 F.2d 86, 90 (5th Cir. 1981).  The government, however, need 

not prove "evil motive or a bad purpose."  

United States

 v. Powell, 

955 F.2d 1206, 1211 (9th Cir. 1991).  See also United 

States v. Schafer, 580 F.2d 774, 781 (5th Cir. 1978); Cooley v. 

United States, 501 F.2d 1249, 1252-53 (9th Cir. 1974).  To establish the 

requisite level of willfulness for a violation of section 7203, the 

government must prove that the offender deliberately failed to file returns 

which the offender knew the law required to be be filed.  

United States

 

v. Evanko, 604 F.2d 21, 23 (6th Cir. 1979);  

United States

 v. 

Brown, 600 F.2d 248, 258 (10th Cir. 1979);  

United States

 v. 

Hawk, 497 F.2d 365, 366-69 (9th Cir. 1974);.


 
      Demonstration of a good purpose is not a defense to a charge of 

willful failure to file.  If it is shown that the taxpayer intentionally 

violated a known duty, the reason for doing so is irrelevant.  United 

States v. Dillon, 566 F.2d 702, 703 (10th Cir. 1977) (attempt to test 

constitutionality of income tax laws).  In 

United States

 v. McCorkle, 

511 F.2d 482 (7th Cir. 1975) (en banc), the court rejected the 

defendant's argument that to prove a willful failure to file the government 

had to establish an intent to defraud.  The jury instruction upheld by the 

court is reprinted in a footnote to the opinion.  See 

McCorkle, 511 F.2d at 484 n.2.  The McCorkle case furnishes a 

good example of evidence that is not admissible in defense of a failure to 

file, e.g., contemplating suicide, no funds available to pay taxes, 

fear of IRS liens on property, involved in divorce, offering to pay civil 

liabilities, and not keeping accurate records.  511 F.2d at 486.  See 

also United States v. Klee, 494 F.2d 394, 395 n.1 (9th Cir. 

1974) ("no necessity that the government prove that the defendant had an 

intention to defraud it, or to evade the payment of any taxes . . . .").


 
      Willfulness is thus established when the government proves that the 

failure to file was "voluntary and purposeful and with the specific intent 

to fail to do that which he knew the law required."  

United States

 v. 



Wilson

, 550 F.2d 259, 260 (5th Cir. 1977); Cooley, 501 F.2d at 

1253 n.4. But willfulness is not established if the government proves only a 

"careless and reckless disregard" for the obligation to file.  United 

States v. Eilertson, 707 F.2d 108, 109-10 (4th Cir. 1983) (trial court 

improperly used pre-Bishop "careless disregard" jury instruction).  

See 

United States

 v. Wolters, 656 F.2d 523, 525 (9th Cir. 

1981) (jury instruction sufficiently defined willful so as to exclude 

"reckless disregard").


 

 
      10.04[5][a] Proof of Willfulness


 
      Proof of willfulness may be, and usually is, shown by circumstantial 

evidence alone.  

United States

 v. Grumka, 728 F.2d 794, 796-97 (6th 

Cir. 1984); 

United States

 v. Gleason, 726 F.2d 385, 388 (8th Cir. 

1984); 

United States

 v. Marabelles, 724 F.2d 1374, 1379 (9th Cir. 

1984) (section 7201) (list of acts from which willfulness can be inferred);  



United States

 v. Schiff, 612 F.2d 73, 77-78 (2d Cir. 1979) 

(previously filed corporate and personal returns; reminder by accountant); 

United States v. Brown, 548 F.2d 1194, 1199 (5th Cir. 1977) (letters 

from 
Service
 
Center
);  Swallow v. 

United States

, 307 F.2d 81, 83 

(10th Cir. 1962) (section 7201).


 
      Willfulness is suggested by a pattern of failing to file for 

consecutive years in which returns should have been filed.  

United States

 

v. Greenlee, 517 F.2d 899, 903 (3d Cir. 1975).  This may include years 

prior or subsequent to the prosecution period.  

United States

 v. 


Upton
, 799 F.2d 432, 433 (8th Cir. 1986);  

United States

 v. 

Farris, 517 F.2d 226, 229 (7th Cir. 1975)..


 
      Willfulness may also be shown by such acts as mailing tax protest 

materials to the IRS, disregarding IRS warning letters, and filing 

contradictory forms. 

