When most people think of criminal liability for making false statements to the federal government, they typically envision outright lies—an individual blatantly denying or fabricating facts in the face of official questioning. However, under 18 U.S.C. § 1001(a)(2), liability for “materially false, fictitious, or fraudulent statement[s] or representation[s]” can be broader than one might imagine. In some circumstances, a misleading but technically true statement may still invite scrutiny—and, in rare cases, exponentially worse, criminal tax prosecution—if it is designed to create a false impression that obstructs or hinders a federal audit or criminal tax investigation.
At the Tax Law Offices of David W. Klasing, our Dual-Licensed Criminal Tax Defense Attorneys & CPAs often encounter taxpayers who are unaware of the potential risks that seemingly “half-true” or misleading statements can pose in a federal tax or other financial investigation context. Given the heightened focus of the Department of Justice (DOJ) and the IRS’s Criminal Investigation Division on intentional misrepresentations—particularly in high-risk civil audits that may turn “eggshell” or “reverse eggshell”—understanding the nuanced scope of 18 U.S.C. § 1001(a)(2) is crucial to safeguarding your legal and financial well-being.
As such, taxpayers must avoid providing false statements to the IRS when questioned about potential tax noncompliance—lying to a federal agent is a felony. If you have failed to file a tax return for one or more years or have submitted tax returns containing knowingly false information, it is in your best interest to contact the Tax Law Offices of David W. Klasing immediately. Our experienced dual-licensed tax attorneys & CPAs can assess your exposure and guide you on achieving tax compliance while avoiding the severe consequences of a criminal tax prosecution. Contact us online to arrange a reduced-rate initial consultation, or call (888) 640-3408.
Thompson v. United States and the Nature of “Falsehoods”
In Thompson v. United States (No. 23-1095), decided on March 21, 2025, the Supreme Court unanimously held that 18 U.S.C. § 1014—which makes it a crime to “knowingly mak[e] any false statement” intended to influence the FDIC regarding loans—does not cover statements that, although misleading, are literally true. Although the case concerned § 1014 rather than § 1001(a)(2), its reasoning raises essential questions about where the boundary lies between “literal truth” and “falsehood” in federal criminal law.
The Facts in Thompson
Patrick Thompson obtained three separate loans from Washington Federal Bank for Savings, ultimately owing a total of $219,000 in principal. When the bank failed, the FDIC took over its accounts and, through a loan servicer, invoiced Thompson for $269,120.58, interest included. During a recorded call, Thompson repeatedly expressed confusion and maintained that he believed he had borrowed only $110,000. Later, he settled for exactly $219,000—the full principal balance—saving himself $50,000 in unpaid interest.
Federal prosecutors indicted Thompson on two counts of violating § 1014, arguing that by emphasizing the $110,000 figure and omitting his other loans, he knowingly made misleading statements designed to influence the FDIC into accepting less than was owed. A jury convicted him, and both the district court and the Seventh Circuit found that “misleading representations” could violate § 1014.
In a brief and forceful reversal, Chief Justice Roberts explained that “false and misleading are two different things,” clarifying that a statement can be misleading while still being true. Because “knowingly mak[ing] any false statement” under § 1014 does not include technically accurate statements presented in a deceptive manner, Thompson’s conviction could not be sustained. Chief Justice Roberts illustrated this point by imagining a doctor who says, “I’ve done a hundred of these surgeries,” without disclosing that 99 patients died—a statement that is true yet profoundly misleading. As Roberts noted, if a statement is literally true, it cannot be deemed “false.”
Does Thompson Apply to 18 U.S.C. § 1001(a)(2)?
Thompson’s holding that “false” does not automatically include “true but misleading” statements might, at first blush, seem to insulate certain half-truths under § 1001. Yet there are significant textual differences:
- 18 U.S.C. § 1014: “knowingly mak[ing] any false statement or report … for the purpose of influencing … the [FDIC].”
- 18 U.S.C. § 1001(a)(2): “knowingly and willfully … [mak]ing any materially false, fictitious, or fraudulent statement or representation.”
Unlike § 1014, § 1001(a)(2) expressly addresses “fraudulent” and “fictitious” statements, suggesting broader coverage. Indeed, many prosecutors and courts have reasoned that a carefully orchestrated “half-truth” or contextually misleading disclosure could be charged as “fraudulent” if it is intended to create a materially false impression.
Nevertheless, Thompson may further embolden defendants to argue the so-called “literal truth” defense—especially in non-adversarial settings where the speaker exerts significant control over the narrative. Whether courts will extend Thompson’s reading of “false” to narrowly construe the term “fraudulent” in § 1001(a)(2) remains to be seen. But the tension is real.
Understanding 18 U.S.C. § 1001(a)(2)
18 U.S.C. § 1001(a)(2) makes it a crime to “knowingly and willfully” make any “materially false, fictitious, or fraudulent statement” in any matter within the jurisdiction of the federal government. The key elements are:
Falsity or Fraudulence
The statement must be demonstrably untrue or intentionally misleading in a manner that conceals or distorts a material fact.
Knowledge and Willfulness
The individual must have known the statement was deceptive and intended to mislead federal authorities.
Materiality
The deception must be capable of influencing the government’s decisions or actions.
