A federal district court in Illinois recently denied multiple motions in a tax crime case seeking acquittal and a new trial. The motions stemmed from the defendant providing information to investigators who conducted an early morning interview, purportedly on an investigation into the defendant’s bank.
The motions also involved the court’s decision to not provide a good faith jury instruction prior to conviction, as the defendant had requested pre-trial. However, the court was not moved by the defendant’s arguments, and denied the motions.
If you find yourself facing criminal tax prosecution, you will need capable legal representation to protect your very liberty and net worth. To learn more about the services that our dual licensed Criminal Tax Defense Lawyers & CPAs offer, call the Tax Law Offices of David W. Klasing at (800) 681-1295 or book online here to schedule your first reduced rate case assessment today.
Illinois Man Convicted of Making False Statements and Filing False Tax Returns
This past month, Judge Franklin U. Valderrama of the United States District Court for the Northern District of Illinois, Eastern Division, issued an opinion in the case of Patrick D. Thompson, denying all motions to acquit and, in the alternative, receive a new trial.
Thompson was indicted and convicted of two counts of making a false statement with the intent to influence the Federal Deposit Insurance Corporation (FDIC) and a mortgage lending business, as well as five counts of filing a false tax return.
Court Finds that IRS Agents Were Assisting Grand Jury, not Investigating on Early Morning Visit
At 8:15am on December 3, 2018, special agents with the FDIC and the IRS’ criminal investigations division (IRS-CI) showed up at Thompson’s personal residence to interview him. At trial, one of the agents testified that, during the interview, the parties discussed Thompson’s loan at Washington Federal. Thompson provide information about the loan when questioned.
According to the transcript of agent testimony, Thompson was told that the agents were investigating Washington Federal but was never told that he or his taxes or filings were the subject of any investigation. However, toward the end of the interview, agents served Thompson with a grand jury subpoena that called for Thompson to appear and provide records, including federal tax records, materials used to prepare federal tax returns, and loan and credit applications. The subpoena also called for Thompson to produce records related to the purchase of his primary residence, a rental residence, and a third property owned by Thompson located in Michigan.
These tactics are commonplace in IRS criminal tax investigations. Even though federal agents must provide the subject of the interview with warnings about their right to decline the interview without legal representation present, the requirements for these warnings are allowed to be modified from the Miranda requirements when someone is being arrested. This has the effect of making many interviewees less concerned and more open to answering questions without their attorney. Many targets are told: “This is probably just a misunderstanding” and are encouraged to try and explain away any potential “misunderstanding” that the government has with them.
In this case, the court determined that the actions of the federal investigators were appropriate, and that the information that they gained from the interview was admissible. This is why it is so important to never speak freely agents with IRS criminal investigation division agents without an attorney present. If you are approached by federal agents with the IRS or another federal agency that are accompanied by IRS agents with questions, be sure to contact your Criminal Tax Defense Attorney as soon as possible.
Court Denies Good Faith Jury Instruction for Tax Perjury
Prior to trial, Thompson requested that the Court give a good faith instruction to the jury. The good faith instruction comes from the seminal tax crimes case of Cheek vs. United States, where the Supreme Court found that, in general, a defendant’s “good faith belief” that they were not in violation of federal tax code would contradict the “willfulness” element of many tax violations. Citing Cheek, the IRS Tax Crimes Handbook states, “A defendant’s good faith belief that he [or she] is not violating the tax laws, no matter how objectively unreasonable that belief may be, is a defense in a tax prosecution.”
The District Court chose not to provide a good faith instruction to the jury, determining that a good faith jury instruction was neither necessary nor warranted by Cheek in Thompson’s case. The Court instructed the jury on the definition of willfulness under the statute. Specifically, the Court instructed the jury that, to reach a conviction, the jury must find that Thompson “knew he had a legal duty to file a truthful tax return, but when he signed the return, he did not believe it was truthful as to a material matter.”
Thompson filed a motion for a new trial, arguing that the Court erred in failing to provide the good faith jury instruction, but Thompson’s motion was rejected. The Court relied on precedent from the Seventh Circuit that found that a good faith instruction is not required where the jury is instructed on willfulness and evidence did not support the instruction. As the Court saw it, no evidence was presented at trial that Thompson did not know the law or that he misunderstood it.