United States

 v. Shivers, 788 F.2d 1046, 1048 

(5th Cir. 1986) (defendant filed a W-4 claiming he was exempt from 

withholding only four days after filing a W-4 claiming three allowances); 

see also United States v. Upton, 799 F.2d 432, 433 (8th 

Cir. 1986) (defendant sent protestor materials to IRS).


 
      There is also an element of common sense in establishing willfulness 

in a failure to file case.  Thus, willfulness can be shown by such factors 

as:  the background of the defendant; the filing of returns in prior years,  



United States

 v. Briscoe, 65 F.3d 576, 588 (7th Cir. 1995);  



United States

 v. Hauert, 40 F.3d 197, 199 (7th Cir. 1994);  United 

States v. Birkenstock, 823 F.2d 1026, 1028 (7th Cir. 1987); United 

States v. Bohrer, 807 F.2d 159, 161 (10th Cir. 1986) United States v. 

Shivers, 788 F.2d 1046, 1048 (5th Cir. 1986); that the defendant was a 

college graduate with accounting knowledge; that the defendant was familiar 

with books and records and operated a business, 

United States

 v. 

Segal, 867 F.2d 1173, 1179 (8th Cir. 1989); that the defendant earned a 

large gross income, Bohrer, 807 F.2d at 161.  See also 



United States

 v. MacLeod, 436 F.2d 947, 949 (8th Cir. 1971) United 

States v. Ostendorff, 371 F.2d 729, 731 (4th Cir. 1967);.


 
      Similarly, where the defendant received a standard Form W-2, the Third 

Circuit found that:


 
      the jury was entitled to view the W-2 Forms as reminders of the duty 

      to file received shortly before or during the period in which filing 

      was required.


 


United States

 v. Cirillo, 251 F.2d 638, 639 (3d Cir. 1957).  The Form 

W-2 does not serve as a return, whether filed by the taxpayer or employer. 

Birkenstock, 823 F.2d at 1030.  See also Section 

40.14[16], infra. 


 
      Also, evidence that a defendant had filed returns in other years when 

he claimed refunds while there was a substantial tax due for the years he 

failed to file is relevant evidence and more than enough to establish 

willfulness. Garguilo, 554 F.2d at 62.


 
      

      10.04[5][b] Willful Blindness or Deliberate Ignorance


 
      Because willfulness requires a voluntary and intentional violation of 

a known legal duty, it is a defense to a finding of willfulness that the 

defendant was ignorant of facts which made the conduct illegal.  Such 

ignorance is not a defense, however, if the defendant purposefully sought to 

avoid knowledge. See 

United States

 v. Kelm, 827 F.2d 1319 (9th 

Cir. 1987). There are few cases in which the facts point to deliberate 

ignorance. 

Id.

 at 1323-24.   Deliberate ignorance or conscious 

avoidance requires proof of  more than the fact that "the defendant was 

mistaken, recklessly disregarded the truth or negligently failed to 

inquire."  

Id.

  Accord 

United States

 v. Mapelli, 971 F.2d 284, 

286 (9th Cir. 1992).  The evidence must support an inference that a 

defendant "consciously avoided the any opportunity to learn what the tax 

consequences were."  

United States

 v. Bussey, 942 F.2d 1241, 1428 

(8th Cir. 1992) 


 
      When the evidence supports the conclusion that a defendant purposely 

contrived to avoid learning all the facts, the government may be entitled to 

an instruction on deliberate ignorance. 

United States

 v. Mapelli, 971 

F.2d at 286.   The use of an "ostrich instruction" -- also known as a 

deliberate ignorance, conscious avoidance, willful blindness, or a 

Jewell instruction (see 

United States

 v. Jewell, 532 

F.2d 697 (9th Cir. 1976)) -- may be appropriate in circumstances where "a 

person suspects a fact, realizes its probability, but refrains from 

obtaining final confirmation in order to be able to deny knowledge if 

apprehended."  Jewell, 532 F.2d at 700 n.7.


 
      A number of courts have approved the use of such instructions under 

proper circumstances.  See, e.g., 

United States

 v. 

Picciandra, 788 F.2d 39, 46 (1st Cir. 1986); 

United States

 v. 

