Cash Hoard Defense

Prosecutors often use the “cash method of proof” to show the existence of a tax deficiency. The cash method of proof basically involves determining a starting point “cash on hand” for one year, analyzing all receipts and expenditures for the following year, and then comparing this to an ending point “cash on hand.”

The “cash hoard defense” is used by tax crime attorneys when prosecutors charge that the defendant has been hoarding cash in order to evade payment of income taxes.

Defendants invariably claim that the prosecution overstates how much cash they accuse a defendant of having on hand, and therefore misrepresents the actual amount of tax owed. Since criminal tax prosecutions are about imposing criminal liability, rather than collecting unpaid taxes, the government is not required to prove the exact amount of tax that the defendant owes.

In applying the cash hoard defense, the defendant must show that the defendant’s income was not substantial enough to save and hoard any appreciable amount of cash over the time period alleged in the indictment.

Basically, the defense boils down to “I don’t make enough money to have hoarded that much cash.” The cash hoard defense is most effective when the defendant’s expenses are compared to their income and there is a a narrow margin of potential savings that is substantially lower than the allegedly hoarded cash.

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