Generally, this statute does not apply just to tax preparers but anyone who causes a false return to be filed. Accordingly, the CPA should be aware that filing a false return could lead to criminal prosecution of both the client and the CPA. This is the case where there is an audit of a false return, however, when faced with the possibility of prosecution the client will often point the finger at the preparer. It is important for the CPA to be mindful when preparing a return to withdraw from representation if there is evidence that a client is not being truthful such as where the client’s books have been purposefully manipulated to understate income or where extensive, unnecessary and unexplained use of cash has been made.
To successfully prosecute a CPA for aiding or assisting another to file a false return, the government must prove beyond a reasonable doubt that:
The defendant CPA aided, assisted, procured, counseled, or advised the preparation or presentation of a document
The document was false as to a material matter, and
The defendant CPA acted willfully
Charges under this provision have historically been brought against accountants, bookers, and entity employees who prepare or assist in the preparation of false tax returns. However, the statute is not limited solely to the direct preparation of a tax return but is much broader in that the statute reaches any intentional conduct that contributes to the presentation of a false document to the IRS. The statute has thus been applied to individuals who communicate false information to their return preparers, causing the tax preparer to file a false return. On the other hand, the statute specifically provides that the accused who signs and files the return or document need not know of or consent to the false statement for the aiding or assisting statute to be invoked. Similarly, 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.
The law of materiality has changed such that materiality is considered a matter of law. As such, it is to be decided by the court and not a factual issue to be decided by the jury. Regardless, it may still be difficult for the government to prove the document was false as to a material matter without a showing of some tax deficiency.
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. 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 (the appeals court for Southern California and thus controlling precedent) 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.