MacKenzie; 777 F.2d 811, 818-19 (2d Cir. 1985); 

United States

 v. 

Callahan, 588 F.2d 1078 (5th Cir. 1979); 

United States

 v. Dube, 

820 F.2d 886, 892 (7th Cir. 1987); 

United States

 v. Bussey, 942 F.2d 

at 1246; United States v. Fingado, 934 F.2d 1163, 1166-67 (10th Cir. 

1991).  Note, however, that courts have observed that the use of such 

instructions is "rarely appropriate."  

United States

 v. 

deFrancisco-Lopez, 939 F.2d 1405, 1409 (10th Cir. 1991) (relying on 

several  Ninth Circuit cases).[FN2]  Thus, it is not advisable to request 

such an instruction unless it is clearly warranted by the evidence in a 

particular case.  Furthermore, the language of any deliberate ignorance 

instruction in a criminal tax case must comport with the government's 

obligation to prove the voluntary, intentional violation of a known legal 

duty.  The deliberate ignorance instruction set forth in 

United States

 v. 

Fingado, 934 F.2d at 1166, appears to be suitable for a criminal tax 

case.[FN3]  Further, to avoid potential confusion with the meaning of 

"willfulness" as it relates to the defendant's intent, it may be  wise to 

avoid use of the phrase "willful blindness," using instead such phrases as 

"deliberate ignorance" or "conscious avoidance."[FN4] 


 

 
10.04[6] Tax Deficiency Not Necessary


 
      The crime of failing to file a return is complete if a return was 

required to be filed at a given date and the taxpayer intentionally did not 

file a return. There is no requirement that the government prove a tax 

liability, as long as the proof establishes that the taxpayer had sufficient 

gross income to require the filing of a return.  Spies v. United 

States, 317 
U.S.
 492, 496 (1943); 

United States

 v. Wade, 585 F.2d 

573, 574 (5th Cir. 1978). As a practical matter, evidence establishing a tax 

deficiency usually will be offered as a part of the government's evidence of 

willfulness but, as noted, this is technically not necessary.  See 



United States

 v. Schmitt, 794 F.2d 555, 560 (10th Cir. 1986) 

(evidence of tax liability relevant and not prejudicial in failure to file 

case).  See also United States v. Hairston, 819 F.2d 

971, 974 (10th Cir. 1987) (defendant not allowed to show that he would have 

received refund to negate willfulness).


 

 
10.04[7] Venue - Failure to File


 
      Reference should be made to the discussion of venue in Section 6.00, 

supra.


 
      As a general rule, venue in a failure to file case is proper in any 

judicial district in which the taxpayer is required to file, i.e., 

the district in which the crime was committed.  

United States

 v. 

Rice, 659 F.2d 524, 526 (5th Cir. 1981);  

United States

 v. 

Quimby, 636 F.2d 86, 89 (5th Cir. 1981).


 
      Section 6091 of the Code sets forth the places for filing returns.  In 

those instances where the Code does not provide for the place of filing, the 

Secretary "shall by regulations" prescribe the place for filing.  26 U.S.C. 

 6091(a).


 
      Generally, individual tax returns are to be filed either in the 

internal revenue district where the taxpayer resides or has his principal 

place of business, or at the 

Service
 
Center

 serving the internal revenue 

district where the taxpayer resides or has his principal place of  business.  

26 U.S.C.  6091(b);  Treas. Reg.  1-6091-2 (26 C.F.R.); 



United States

 v. Garman, 748 F.2d 218, 219 (4th Cir. 1984).  "'Legal 

residence' means the permanent fixed place of the abode which one intends to 

be his residence and to return to it despite temporary residences elsewhere, 

or absences."  

United States

 v. Calhoun, 566 F.2d 969, 973 (5th Cir. 

1978).  Note that, "(a)n individual employed (exclusively) on a salary or 

commission basis . . . does not have a 'principal place of business' within 

the meaning of this section."  Treas. Reg.  1.6091-2(a)(2) (26 

C.F.R.).


 
      One exception to the general rule for individuals provides that if the 

taxpayer's legal residence is outside the 

United States

 or if his return 

bears a foreign address, the return should be filed with the Director of 

International Operations, Internal Revenue Service, 

Washington
, 
D.C.

