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Crime of making or subscribing false return or document

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Crime of making or subscribing false return or document

Any person who willfully makes and or subscribes any return, statement, or other document containing a declaration that it is made under the penalties of perjury and who does not believe the document to be true and correct as to every material matter commits a felony punishable by imprisonment for up to three years and/or a fine of up to $100,000 ($500,000 for corporations).

The forgoing provision dictating that it is a felony to willfully make and or subscribe a false return or other document is one of the most powerful and frequently used prosecutorial weapons available to the government under the Tax Code. It is frequently charged as the primary or alternative charge in the totality of criminal tax cases. When the government brings a charge under this provision of the law, it does not have to prove that the taxpayer was attempting to evade taxes or even that the taxpayer had a tax liability in the first place. It only has to show that the taxpayer knowingly made a significant false statement on a return or other document covered by this extremely far reaching and broadly drafted statute. For example, a charge may be brought against a taxpayer that has correctly reported income from an illegal source but falsely described the source such as would occur when a drug dealer reports his illegal income as pharmaceutical sales. Another example would be where a taxpayer who had never performed any services for her father’s corporation filed a false return reporting the payments received from those corporations as wages.

ELEMENTS OF THE OFFENSE

To prevail in the prosecution of a charge of the willful making and subscription of a false return or other document, the government must prove beyond a reasonable doubt the following elements:

  • The defendant made a return, statement, or other document
  • The document was subscribed (signed) under the penalties of perjury
  • It is false as to a material matter(s), and
  • The defendant acted willfully

MAKING OF A RETURN, STATEMENT, OR OTHER DOCUMENT

The crime of willfully making a false return, statement or other document is most often charged in relation to the making, subscription and filing of tax returns. This statue applies not only to income tax returns but also to other returns, such as employment, gift, corporate and partnership returns. A return for purposes of this provision includes both the tax forms, the accompanying supporting schedules and any other documents attached to the form and or documents that have been incorporated by reference to the return For instance, Courts have held that a personal return includes the accompanying schedules, a forged letter attached to a return concerning a charitable contribution, and amended tax returns. These provisions are equally applicable to electronic returns.

The false document charge has to date been applied to a variety of documents including those involved with Settlement Negotiations, Offers in Compromises and documents submitted to obtain an Automatic Extension of Time to File a Corporate Tax Return.

The statute of limitations for making and subscribing a false return or other document is six years and runs from the later of the date the return is filed or the original or extended due date (where applicable).

Taxpayers can be prosecuted when they file a false Form 1040, or for aiding or assisting another to file a false form, such as where evidence exists to indicate that the taxpayer’s intent was to cause a false tax return to be filed by another, such as where the taxpayer encourage his subcontractors not to claim income that the taxpayer intentionally failed to source to them on Form 1099.

To successfully prosecute a violation of the aiding or assisting provisions for aiding or assisting another to file a false form, the government must prove beyond a reasonable doubt that;

  • The defendant aided, assisted, procured, counseled, or advised the preparation or presentation of a document
  • The document was false as to a material matter
  • The defendant acted willfully.