The Third Party Defense

A third party defense redirects culpability at the accountant or tax professional responsible for preparing or filing taxes. This defense is akin to the good faith defense. Since a defendant hires a tax return preparer in order to be relieved of the burden of preparing the return himself, he is relieved of any liability the preparer might incur as a result of someone else having done the work.

It is important to remember that knowingly reporting false information to a tax professional falls outside of this exception. If the defendant lies to the tax preparer in order to minimize his tax assessment, it can hardly be said that he relied in good faith on his accountant; therefore the defendant will likely be convicted on charges of tax evasion.

Sometimes the third party is a defendant’s spouse, who filed on behalf of his wife/husband, and then made mistakes or omissions without the knowledge of the defendant.  In this case, the defendant is not liable for those mistakes or omissions.

Just as if a defendant intentionally misrepresents his financial situation to a professional tax preparer, the same rule applies if the defendant intentionally misrepresents information to his spouse in an attempt to evade the tax. The defendant, not the spouse or tax preparer, is liable if he knowingly uses a third party in an attempt to evade payment or assessment of the tax.

Another defense strategy could be when the tax return gets lost in the mail. In this rare situation the defendant is in good faith because he/she attempted to file tax return, and through no fault of his/her own, the return fails to reach the IRS.

Such a defense, if supported by corroborating evidence, is almost certain to be successful.

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