, or the 

district director, or the director of the 

Service
 
Center

, depending on the 

appropriate officer designated on the return form or in the instructions 

issued with the return. Treas. Reg.  1.6091-3(b) (26 C.F.R.).  Another 

exception provides that if an individual, although continuously present in 

the 

United States

, has no legal residence or principal place of business in 

any internal revenue district, the return should be filed with the District 

Director in 

Baltimore
, 
Maryland

.  Treas. Reg.  1-6091-2(a)(1) (26 

C.F.R.).


 
      For a corporation, the general rule is substantially the same as for 

individuals, except that the "principal office or agency of the corporation" 

is substituted for "legal residence." Treas. Reg.  1.6091-2(b) (26 

C.F.R.).


 
      While no case exactly on point has been located, a reasonable 

interpretation would suggest that the place of performance is to be 

determined on the basis of the taxpayer's legal residence or principal place 

of business at the time the return was due, because 26 U.S.C.  6091 is 

written in the present tense.


 
      Returns can also be filed by hand-carrying to the appropriate Internal 

Revenue Service office (26 U.S.C.  6091(b)(4)).  The regulations 

provide, for example, that an individual return "filed by hand-carrying 

shall be filed with the district director (or with any person assigned the 

administrative supervision of an area, zone, or local office constituting a 

permanent post of duty within the internal revenue district of such 

director) . . . ."  Treas. Reg.  1.6091-2(d)(1) (26 C.F.R.).  The 

reference to the district director or local office refers back to the 

district "in which is located the legal residence or principal place of 

business" of the taxpayer.  

Id.




 
      As a practical matter, all of this means that venue in the usual 

individual failure to file case can be placed in the district where the 

appropriate 

Service
 
Center

 is located, or in the district where the taxpayer 

resides or has his principal place of business.  Note, however, that under 

the statute governing venue in continuing offenses, 18 U.S.C.  3237, 

specific reference is made to cases brought pursuant to sections 7201, 7203, 

and 7206(1), (2), and (5). Section 3237(b) provides that where an offense is 

described in section 7203 or when venue for a prosecution of an offense 

described in section 7201 or section 7206(1), (2), or (5) is based solely on 

a mailing to the IRS and prosecution is begun in a judicial district other 

than the judicial district in which the defendant resides, the case may be 

transferred upon motion by the defendant to the district in which he was 

residing at the time the offense was committed. See also 

Section 6.00, supra, on venue in this Manual.


 

 
10.04[8] Statute of Limitations


 
      Reference should be made to Section 7.00, supra, discussing the 

statute of limitations in criminal tax cases.


 
      The statute of limitations for a failure to file a return is six (6) 

years, except for information returns required under Part III of subchapter 

A of Chapter 61 of the Internal Revenue Code.  26 U.S.C.  6531(4).  

For information returns required by the Code, including returns (Forms 8300) 

required pursuant to section 6050I, the period of limitations is three (3) 

years, as is the period of limitations for failure to supply information or 

keep records. 


 
      The statute of limitations is computed from the due date of the 

return. See Section 10.04(3), supra.  In the case of an 

individual, this will usually be April 15th, unless an extension of time in 

which to file is granted (26 U.S.C.  6081), in which event the statute 

is computed from the extended compliance date.  See 

United States

 

v. Pandilidis, 524 F.2d 644, 647-648 (6th Cir. 1975);  

United States

 

v. Goldstein, 502 F.2d 526, 529-530 (3d Cir. 1974)


 
      The statute of limitations is tolled by the filing of the information 

or indictment.  

United States

 v. Saussy, 802 F.2d 849, 851 (6th Cir. 

1986) (claim that information must be "verified" by affidavit or other prior 

determination of probable cause rejected).  The statute is also tolled when 

the defendant is outside the 

United States

 or is a fugitive from justice, 26 

U.S.C.  6531, and during certain summons enforcement proceedings, 26 

U.S.C.  7609(e).


 




 
                      10.05 FAILURE TO PAY


 
10.05[1] Elements


 
      To establish the offense of failure to pay a tax, the government must 

prove beyond a reasonable doubt that:


 
      (1)  The defendant had a duty to pay a tax;


 
      (2)  The tax was not paid at the time required by law; and,


 
      (3)  The failure to pay was willful.


 


United States

 v. Tucker, 686 F.2d 230, 232 (5th Cir. 1982). 

