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What is the so-called Spies evasion doctrine?

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    The “Spies evasion” doctrine is, essentially, one of the ways of committing tax evasion. It is a legal theory that finds a taxpayer criminally liable when he willfully (1) fails to file a tax return, and (2) his action is coupled with an “affirmative act of evasion,” like actively concealing or misleading the government. In Spies the Supreme Court identified at least seven examples of conduct that constituted affirmative acts of evasion. The Court stated: [We] “think [the] affirmative willful attempt may be inferred from conduct such as [1] keeping a double set of books, [2] making false entries of alterations, [3] or false invoices or documents, [4] destruction of books or records, [5] concealment of assets or covering up sources of income, [6] handling of one’s affairs to avoid making the records usual in transactions of the kind, and [7] any conduct, the likely effect of which would be to mislead or to conceal.” Spies v. United States , 317 U.S. 492, 499 (1943).

    What is an “affirmative act” for purposes of the Spies evasion doctrine? It may be any number of things, including but not limited to, making a false statement to the IRS, either oral or written. Importantly, the statement could be made before, after, or at the same time as filing the tax return. Thus, for example, a taxpayer makes an “affirmative” act of evasion after failing to file his income tax return when he lies to the IRS about how much income he earned. Accordingly, a taxpayer’s lying about earnings could also earn him jail time-and heavy penalties.

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