THE PERJURY PROBLEM
How does the
IRS turn a weak misdemeanor case into a multiple felony conviction?
Answer: Find a false verbal or written statement and refer the perjury
violation to the U.S. Attorney's office for criminal prosecution.
Let's take a
look at the arsenal of weapons the IRS can use to get a felony conviction for
someone lying to an IRS employee and/or delivering false documents. The
Internal Revenue Code (IRC) has two types of punishment for tax-related
perjury violations: one is a misdemeanor; the other is a felony. To me,
the misdemeanor charge is the appropriate charge for most IRS violations, but
it is rarely used. The IRS prefers felony convictions whenever possible!
26 USC Section
willfully delivers or discloses to the [IRS] any list, statement or other
document, known by him to be fraudulent or to be false as to any material
matter, shall be fined not more than $1,000, or imprisoned not more than 1
year, or both.
26 USC Section
willfully makes and subscribes any return, statement, or other document,
which contains or is verified by a written declaration that it is made
under the penalties of perjury, and which he does not believe to be true and
correct as to every material matter shall... be guilty of a felony and, upon
conviction thereof, shall be fined not more than $5,000, or imprisoned not
more than 3 years, or both, together with the costs of prosecution.
Now we enter
the murky waters of double and triple charges for the same crime. If you
think these draconian measures are cruel and unusual punishment, you will be
surprised to know that multiple charges for the same crime are legal and have
been approved by the U.S. Supreme Court. Multiple perjury violations are
left to the discretion of the U.S. Attorney's Office and are oftentimes used
as a club to punish aggressive taxpayers.
18 USC Section 1621
having taken an oath before a competent tribunal, officer, or person, on any
case in which a law of the United States authorizes an oath to be
administered, that he will testify, declare, depose, or certify truly, or
that any written testimony, declaration, deposition, or certificate by him
subscribed is true, willfully subscribes as true any material matter which
he does not believe to be true; is guilty of perjury and shall... be fined
no more than $2,000 or imprisoned not more than five years, or both.
so-called tax perjury statute 7206(1) and the general perjury statute 1621 are
very serious felonies, but as you have noted, the above statutes require the
taxpayer to perform particular overt acts. The tax perjury statute
requires the taxpayer to submit a document (such as a tax return, financial
statement, or affidavit) signed under the penalties of perjury. The
general perjury statute requires the taxpayer to commit perjury after taking
federal prosecutors have a weak case and know the jury is likely to acquit,
they will crank up "old reliable," the general false statement statute.
18 USC Section
Whoever, in any
matter within the jurisdiction of any department or agency of the United
States knowingly and willfully makes any false... statements shall be fined
not more than $10,000 or imprisoned not more than five years, or both.
can be charged with failing to file a tax return, which is a misdemeanor, and
end up going to jail for up to five years under section 1001 for a careless
statement you made to an IRS employee.
have not filed tax returns for three years or more and owe more than $75,000
in tax must exercise extreme caution when they attempt to re-enter the tax
system. The tax returns you will be submitting will be signed under the
penalties of perjury, and if the IRS later proves that you omitted income
and/or disguised some of your deductions, the U.S. Attorney will attempt to
prosecute you under multiple statutes such as section 7201 for tax evasion,
section 7206(1) for tax perjury violations, and section 1001 for the general
false statement statute.
attempting to re-enter the tax system must hire the very best tax advisors
they can find. A preference should be given to professionals who
specialize in failure-to-file cases and have 20 or more years of experience.
statutes also affect taxpayers who file every year but take very aggressive
positions on their tax returns. The following axiom must be adhered to at all
times: Never attempt to explain, clarify, or deny any issue relating to your
tax returns with any IRS employee. All communications must be through
If you are
approached by IRS Special Agents, you should not open your mouth. The
IRS Special Agent cannot compel you to give testimony or produce documents at
this time. Anything you say or do will be used against you in federal
court. Remember, most criminal tax cases are "made" within the first 20
minutes of conversation.
We have all
heard about the "three great lies in the world"; today I am proposing the
fourth great lie: "I am a government agent and I am here to help you." I
can't begin to tell you how often taxpayers fall hook, line, and sinker for
When I worked for the IRS, my first few cases
with the IRS/Criminal Investigation Division (IRS/CID) were quick and easy
because the taxpayers and their advisors did not fully understand they had the
right to remain silent even after I read them their Fifth Amendment rights!
It was like stealing candy from a baby. Most Special Agents get sick of
this type of work and transfer to narcotics, money laundering, or political
corruption where they can use their skills and talents against the real
The best-kept secret when dealing with the
IRS/CID is to know that its agents are under tremendous pressure to produce as
many easy criminal cases as possible. Every year the IRS/CID
likes to boast they initiate 3,000-4,000 investigations and have a 90%
successful prosecution rate; to get these high numbers their agents must
pursue many easy-to-work perjury cases.
Conclusion: It is much more
difficult to work a criminal case if the taxpayer declines to answer questions
and declines to provide the records necessary for a successful criminal
investigation. You have every right to take this position. Use it!
Overview of IRS Criminal
|Percent to Prison
*Sentence includes confinement to federal
prison, halfway house, home detention, or some combination thereof. A fiscal
year runs from October 1 through September 30.