See Sansone v. 
United States
, 380 

U.S.

 343, 351 (1965). 

Prosecutions of a willful failure to pay "are rare".  

United States

 v. 

Tucker, 686 F.2d at 233.


 

 
10.05[2] Required by Law to Pay


 
      This element should not pose any undue difficulty.  If the taxpayer 

has not filed a return, the charge would be a failure to file. However, when 

a return is filed that reflects a tax due and owing, and no tax is paid, 

there are at least two possible charges, depending on the facts -- an 

attempted evasion of payment, in violation of 26 U.S.C.  7201, or a 

failure to pay a tax, in violation of 26 U.S.C.  7203.  The charge 

would be under section 7203 if there was no affirmative attempt to evade the 

payment such as, for example, the concealment of assets or the use of 

nominees, but, rather, simply a failure to pay a tax that was due and owing.


 
      As to the time of payment, section 6151(a) of the Code sets forth the 

general rule as follows:


 
      Except as otherwise provided in this subchapter, when a return of tax 

      is required under this title or regulations, the person required to 

      make such return shall, without assessment or notice and demand from 

      the Secretary, pay such tax to the internal revenue officer with whom 

      the return is filed, and shall pay such tax at the time and place 

      fixed for filing the return . . . .


 
See 

United States

 v. Drefke, 707 F.2d 978, 981 (8th Cir. 

1983).


 
      In the usual failure to pay case, the taxpayer will have filed a 

return and then failed to pay the tax.  While most assessments are based on 

filed returns, it is not necessary that the Service assess the tax as due 

and owing, because a tax deficiency arises by operation of law on the date 

the return is due. 26 U.S.C.  6151(a); 

United States

 v. 

Silkman, 220 F.3d 935, 937 (8th Cir. 2000), cert. denied, 121 

S.Ct. 889 (2001);  

United States

 v. Voorhies, 658 F.2d 710, 714 (9th 

Cir. 1981) (evasion of payment case).  Otherwise stated, it is not necessary 

that there be an administrative assessment before a criminal prosecution may 

be instituted. Voorhies, 658 F.2d at 714-15.  Accord, 



United States

 v. Daniel, 956 F.2d 540, 542 (6th Cir. 1992);  



United States

 v. Dack, 747 F.2d 1172, 1174 (7th Cir. 1984).


 
10.05[3] Failure to Pay


 
      The Internal Revenue Service will provide a qualified witness and/or a 

certified transcript of account or a certificate of assessments and payments 

establishing the failure to pay the tax.   Section 6151(a) of the Code 

provides that the tax must be paid at the time and place fixed for filing 

"determined without regard to any extension of time for filing the return."


 
 

 10.05[4] Willful Failure to Pay


 
      See the discussion of willfulness in Sections 8.06 and 

10.04[4], supra.


 
      In 
United States
 v. 
Andros
, 484 F.2d 531 (9th Cir. 1973), the 

court, in sustaining a conviction for willful failure to pay, took the 

position that to establish willfulness the government must prove that the 

taxpayer had sufficient funds to pay the tax and voluntarily and 

intentionally did not do so. 

Id.

 at 531.  But the court also stated 

that willfulness connotes bad faith or evil intent in view of all the 

financial circumstances of the taxpayer.  This premise is no longer viable 

after 
United States
 v. Pomponio, 429 

U.S.

 10 (1976).


 
      In 

United States

 v. Tucker, 686 F.2d 230 (5th Cir. 1982), the 

Fifth Circuit rejected the defendant's contention that the government had to 

prove the defendant was financially able to pay the tax when it became due, 

saying (686 F.2d at 233):


 
      Tucker's second argument is that, in order to show willfulness under 

      Section 7203, the government must prove that the taxpayer was 

      financially able to pay his tax debt when it came due.  Tucker argues 

      that he was unable to pay his taxes when due because his checking 

      accounts had either very low or negative balances, and because he had 

      no other assets available to satisfy the debt.  He thus concludes that 

      his failure to pay was not willful.  This argument borders on the 

      ridiculous.  Every 

United States

 citizen has an obligation to pay his 

      income tax when it comes due. A taxpayer is obligated to conduct his 

      financial affairs in such a way that he has cash available to satisfy 

      his tax obligations on time.  As a general rule, financial ability to 

      pay the tax when it comes due is not a prerequisite to criminal 

      liability under Section 7203.  Otherwise, a recalcitrant taxpayer 

      could simply dissipate his liquid assets at or near the time when his 

      taxes come due and thereby evade criminal liability.


