Is my tax advisor liable for helping me commit tax evasion?

Yes. A tax practitioner (attorney, CPA, enrolled agent, accountant, bookkeeper, etc.) can be found guilty to the same extent as the taxpayer who actually owes the taxes. This is because the scope of tax evasion is defined broadly in Section 7201. Specifically, Section 7201 provides that tax evasion includes a person’s attempt “in any manner”—including helping another—“to evade or defeat any tax” or its payment (emphasis added). Thus, the statute allows the IRS to prosecute any person for the evasion of another’s tax liability. The defendant need not be the taxpayer in question.

To successfully prosecute a violation of the aiding or assisting another file a false tax return, the government must prove beyond a reasonable doubt that: (1) the defendant aided, assisted, procured, counseled, or advised the preparation or presentation of a document; (2) the document was false as to a material matter; and (3) the defendant acted willfully.

We consider these elements in turn.

1. Element One: Aiding, Assisting, etc. in the Filing of a False Tax Return

Charges under this provision are most often brought against, accountants, bookkeepers and others (including an entity’s employees) who prepare or assist in the preparation of tax returns. However, the statute (IRC 7201) is not limited solely to the direct preparation of a return, but is actually much broader: the statute reaches any intentional conduct that contributes to the presentation of a false document to the IRS.

Moreover, to be changed under this Code Section, one need only assist in the preparation of the actual false document; he or she need not even sign or file it. Accordingly, the statute has been applied to individuals who communicate false information to their return preparers, thereby causing the tax preparer to file a false return.

An aside: Does it make a difference whether the taxpayer himself or herself did not know the return is false? No—the statute specifically provides that the taxpayer himself or herself who signs and files the return or document need not know of, or consent to, the false statement for the aiding and abetting statue to be brought against the preparer. This prevents such “wink-wink, nod-nod” relationships between a client and a tax advisor. For example, a tax preparer who inflates deductions understates income, or claims false credits on a client’s return may be charged with aiding and abetting even if the taxpayer for whom the return is prepared is unaware of the falsity of the return he signed and filed.

Finally, a tax preparer who utilizes information provided by a client that the preparer knows to be false, in the preparation of a return can be criminally charged with assisting in the preparation of a false return.

2. Element Two: Materiality

The courts that have ruled on what constitutes a material matter have held materiality to be a matter of law to be decided by the court and not a factual issue to be decided by the jury.

3. Element Three: Willfulness

To establish willfulness in the delivery or disclosure of a false document, the government need only show that the accused knew that the law required a truthful document to be submitted and that he or she intentionally violated the duty to be truthful. Therefore, the crime of aiding or assisting in the preparation or presentation of a false return or document requires that the defendant’s actions be willful in that the defendant knew or believed that his or her actions were likely to lead to the filing of a false return. The Ninth Circuit has held that the government must prove not only that the accused knew that the conduct would result in a false return—but must additionally establish that tax fraud was in fact the objective of the allegedly criminal conduct.