In an opinion the Houston Chronicle described as “stinging” and “dripping with sarcasm,” the United States Court of Appeals for the Fifth Circuit recently upheld a lower court’s ruling against former Texas Congressman Steve Stockman, who was sentenced to 10 years in federal prison and ordered to pay over $1 million in restitution following an April 2018 conviction on various counts of financial crimes. Stockman subsequently appealed, arguing that the jury in his case had received improper instructions and that he should have been acquitted (found “not guilty”).
The higher court flatly rejected Stockman’s argument, countering that, among other issues with the appeal, the jury instructions were appropriate for the charges. Though most of the allegations against Stockman involved non-tax matters, such as improper campaign contributions, wire fraud, and money laundering, one is pertinent to our readers: filing a false tax return (26 U.S. Code § 7206(1)), which was the final charge listed in the 28-count indictment against the former congressman.
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Stockman’s case began in March 2017, when the U.S. Department of Justice (DOJ) announced the filing of a 28-count indictment (charging document) alleging, among other serious crimes, offenses that included “mail and wire fraud, conspiracy, making false statements to the Federal Election Commission (FEC), making excessive campaign contributions and money laundering.” Having failed to report the proceeds from these crimes, Stockman was also charged with filing a false tax return for the 2013 tax year.
According to the indictment, Stockman filed his 2013 taxes in April of 2014, with assistance from a professional tax preparer. At that time, the indictment alleged, “Stockman did willfully make and subscribe, and cause to be made and subscribed, a 2013 U.S. joint Individual Income Tax Return, IRS Form 1040, which was verified by a written declaration that the return was made under penalties of perjury, and which he did not believe to be true and correct as to every material matter.”
This meets the legal definition of tax perjury, i.e. making and subscribing a false tax return (filing a false return), which is prosecuted under 26 U.S. Code § 7206(1). In plain language, a person commits this crime by knowingly filing a tax return that contains serious inaccuracies, such as false information about the filer’s taxable income, business expenses, or dependents. (Note: If the taxpayer never files to begin with, a different offense is charged: 26 U.S. Code § 7203, willful failure to file return, supply information, or pay tax.)
This case shares several similarities with another we recently covered, in which the U.S. Court of Appeals for the Eleventh Circuit sided with a district court against former Florida congresswoman Corrine Brown, who unsuccessfully appealed after being sentenced to five years in prison and ordered to repay over $600,000 to the IRS, the U.S. House of Representatives, and other parties. In that instance, the congresswoman argued that the district court’s removal of a juror who found her not guilty was improper. However, the appellate court supported the lower court’s decision to remove the juror from Brown’s trial, citing various religious statements that made the juror “not capable of rendering a verdict,” including the juror’s assertion that “My Father in Heaven” was his source of information. Additional reading on both cases is available at the Federal Tax Crimes blog.
At the Tax Law Office of David W. Klasing, we are award-winning criminal tax defense attorneys with more than 20 years of combined experience representing taxpayers charged with misdemeanor and felony offenses, including tax evasion (26 U.S. Code § 7201), tax obstruction (26 U.S. Code § 7212), willful failure to file returns (26 U.S. Code § 7203), and aiding or assisting a false return, i.e. return preparer fraud (26 U.S. Code § 7206(2)). In addition to criminal tax defense representation, our office provides skillful and strategic civil tax services, including tax planning and preparation, tax audit representation, and IRS audit appeals representation.
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Note: As long as a taxpayer that has willfully committed tax crimes 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 prosecution, the taxpayer can be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously receive a break on the civil penalties that would otherwise apply. It is imperative that you hire an experienced and reputable tax defense attorney to take you through the voluntary disclosure process. 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. See our Testimonials to see what our clients have to say about us!
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If you or your business needs assistance resolving a civil tax issue, negotiating with the IRS, or fighting criminal allegations, rely on the Tax Law Office of David W. Klasing for zealous 24-hour support. Contact us online today to arrange a reduced-rate tax consultation, or call the Tax Law Office of David W. Klasing at (800) 681-1295 for immediate assistance.
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