 
The court declined to follow the Ninth Circuit in 
Andros
, 484 F.2d 

531, taking the position that the language in 
Andros
, to the effect 

that it must be shown that a taxpayer has sufficient funds to pay the tax on 

or about the day the tax was due, was dicta.  Tucker, 686 F.2d at 

233. Again, it would seem to be only common sense that a taxpayer who has 

dissipated his assets on luxury items should not be able to avoid criminal 

prosecution by showing that he had no funds to pay the taxes he owed.  

See also Section 9.03, supra.


 

 
10.05[5] Venue


 
      Reference should be made to the discussion of venue in Sections 6.00 

and 10.04[7], supra.


 
      Generally, a person required to pay a tax must pay the tax at the 

place fixed for filing the return.  Venue would therefore normally be in the 

district where the return was filed.  As previously noted, where there is no 

filing the charge normally would be a failure to file rather than a failure 

to pay a tax.


 

 
10.05[6] Statute of Limitations


 
      The statute of limitations is six years "for the offense of willfully 

failing to pay any tax . . . at the time or times required by law or 

regulations." 26 U.S.C.  6531(4).  See 

United States

 v. 

Smith, 618 F.2d 280, 281-82 (5th Cir. 1980).


 
      The six-year period of limitations begins to run when the failure to 

pay the tax becomes willful, not when the tax is assessed or when payment is 

demanded.  
Andros
, 484 F.2d at 532-33.  See also 



United States

 v. Sams, 865 F.2d 713, 716 (6th Cir. 1988) ("the 

limitation period begins to run when the taxpayer manifests some act of 

willful nonpayment");   United States v. Pelose, 538 F.2d 41, 44-45 

(2d Cir. 1976)..


 
                        





 
                        10.06 SENTENCING


 
      Reference should be made to Section 5.00 infra, which discusses 

the application of the Federal Sentencing Guidelines to criminal tax cases.  

Note, however, that costs of prosecution must be included in the punishment 

imposed for failure to file.  

United States

 v. May, 67 F.3d 706, 707 

(8th Cir. 1995).


 
                         





 
                         10.07 DEFENSES


 
      There are a number of defenses that have been litigated and decided by 

the courts.  A list of some of the common defenses raised in failure to file 

cases and their treatment by the courts follows.


 

 
10.07[1] Intent to Pay Taxes in Future           


 
      The intent to report and pay taxes due in the future does not 

constitute a defense and "does not vitiate" the willfulness required for a 

failure to file or, for that matter, for an attempt to evade.  Sansone v. 


United States
, 380 

U.S.

 343, 354 (1965).

                                            


 
10.07[2] Absence of a Tax Deficiency


 
      There is no requirement that the government establish a tax liability 

in a failure to file case, as long as the taxpayer had a gross income that 

required the filing of a return.  Spies v. 
United States
, 317 

U.S.

 

492, 496 (1943); 

United States

 v. Wade, 585 F.2d 573, 574 (5th Cir. 

1978).


 

 
10.07[3] Delinquent Filing


 
      The defense of filing late returns has been rejected in failure to 

file cases.  In addition, evidence offered by the defendant of late filing 

and the late payment of taxes has been excluded.  

United States

 v. 

Ming, 466 F.2d 1000, 1005 (7th Cir. 1972);   

United States

 v. 

Greenlee, 380 F. Supp. 652, 660 (E.D. Pa. 1974), aff'd., 517 F.2d 

899, 903 (3d Cir.).


 
      The First Circuit, in 

United States

 v. Bourque, 541 F.2d 290, 

294 (1st Cir. 1976), noted the principle that "subsequent conduct cannot 

relieve a taxpayer from criminal liability for failure to file tax returns 

on or before their due date."  In this connection, the Seventh Circuit has 

upheld the exclusion of evidence by the defendant that he had eventually 

paid his taxes, even though the government was allowed to prove the amount 

of taxes the defendant owed for the years in issue.  

United States

 v. 