Without a jury instruction that explicitly touches on the good faith defense to certain tax violations, it is up to the defendant and their legal representation to make it clear to the jury at trial that they did not believe they were doing anything wrong. In the face of this uphill battle, it is important to have experienced and resourceful Criminal Tax Defense Attorneys on your side to defend your case effectively.
The Tax Law Offices of David W. Klasing Are Here to Help You
To schedule your first-time case evaluation for a reduced rate, reach out to the experienced dual licensed Criminal Tax Defense Attorneys & CPAs at the Tax Law Offices of David W. Klasing at (800) 681-1295 or book online here to schedule your first reduced rate case assessment today.
Concerned About Criminal Tax Charges? Call the Tax Law Offices of David W. Klasing
If you are dealing with serious tax matters, you deserve tax assistance that you can rely on. Schedule your first reduced-rate case evaluation with our Criminal Tax Defense Lawyers by calling (800) 681-1295 today or schedule online here.
If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
More Commonly Asked Tax Audit Questions
- How should Tax Audits be Handled by Criminal Tax Counsel?
- How to survive audit when I cheated on return being audited
- What is an eggshell audit?
- What is a reverse egg shell audit?
- Why is a reverse egg shell audit dangerous for a taxpayer?
- Warning signs of a criminal referral from an IRS audit
- Effective tax defense counsels goals in an egg shell audit?
- How are the 4 goals and outcomes 1 and 2 best obtained?
- What are the possible outcomes of an egg shell audit?
- Is it my right to know why I was selected for examination?
- What can I do to prepare for an audit?
- What is an IRS civil examination?
- How IRS decides which tax returns are audited
- What are my appeal options if I disagree with IRS?
- What are my basic taxpayer rights if the IRS audits me?
- Options if I am unable to pay at the conclusion of audit
- What a 30 or 90-Day Letter from the IRS means
- What is involved with appealing disagreements?
- Rights to disagree with IRS tax auditor’s findings
- Can I stop the IRS from repeatedly auditing me?
- Can I have the examination transferred to another area?
- Can I record my IRS interview and is it a good idea?
- How many years of returns are at risk during an audit?
- Common reasons for the IRS to conduct a tax audit
- How to avoid negative consequences from an IRS interview
- Have to agree to interview by taxing authority directly?
- Are all audits the same?
- What should I do if the IRS is investigating me?
- What if I don’t respond to a taxing authority audit notice
- Your rights during an IRS tax audit
- Risks of attending an IRS audit without a tax lawyer
- Most common audit technique used by taxing authorities
- Don’t go into an IRS audit without representation
- Why hire an attorney to represent me in an audit?
- Why hire David W. Klasing to represent me in an audit
Questions and Answers for Criminal Tax Representation
- When tax defense counsel parallels tax crime investigation
- Guilty of tax obstruction by backdating documents?
- To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
- Help! The Document I Gave the IRS Had False Information
- Tax crime aiding or assisting false return IRC §7206(2)
- What is the crime known as tax obstruction § 7212?
- What is the difference between tax perjury and tax evasion?
- What is the tax crime commonly known as tax perjury?
- What is a Klein Conspiracy?
- Increased possibility of civil action in IRS investigation
- Am I Guilty of Tax Evasion if the Law is Vague?
- What happens if the IRS thinks I committed tax crimes?
- What are ways to defend against a tax evasion charge?
- Difference between criminal tax evasion and civil tax fraud
- What accounting method does the IRS use for tax fraud
- Can I Change Accounting Method to the Accrual Method
- What is the willfulness requirement for tax evasion?
- I didn’t know I committed tax fraud. Can I get off?
- Concealed assets from IRS. Can I avoid tax evasion charges
- How government proves I willfully engaged in tax evasion
- What is the venue or court where a tax crime case is heard?
- Must the IRS prove tax crimes beyond a reasonable doubt?
- Is it a crime to make false statements to the IRS?
- Will the IRS overlook my tax evasion if it’s minor?
- Failed to tell IRS about my nominee account
- Audit risk with cash based business transactions
- How to defend a client charged with tax evasion
- Is it tax evasion if I didn’t file income tax return?
- Government says I attempted to evade my taxes. Now what?
- I forgot to pay my taxes or estimated tax. Is this a crime?
