What is “Willful Blindness” in Relation to Tax Crimes?

Willful blindness (also known as conscious avoidance or deliberate ignorance) is a judicial doctrine that makes a criminal conviction on a tax issue more likely by imputing knowledge onto a defendant. The doctrine broadens the statutory definition of a guilty party to include someone who is found to have deliberately avoided the discovery of incriminating information. Willful blindness is a widely observed judicial doctrine. It is specifically employed in criminal tax cases by the prosecution where a defendant may not have had actual knowledge of the tax offense in question but may “ought to have” known or consciously avoided finding out. Willful blindness can be a difficult hurdle to navigate in a court of law. Those who are facing allegations of willful blindness in a tax case should immediately consult one of our competent dually licensed Tax Attorneys and CPAs about their options. Call the Tax Law Offices of David W. Klasing today at (800) 681-1295 or schedule a reduced rate consultation online here.

The “Willful Blindness Doctrine” in Tax Cases

Once a narrowly construed doctrine, the willful blindness doctrine was established primarily by United States v. Jewell (1976), a case tried in front of the 9th U.S. Circuit Court of Appeals. In Jewell, the Court of Appeals determined that the trial court was correct to instruct the jurors that they could find the defendant guilty of possession when he voluntarily drove a car filled with marijuana across the U.S. border, despite there being no evidence of the defendant having any actual knowledge of the cargo he was transporting.

The application of the loosely defined doctrine proliferated rapidly into other areas of the law as a favorite tool of prosecutors to secure convictions in cases where proof of actual knowledge was difficult to obtain. This is certainly the case in white-collar and tax cases, where the type of knowledge that the prosecution must prove is often complex. The doctrine was more eloquently defined at the Supreme Court level in the 1991 case Cheek v. United States, where “willfully” was defined as a “specific intent to violate a known legal duty.” Cheek also provides the primary defense against a violation of the Internal Revenue Code (IRC), which you can read more about below. For questions about the willful blindness doctrine and how it may apply to you, please reach out to one of our dually licensed Tax Attorneys and CPAs today.

Examples of Willful Blindness in the Context of Tax Crimes

While negligent, reckless, or inadvertent actions do not amount to a criminal tax charge, there are several examples of instances where a prosecuting attorney may attempt to employ willful blindness in order to secure a conviction. These examples include when a defendant fails to:

• Inspect and report the entirety of profits from offshore entities
• Inquire about potentially fraudulent filings for fear of confirmation
• Refrains from examining a tax return despite suspicion of falsely inflated losses

If you believe that one of the above examples may apply to you, please contact a competent tax attorney.

Willful Blindness Jury Instruction in a Tax Crime Case

For the jury to consider willful blindness as a means for imputing knowledge to a defendant, the court will have to issue an instruction to the jury. The content of the instruction is predetermined by the conscious avoidance doctrine of the Second Circuit. To find that the defendant was willfully blind, the jury will have to determine beyond a reasonable doubt that the defendant’s actions were deliberate to avoid specific knowledge, either of the law or of their own financials. The jury must consider two factors:

1. Whether the defendant suspected that there was information relevant to their tax liability that they had not discovered
2. Whether the defendant acted purposefully to avoid discovering said information

Courts vary on which guidance they abide by on proper application of willful blindness jury instruction. Some allow the government to use the willful blindness instruction to establish willfulness. Others only allow the willful blindness instruction where the evidence could establish the defendant’s actual knowledge definitively. For more information on whether your case is being heard appropriately, reach out to one of our dually licensed Tax Attorneys and CPAs for a complete, diligent assessment.

Where the willful blindness jury instruction is given and a jury finds the defendant guilty, the process of appealing this verdict can be very difficult. Therefore, it is critical to enlist the help of a competent, experienced California Tax Law Attorney and CPA early on to make sure you are properly represented at every stage of your case.

Defenses to Willful Blindness in Tax Crimes

When faced with criminal charges under the Internal Revenue Code, a defendant may choose to employ a Cheek defense, created by the aforementioned case in front of the Supreme Court. In Cheek, the Supreme Court determined that a defendant could combat a criminal tax charge with evidence of their own lack of willfulness. Generally, a defendant using the Cheek defense must demonstrate their own good-faith belief that they were acting in accordance with the IRC. The availability of the Cheek defense depends on the circumstances by which a willful blindness jury instruction is offered or not.

Willful Blindness and Collective Knowledge

The willful blindness doctrine may also be utilized to implicate a corporation generally, based on the collective knowledge of multiple agents of the corporation. The corporation could be criminally liable if the organizational structure of the corporation is found to have been deliberately contrived to obfuscate information about tax liability.

Accused of Willful Blindness? Call Our Tax Attorneys/CPAs Today

If you are facing charges from the IRS, or even if you are concerned about a potential case against you, it is important that you contact the dually licensed Tax Attorneys and CPAs at The Tax Law Offices of David W. Klasing. We have decades of experience dealing with the IRS on behalf of individuals and corporations, and we will work tirelessly on your behalf. Call our offices today at (800) 681-1295 or schedule a reduced rate consultation online here

Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed domestic or foreign tax and information returns coupled with affirmative evasion of U.S. income tax on domestic or offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosurebefore the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. 

It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!

We Are Here for You

Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.

In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.

Our office technology allows clients to meet virtually via GoToMeeting. With end-to-end encryption, strong passwords, and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client.

