March 1st, 2022
Posted By
Hope C. Lefeber
Tax violations - Failure to File a Return

charged with a crime for failing to pay, failing to file a tax return, failing to supply tax information, or failing to keep tax records. Violations of I.R.C. §7203 are misdemeanors punishable by a fine of up to $25,000, imprisonment for up to 1 year, or both. In the case of a willful violation of section60501 (relating to the payment of more than $10,000 in cash), it is a felony, punishable by up to 5 years imprisonment.

The statute identifies four separate offenses:

  • Failure to pay an estimated tax
  • Failure to file a tax return
  • Failure to keep tax records; and
  • Failure to supply information.

Violations of I.R.C. §7203 are most often charged when a person fails to comply with an affirmative requirement of the Internal Revenue Code or regulations, but did not commit any act or omission as part of an attempt to evade taxes or obstruct the I.R.S. The most common charge under I.R.C. § 7203 is for failure to pay a tax or an estimated tax or for failure to file a return. Although less common, a person can be charged for failure to keep records or failure to supply information.

Failure to Pay a Tax or File a Tax Return

To prove someone guilty under I.R.C. §7203, the government must prove the following, beyond a reasonable doubt:

  • The individual was required to file a tax return;
  • The individual failed to file a tax return at the time required by law;
  • The individual’s failure to file a tax return was willful.

Required to File a Tax Return

The I.R.C. definition of a “person” includes an individual, a trust, an estate, a partnership, an association, a company, or a corporation. A person who is required to file a tax return must have received gross income in an amount equal to or greater than the exemption amount after considering the person’s marital status, filing status, and age.

Failure to File at the Time Required by Law

To find someone guilty under §7203, the government must prove that the person did not timely file a tax return. However, the crime of failing to timely file a return covers more than just people who did not file a tax return. It also includes people who purposely did not include enough information to calculate their tax liability or who purposely did not include all sources of income.

The time for filing a return can be found in Title 26 of the United States Code and is as follows:

  • Individuals filing on a calendar year basis are required to file a return “on or before the 15th day of April following the close of the calendar year and returns made on the basis of a fiscal year shall be filed on or before the 15th day of the fourth month following the close of the fiscal year, except as otherwise provided…” §6072(a).
  • Corporations are generally required to file “on or before the 15th of March following the close of the calendar year, and such returns made on the basis of a fiscal year shall be filed on or before the 15th day of the third month following the close of the fiscal year…” §6072(b).
  • Filing dates for estate and gift tax returns are set forth under §§6075(a) and (b).

If the person was granted an extension, the filing deadline is the date to which the tax return deadline was extended.

Willful Failure to File Taxes

Finally, under I.R.C. §7203, the government must prove that the failure to file a tax return was willful. This means that the person knew they were under a duty to file a tax return and voluntarily and intentionally violated that duty. Willfulness is more than mere negligence and requires a showing that the person knew of their duty to file and intentionally violated it.

An honest mistake is not enough to prove willfulness and can negate the willfulness element of the crime and result in acquittal.

To prove willful failure to file a tax return, the government may present evidence that the person:

  • Is a tax professional
  • Failed to file taxes for multiple years
  • Is educated and has a knowledge of accounting
  • Filed returns when they were due a refund but did not file when they owed taxes
  • Disregarded I.R.S. notices
  • Received a W-2 (proving that the individual knew he was aware of their duty to file)

Failure to Keep Records or Supply Information

To establish a violation of I.R.C. §7203 for failure to keep records, the government must prove that the person:

  • Was required to maintain records, and
  • Willfully failed to maintain such records.

To protect yourself, you should keep tax records until the period of limitations for that tax return runs out. The length of time depends on the type of action, expense, or event that the document records. The statute of limitation for criminal violations of the IRS Code is 6 years from the date that the return was due or filed.

To establish a violation of I.R.C. §7203 for failure to supply information, the government must prove that the person:

  • Was required to supply information to the I.R.S.,
  • Failed to supply information as required by law; and
  • Willfulness.

Criminal charges for failure to keep records or supply information are uncommon. The Department of Justice’s position is that these crimes should only be charged when a person failed to comply with an affirmative requirement under the I.R.C. or regulations but did not attempt to evade taxes or obstruct the I.R.S. People who commit acts of tax evasion or obstruction will be charged with felonies for violations of I.R.C. §§7201 or 7212.

Call Hope Lefeber for Vigorous Defense Against Tax Crime Charges

If you are under investigation or have been charged with a tax crime, you must act quickly to protect yourself.

Philadelphia criminal defense attorney Hope Lefeber has extensive experience defending people who have been charged with tax crimes. Ms. Lefeber began her career as an enforcement attorney with the United States Securities & Exchange Commission (SEC) where she learned first-hand how the federal government prepares and prosecutes white-collar criminal cases. For the past 30 years, she has used that experience to defend people accused of tax fraud and other white-collar crimes in federal court.

Ms. Lefeber meticulously investigates and prepares every case she takes on. She has extensive experience analyzing complex financial records and defending people who have been accused of tax crimes in federal court. She has represented accountants, CPAs, businessmen and women, individuals, and corporate taxpayers who are under investigation or have been charged with tax fraud and is proud to provide them with a vigorous and thorough defense.

Learn more about Hope Lefeber and her record of success, read testimonials from other people she has helped, and contact Ms. Lefeber today to schedule a confidential consultation to discuss your situation and how she can help.