Compared to the narrower language in § 1014, § 1001(a)(2) explicitly covers fraudulent statements, which often include cunning arrangements of technically true facts designed to deceive. Courts have historically wrestled with whether literally accurate but misleading statements can trigger liability under § 1001, often looking to Bronston v. United States, 409 U.S. 352 (1973), for guidance.
The Bronston Literal Truth Defense and Its Limits
In Bronston (a perjury case), the Supreme Court held that “literally true but misleading” answers under oath do not constitute perjury because cross-examination in an adversarial setting should expose half-truths. However, in footnote 4, the Court acknowledged that “criminally fraudulent statements”—even if composed of literally true words—could be punished outside the narrow perjury statute, particularly where the speaker selects and arranges statements to create a false impression.
DOJ Criminal Tax Manual on Literal Truth
The Department of Justice’s Criminal Tax Manual, Section 24.04, clarifies that the Bronston-style defense still applies narrowly under § 1001(a)(2), citing cases like United States v. Sarwari, 669 F.3d 401, 406 (4th Cir. 2012). Put simply, if statements are “undisputedly literally true,” there is typically no § 1001 violation. Yet selective omissions or manipulations of context—especially in non-adversarial settings—can be prosecuted if the government proves a “scheme” to defraud.
Historically, some Fifth Circuit decisions (e.g., Peterson v. United States, 344 F.2d 419 (5th Cir. 1965)) suggested that “literally true but misleading” could violate § 1001. Later, the Fifth Circuit curtailed that expansive view in United States v. Moses, 94 F.3d 182, 188-89 (5th Cir. 1996), holding that when “the alleged statement forming the basis of a violation … is true on its face,” § 1001 generally does not apply. Overall, the modern trend is that Bronston and the “literal truth” defense carry considerable weight under § 1001, although it remains a highly fact-specific analysis.
Key Takeaways from Thompson for False Statements Under 18 U.S.C. § 1001(a)(2)
Textual Nuances Matter
Thompson turned on § 1014’s narrower focus on “false statements,” whereas § 1001(a)(2) criminalizes statements that are “materially false, fictitious, or fraudulent.” The addition of “fraudulent” is potentially pivotal.
Literal Truth Can Still Be a Defense—But it’s Narrow
While Thompson reaffirms that misleading words can be “true,” it does not necessarily shield a defendant who consciously arranges facts to create a deceptive impression in contexts where “fraudulence” is explicitly covered.
Context is Critical
In an adversarial setting (like a live court proceeding under oath), cross-examination might catch half-truths—thereby sparing the speaker from perjury prosecution if the statements are literally true. Outside that adversarial structure, especially in non-testimonial exchanges with IRS agents or federal investigators, half-truths or selective omissions can more readily be viewed as intentional efforts to deceive.
Potential Penalties Under 18 U.S.C. § 1001(a)(2)
A conviction for making false or fraudulent statements under § 1001(a)(2) can lead to:
- Up to Five Years in Federal Prison (or eight if connected to terrorism investigations)
- Substantial Fines: Often up to $250,000 for individuals (with possible enhancements if the offense causes major financial harm).
- Collateral Consequences: Professional license suspensions, prohibitions on serving as a corporate officer, immigration repercussions for non-U.S. citizens, and grave reputational damage.
Penalties can be further enhanced if prosecutors add other charges—such as Tax Evasion or Obstruction of Justice—to the indictment.
In criminal tax investigations or high-risk civil audits, statements to IRS revenue agents or investigators come under intense scrutiny. For example, if a taxpayer provides bank statements that are accurate on their face but omits offshore accounts or other critical data—leading the agent to an incomplete conclusion—prosecutors may still charge that such selective disclosure constitutes a “fraudulent statement” if the intent was to hide a taxable event or other wrongdoing.
Because of this heightened risk, we strongly advise taxpayers not to speak directly with the IRS or produce documents without first consulting experienced dual-licensed criminal tax defense counsel. Even seemingly harmless “half-answers” may be construed as orchestrating a false impression.
Contact the Tax Law Offices of David W. Klasing Today
At the Tax Law Offices of David W. Klasing, our unique blend of legal and accounting expertise equips us to mount a robust, strategic defense for individuals and businesses facing high-stakes civil audits, criminal tax investigations, or parallel federal inquiries. We provide strategic guidance during audits and investigations—overseeing communications with federal authorities to minimize the risk that any statement or disclosure might later be characterized as “false” or “fraudulent” under § 1001(a)(2)—while our status as licensed attorneys ensures that our interactions benefit from powerful attorney-client privilege and the work-product doctrine. In the event a civil audit escalates into a criminal tax referral, we stand ready to defend against potential false-statement charges, criminal tax allegations, or both. If you suspect you are under federal scrutiny or have made statements that might be deemed misleading, do not attempt to fix the situation alone; seek experienced legal counsel immediately.
If you fear your communications with the IRS, FBI, or other federal agencies might expose you to liability under 18 U.S.C. § 1001(a)(2)—or if you are simply unsure how to respond lawfully to government inquiries—contact our dual-licensed criminal tax defense attorneys & CPAs today. Call (800) 681-1295, or click HERE to schedule a reduced-rate initial consultation. We have decades of proven experience guiding taxpayers through federal investigations, mitigating civil and criminal tax exposure, and protecting freedom, finances, and professional reputations. Let us help safeguard what matters most to you.
