Preparing a false or fraudulent tax return on behalf of another

Completing tax forms is never fun, and many people would rather have someone else do it.  So it’s no surprise that there are lucrative careers available for accountants and tax attorneys who help individuals and businesses file their tax forms and pay their taxes.  These professionals also assist clients in maximizing their refunds and minimizing the amount of taxes owed to the government.  As long as an accountant or attorney doesn’t advise his client to break the law, there is absolutely nothing wrong with that.

But a tax preparer (tax preparer is the language that the IRS uses for anyone who prepares someone else’s return) who advises a client to break the law or to file a false statement is just as vulnerable to criminal prosecution as the taxpayer.  None of the criminal statutes in the Internal Revenue Code require that the taxpayer be the actor.  26 USC § 7201, clearly states that it covers “Any person who willfully attempts in any manner to evade or defeat any tax” (emphasis added), meaning that attempting to evade or defeat the tax of another is just as illegal as evading your own income taxes.  Likewise, laws against making false statements prohibit the conduct regardless of whether or not the statements were made on the individuals own tax filings.

In fact, these preparers can be even more vulnerable than the taxpayer if the taxpayer innocently believed his or her conduct was legal because of the advice of the preparer.  All of these statutes require that the conduct be willful.   Consequently, proving that a trained accountant or attorney willfully violated the law can be easier to prove than the willfulness of the taxpayer who will claim that he was merely following the advice of his attorney or accountant.  So even if the taxpayer is able to convince the Internal Revenue Service of an innocent mistake or lack of understanding of the law, the preparer can be left facing substantial criminal penalties for attempting to assist the taxpayer in evading his taxes.

But willfulness can also provide a defense to a tax preparer that is not available to the taxpayer.  If the taxpayer provides false information to the preparer or misleads him, the tax preparer cannot be prosecuted merely because the taxpayer used him as a vehicle to commit tax fraud.  A preparer can only be charged under these statutes if he knowingly attempts to evade taxes or mislead the IRS.

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