Using the IRS to Harass a Third Party
Obstructing the administration of Internal Revenue laws violates 26 U.S.C. § 7212 and is punishable by up to three years in prison. The statute is fairly broad and covers not just efforts to interfere with an existing investigation. It also covers attempts to initiate IRS investigations of third parties. Anything that wastes the time and resources of the IRS can be viewed as a potential violation of 26 U.S.C. § 7212. False tax filings against third parties can also violate the prohibition against making false statements or submitting false documents leading to further prosecution.
Submitting tax filings to the federal government is not merely an act between the taxpayer and the federal government. All submissions a taxpayer makes also include information on the source of their income. For instance, when we report income, we are also reporting the salary paid by our employer. Other forms of income are similarly recorded and tracked. So a false filing does not just deceive the IRS with regards to that individual taxpayer. It can also create false tax liabilities for the supposed sources of the income.
Some have attempted to defend against creditors or other tax claims by filing false forms to the IRS in order to initiate an investigation and prevent collection of amounts owed, either to other government entities or to private creditors. By claiming false receipts or payments, some individuals have attempted to encourage the IRS to initiate investigations against innocent third parties. These false filings if undetected,can create false tax liabilities for their victims, and one person filing false forms to the IRS can waste hundreds of hours of agents’ time. In order to prevent this, the IRS uses 26 U.S.C. § 7212 to prosecute these individuals for interfering with the administration of Internal Revenue Laws.
A successful prosecution does not require the IRS to prove any actual benefit to the taxpayer, merely that the submissions were false and interfered with IRS business. Also, it would appear that the law requires that these actions be done for the purpose of causing a false action by the IRS. Merely submitting false documents to the IRS is not a crime without the required mental state.