Without knowing more about your specific facts and circumstances, this question cannot be answered. However, IRC Section 7201 finds a person liable for tax evasion when he “willfully attempts in any manner to evade or defeat any tax.” An attempt to evade taxes exists when one (1) fails to file a tax return and (2) engages in an affirmative act to evade or defeat the assessment of a tax.
Furthermore, case law has held that a taxpayer makes such an affirmative action when he files a false W-4 and later fails to file his income tax return. See, e.g., United States v. Brooks, 174 F.3d 950, 954-56 (8th Cir. 1999). For example, if a taxpayer files a W-4 Form, falsely claiming that he is tax exempt in Year 1, and several years later he fails to file his income return, he commits tax evasion because he made an affirmative act to defeat a tax. See United States v. King, 126 F.3d 987, 991-94 (7th Cir. 1997), where the taxpayer committed Spies evasion. There, the taxpayer failed to file a return. Taken alone, that would not have risen to the level of a felony. However, he was found liable because his action was coupled with his prior acts of filing a W-4 where he falsely claimed to be exempt from income tax—actions which taken together, constituted an “affirmative act” to evade taxes. Interestingly, the old W-4s relied upon by the prosecution in establishing Spies evasion had already expired for the tax year at issue but they were still evidentially sufficient to find that the taxpayer had committed an affirmative act by their prior use.
Is it tax evasion if my W-4 contains false statements? was last modified: October 10th, 2016 by David Klasing