Questions and Answers on Unfiled Back Taxes

• What are the common issues that non-filers face?
• Risk of audit after filing delinquent prior year returns
• Can substitute return deficiency be discharge in bankruptcy
• Substitute return modified by subsequent delinquent return?
• Do I file every delinquent return for each missing year?
• How does the IRS identify non-filers?
• How important is it to the government that I didn’t file?
• Delinquent tax return criminal prosecution likelihood
• Will I get a refund on a delinquent tax year?
• What happens after enforcement action has begun?
• Should I use an attorney, EA or a CPA to represent me when I re-enter the tax system?
• Why do people drop out of the tax system?
• What happens after the IRS identifies me as a non-filer?
• IRS has not previously filed substitute returns
• Tax attorney representation when re-entering tax system
• How will the government force me to file returns?
• What penalties can IRS impose on delinquent tax filings?
• What should I do to re-enter the tax system?
• Can Law Office of David W. Klasing help me re-enter system?
• Will tax collection taken by authorities affect my credit
• I concealed bank accounts from the government
• Forgetting or failing to file tax return

Questions and Answers for Criminal Tax Representation

• When tax defense counsel parallels tax crime investigation
• Guilty of tax obstruction by backdating documents?
• To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
• Help! The Document I Gave the IRS Had False Information
• Tax crime aiding or assisting false return IRC §7206(2)
• What is the crime known as tax obstruction § 7212?
• What is the difference between tax perjury and tax evasion?
• What is the tax crime commonly known as tax perjury?
• What is a Klein Conspiracy?
• Increased possibility of civil action in IRS investigation
• Am I Guilty of Tax Evasion if the Law is Vague?
• What happens if the IRS thinks I committed tax crimes?
• What are ways to defend against a tax evasion charge?
• Difference between criminal tax evasion and civil tax fraud
• What accounting method does the IRS use for tax fraud
• Can I Change Accounting Method to the Accrual Method
• What is the willfulness requirement for tax evasion?
• I didn’t know I committed tax fraud. Can I get off?
• Concealed assets from IRS. Can I avoid tax evasion charges
• How government proves I willfully engaged in tax evasion
• What is the venue or court where a tax crime case is heard?
• Must the IRS prove tax crimes beyond a reasonable doubt?
• Is it a crime to make false statements to the IRS?
• Will the IRS overlook my tax evasion if it’s minor?
• Failed to tell IRS about my nominee account
• Audit risk with cash based business transactions
• How to defend a client charged with tax evasion
• Is it tax evasion if I didn’t file income tax return?
• Government says I attempted to evade my taxes. Now what?
• I forgot to pay my taxes or estimated tax. Is this a crime?
• Government proof I “willfully” failed to pay taxes
• 5 Ways to Respond to Tax Evasion Charges
• Being audited after using a tax professional
• Rules for what an IRS agent can do while investigating me
• How tax preparers, attorneys and accountants are punished
• How the IRS selects tax crime lead for investigation
• How does the IRS prosecute suspected tax crimes?
• Does IRS reward informant leads for suspected tax crimes?
• How the government proves deficiency in a tax evasion case
• Do prior tax crimes factor into new IRS tax convictions?
• Requesting conference before investigative report is done
• Requesting conference after IRS Special Agent Report
• What are my rights during an IRS criminal investigation?
• Avoid prosecution for tax crime with voluntary disclosure?
• Defense tactics that make it hard for to prove willfulness
• How a tax attorney can stop your criminal tax case?
• What can you generally tell me about tax crimes?
• Continuing filing requirement with investigation pending
• Federal criminal code crimes that apply to tax issues
• Penalty for making, subscribing, and filing a false return
• CID special agent’s report for criminal prosecution
• What is the discovery process in a criminal tax case?
• What the IRS includes in indictment for tax case
• What is the hardest element of a tax crime to prove?
• IRS methods of gathering evidence to prove tax crime
• What does a grand jury do in IRS tax crime prosecution?
• Failure to keep records or supply information
• Failure to make a return, supply information, or pay tax
• What is attempting to evade payment of taxes?
• What is income tax evasion and how is it punished?
• What is attempted income tax evasion?
• What is the crime of failure to pay tax? What is punishment
• Crime of making or subscribing false return or document
• Criminal Investigation Division investigation tactics
• Tax crimes related to employment tax forms and trust funds
• Tactics to defend or mitigate IRS criminal tax charges
• How the IRS generates leads about suspected tax crimes
• What is the crime ”evasion of assessment” of tax?
• Specific examples of “attempting” to evade tax assessment
• What is the so-called Spies evasion doctrine?
• Does overstating deductions constitute tax evasion?
• Is it tax evasion if my W-4 contains false statements?
• IRC §7201 attempt to evade vs. common-law crime of attempt
• What are the penalties for Spies tax evasion?
• How government proves a taxpayer attempted tax fraud
• What is a tax that was “due and owing.”
• What is evasion of assessment for tax liability?
• Is evasion of assessment different from evasion of payment
• Does the IRS have a dollar threshold for tax fraud?
• What is the IRS burden of proof for tax fraud convictions?
• Are Tax Laws Constitutional?
• What is the source of law that defines tax evasion?
• Does section 7201 create two distinct criminal offenses?
• Does tax evasion definition include partnership LLC
• What if I helped someone else evade taxes?
• Is it illegal to overstate deductions on my tax return?
• Is it illegal to conceal bank accounts from the IRS?
• Do later losses justify prior deductions?
• Common reasons the IRS and DOJ start investigations
• What is the Mens Rea component of tax crimes?
• What is a proffer agreement and what are the risks?
• Why to have an attorney to review a proffer agreement
• Why enter into a proffer agreement?
• Limited use immunity from proffer agreements
• Difference between civil and criminal fraud allegations