Sawyer, 607 F.2d 1190 (7th Cir. 1979).


 

 
10.07[4] Negligence


 
      Because failure to file and failure to pay are specific intent crimes, 

negligence is a defense to  willfulness.  The government must prove that the 

defendant acted purposefully as distinguised from inadvertently, 

negligently, or mistakenly.  

United States

 v. Collins, 457 F.2d 781, 

783 (6th Cir 1972); 

United States

 v. Matosky, 421 F.2d 410, 413 (7th 

Cir. 1970).


 

 
10.07[5] Civil Remedy Not Relevant


 
      The fact that the government could proceed civilly, instead of 

criminally, is "irrelevant to the issue of criminal liability and the 

defendant is not entitled to an instruction that the government could assess 

the taxes without filing criminal charges."  

United States

 v. Buras, 

633 F.2d 1356, 1360 (9th Cir. 1980);  
United States
 v. 
Merrick
, 464 

F.2d 1087, 1093 (10th Cir. 1972).


 

 
10.07[6] Inability to Pay


 
      The Seventh Circuit has stated that a defendant is not entitled to an 

instruction on inability to pay where no foundation was laid in the evidence 

that the defendant lacked the money to pay his taxes:


 
      Lewis had money to pay the other expenses of his business;  he just 

      assigned a lower priority to paying withholding taxes than to meeting 

      his other expenses.  This does not "show inability to pay" and the 

      judge was not required to give an instruction that was premised on 

      such inability.


 


United States

 v. Lewis, 671 F.2d 1025, 1028 (7th Cir. 1982). See 

also, 

United States

 v. Tucker, 686 F.2d 230, 233 (5th Cir. 1982).


 

 
10.07[7] IRS Required to Prepare Returns


 
      Section 6020 of the Internal Revenue Code provides that if a person 

fails to file a return or makes a willfully false return, the Secretary 

"shall make such return from his own knowledge or from such information as 

he can obtain." Courts have uniformly disapproved the use of this section as 

a defense in failure to file cases.  See, e.g., United 

States v. Powell, 955 F.2d 1206, 1213 (9th Cir. 1991).  Accord, 



United States

 v. Lacy, 658 F.2d 396, 397 (5th Cir. 1981); See 

also  

Moore

 v. C.I.R., 722 F.2d 193, 196 (5th Cir. 1984).


 
      A defendant in the Eastern District of 

New York

 claimed that the 

government was barred from prosecuting him for failure to file, because he 

had filed partnership returns, which triggered the IRS's duty to file 

individual returns for him under section 6020(b) of the Code.  Rejecting 

this defense and holding that the government was not barred from prosecuting 

for a failure to file, the court in an unpublished opinion stated that the 

defendant's interpretation of the statutes was "inherently implausible" and 

that section 6020(b) "cannot be interpreted as foreclosing civil or criminal 

sanctions for acts or omissions of the taxpayer."  

United States

 v. 


Harrison
, 30 A.F.T.R. 72-5367 (E.D.N.Y. 1972), aff'd. without 

opinion, 486 F.2d 1397 (2d Cir. 1972), cited with approval in 

Hollett v. Browning, 711 F.Supp 1009 (E.D. Ca 1988). 


 
      In 

United States

 v. Millican, 600 F.2d 273, 278 (5th Cir. 

1979), the court held that there was "no merit to Millican's claim of 

entitlement to an instruction that the Internal Revenue Service was under a 

duty pursuant to 26 U.S.C.A. section 6020(b)(1) to prepare his tax return."


 
      Similarly, the Seventh Circuit upheld a jury instruction on section 

6020(b) which stated that while the law permits the Secretary to prepare a 

return, "the law does not require the Secretary to do so and the Secretary's 

discretion in this matter in no way reduces the obligation of the individual 

taxpayers to file their returns."  

United States

 v. Verkuilen, 690 

F.2d 648, 656 (7th Cir. 1982).


 

 
10.07[8] Marital and Financial Difficulties


 
      The refusal of the trial judge to allow an attorney charged with a 

failure to file to introduce evidence of marital and financial difficulties 

has been upheld on the grounds that "evidence of financial and domestic 

problems are not relevant to the issue of willfulness" as used in section 

7203.  Bernabei v. 

United States

, 473 F.2d 1385 (6th Cir. 1973).  