- Government proof I “willfully” failed to pay taxes
- 5 Ways to Respond to Tax Evasion Charges
- Being audited after using a tax professional
- Rules for what an IRS agent can do while investigating me
- How tax preparers, attorneys and accountants are punished
- How the IRS selects tax crime lead for investigation
- How does the IRS prosecute suspected tax crimes?
- Does IRS reward informant leads for suspected tax crimes?
- How the government proves deficiency in a tax evasion case
- Do prior tax crimes factor into new IRS tax convictions?
- Requesting conference before investigative report is done
- Requesting conference after IRS Special Agent Report
- What are my rights during an IRS criminal investigation?
- Avoid prosecution for tax crime with voluntary disclosure?
- Defense tactics that make it hard for to prove willfulness
- How a tax attorney can stop your criminal tax case?
- What can you generally tell me about tax crimes?
- Continuing filing requirement with investigation pending
- Federal criminal code crimes that apply to tax issues
- Penalty for making, subscribing, and filing a false return
- CID special agent’s report for criminal prosecution
- What is the discovery process in a criminal tax case?
- What the IRS includes in indictment for tax case
- What is the hardest element of a tax crime to prove?
- IRS methods of gathering evidence to prove tax crime
- What does a grand jury do in IRS tax crime prosecution?
- Failure to keep records or supply information
- Failure to make a return, supply information, or pay tax
- What is attempting to evade payment of taxes?
- What is income tax evasion and how is it punished?
- What is attempted income tax evasion?
- What is the crime of failure to pay tax? What is punishment
- Crime of making or subscribing false return or document
- Criminal Investigation Division investigation tactics
- Tax crimes related to employment tax forms and trust funds
- Tactics to defend or mitigate IRS criminal tax charges
- How the IRS generates leads about suspected tax crimes
- What is the crime ”evasion of assessment” of tax?
- Specific examples of “attempting” to evade tax assessment
- What is the so-called Spies evasion doctrine?
- Does overstating deductions constitute tax evasion?
- Is it tax evasion if my W-4 contains false statements?
- IRC §7201 attempt to evade vs. common-law crime of attempt
- What are the penalties for Spies tax evasion?
- How government proves a taxpayer attempted tax fraud
- What is a tax that was “due and owing.”
- What is evasion of assessment for tax liability?
- Is evasion of assessment different from evasion of payment
- Does the IRS have a dollar threshold for tax fraud?
- What is the IRS burden of proof for tax fraud convictions?
- Are Tax Laws Constitutional?
- What is the source of law that defines tax evasion?
- Does section 7201 create two distinct criminal offenses?
- Does tax evasion definition include partnership LLC
- What if I helped someone else evade taxes?
- Is it illegal to overstate deductions on my tax return?
- Is it illegal to conceal bank accounts from the IRS?
- Do later losses justify prior deductions?
- Common reasons the IRS and DOJ start investigations
- What is the Mens Rea component of tax crimes?
- What is a proffer agreement and what are the risks?
- Why to have an attorney to review a proffer agreement
- Why enter into a proffer agreement?
- Limited use immunity from proffer agreements
- Difference between civil and criminal fraud allegations
Questions and Answers on Unfiled Back Taxes
- What are the common issues that non-filers face?
- Risk of audit after filing delinquent prior year returns
- Can substitute return deficiency be discharge in bankruptcy
- Substitute return modified by subsequent delinquent return?
- Do I file every delinquent return for each missing year?
- How does the IRS identify non-filers?
- How important is it to the government that I didn’t file?
- Delinquent tax return criminal prosecution likelihood
- Will I get a refund on a delinquent tax year?
- What happens after enforcement action has begun?
- Should I use an attorney, EA or a CPA to represent me when I re-enter the tax system?
- Why do people drop out of the tax system?
- What happens after the IRS identifies me as a non-filer?
- IRS has not previously filed substitute returns
- Tax attorney representation when re-entering tax system
- How will the government force me to file returns?
- What penalties can IRS impose on delinquent tax filings?
- What should I do to re-enter the tax system?
- Can Law Office of David W. Klasing help me re-enter system?
- Will tax collection taken by authorities affect my credit
- I concealed bank accounts from the government
- Forgetting or failing to file tax return
