In criminal law we are always told that ignorance of the law is no defense. While this maxim is true in most cases of criminal law, it is not so in tax crimes. In theory, someone can legally avoid taxes by showing that he truly believes that he does not owe any taxes.
In most criminal matters the “mistake of law,” not knowing whether something is illegal, is not a valid defense. In the case with tax crimes however, this can sometimes be used as an acceptable defense. Due to the Supreme Court’s reading of the “willfulness” condition which applies in the case for committing federal tax crimes, using mistake of law is a valid legal defense.
The Court defines willfully as “voluntary, intentional violation of a known legal duty.” So if an individual did not know of their legal duties to file tax returns, they did not willfully fail to file; therefore they may not be held accountable. Because of this, the willfulness condition makes tax crime charges such as tax evasion notoriously difficult to prosecute and effectively gives some taxpayers an easy way out.
This position is sometimes viewed with criticism because the Court’s definition of “willfulness” is not clearly defined; it relies heavily on determining the intent of the taxpayer in question.
This makes ignorance an easy defense for tax payers looking for an easy way out from charges of tax evasion. But tax payers should still be aware that even if the mistake of law defense can apply, it is not a guarantee of escaping due punishment.
In civil proceedings, the law may be less strict, which sometimes allows more room to avoid charges of tax evasion. However, the implementation of this law varies in federal courts and so tax payers who frequently look to circumvent the tax laws will likely face harsh penalties and even jail time, if brought up on charges.