See also 

United States

 v. Greenlee, 517 F.2d 899, 903 

(3d Cir. 1975).


 

 
10.07[9] Fear of Filing


 
      Saying it was "no defense," the Second Circuit upheld the refusal of 

the trial judge to instruct the jury that it must acquit if it found the 

defendant did not file his returns because of a fear of incriminating 

himself for prior violations.  

United States

 v. Egan, 409 F.2d 997, 

998 (2d Cir. 1972).


 

 
10.07[10] Claim That Returns Were Mailed                  


 
      A jury could find that returns not received by the Internal Revenue 

Service were in fact mailed as claimed by a defendant.  But a thorough 

explanation by a representative of the appropriate 

Service
 
Center

 respecting 

the manner in which returns are received and processed, coupled with 

evidence that the 

Service
 
Center

 never received the returns, is sufficient 

to support a conviction under section 7203.  

United States

 v. 

Greenlee, 517 F.2d 899, 903 (3d Cir. 1975).


 

 
10.07[11] Complicated Records


 
      While characterizing the defense as "lame" and upholding the 

conviction on failure to file charges, the Sixth Circuit held that it was 

error not to permit the defendant to introduce in evidence some of his 

records to corroborate his claim that the records were so complicated he 

could not file accurate returns on time.  

United States

 v. Dark, 597 

F.2d 1097, 1099-1100 (6th Cir. 1979).


 

 
10.07[12] Paperwork Reduction Act


 
      The Paperwork Reduction Act, 44 U.S.C.  3512 (PRA), provides 

that no person shall be subject to any penalty for failing to provide 

information if an agency's request does not display an Office of Management 

and Budget (OMB) number.  Tax returns are agency requests within the scope 

of the PRA and bear OMB numbers.  However, return instruction booklets do 

not bear OMB numbers and tax protestors have attempted to manufacture a 

defense on this basis.  The absence of an OMB number from tax return 

instruction booklets does not excuse the duty to file the return.  United 

States v. Ryan, 969 F.2d 238, 240 (7th Cir. 1992) (IRS instruction 

booklets merely assist taxpayers rather than independently request 

information); 

United States

 v. Holden, 963 F.2d 1114, 1116 (8th Cir. 

1992).  Also, it is not necessary that an expiration date appear on a 

return.  Salberg v. 

United States

, 969 F.2d 379, 384 (7th Cir. 1992) 

(year designation, e.g., "1990" is sufficient).  See 

also Section 40.14[20], infra.


 

 
10.07[13] Other Defenses


 
      In 

United States

 v. Dunkel, 900 F.2d 105, 107-08 (7th Cir. 

1990), vacated and remanded on other grounds, 498 

U.S.

 1043 (1991), 

rev'g on other grounds, 927 F.2d 955 (7th Cir. 1991), a  tax 

protestor defendant claimed that the requirement to "make a return" was 

unconstitutionally vague.  The defendant posited different interpretations 

of the word "make," including to "construct a return out of raw materials."  

Dunkel, 900 F.2d at 107.  The Court had little sympathy for this 

frivolous argument and rejected it by stating that "statutes are not 

unconstitutional just because clever lawyers can invent multiple meanings."  

Dunkel, 900 F.2d at 108.


 
   





 
   10.08 LESSER INCLUDED OFFENSE/RELATIONSHIP TO TAX EVASION 


 
      In charging and sentencing determinations, the question sometimes 

arises whether section 7203 is a lesser included offense of section 7201, 

tax evasion. Reference should be made to the 


 
detailed discussion of this issue in Section 8.09, supra.


 




 
FN 1. Changed to 18 U.S.C.  3571, commencing Nov. 1, 1986.


 
FN 2. But see 

United States

 v. Rodriguez, 983 F.2d 455, 457 

(2d Cir. 1993) (Second Circuit more willing than Ninth Circuit to authorize 

use of this type of instruction).  


 
FN 3. Out of an abundance of caution, however, a prosecutor may wish to 

utilize the instruction set out in 

United States

 v. MacKenzie, 777 

F.2d 811, 818 n.2 (2d Cir. 1985).


 
FN 4. It is suggested that any time a deliberate ignorance or conscious 

avoidance instruction is given, the prosecutor should also insure that the 

jury is expressly directed not to.
 

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