what is definition of intent to evade tax

I keep the following quote from an appeals court ruling in my index file:

To establish the crime of federal tax evasion as charged in the indictment the prosecution must prove beyond a reasonable doubt that defendant willfully attempted to evade or defeat a tax due the government. This involves the specific intent to evade the tax, and some willful commission, affirmative action or omission by defendant in furtherance of that intent.

The key word in the above is "willful." This means that the acts of the accused were intentional and/or deliberate. The government is allowed to infer such willfulness from the actual conduct of the accused or acts performed or not performed by the accused or from any other conduct which could mislead or conceal.

On Jun 23, 7:37 pm, Alan wrote:>

The burden for imposing civil fraud penalties is "a preponderance of evidence," not the much more stringent "beyond a reasonable doubt."

So there has to be a "a preponderance of evidence" that the fraud was "willful". What might be valid examples of this? Surely there must be some statutes or other rules to keep the government from extending their reach, because every omission of income could be construed as willful. How would one respond to the IRS in writing or in court to explain that it was not willful?

Typically, the IRS will not try to make the case unless there are three years of such omission. Thye consider once an accident, twice kind of iffy and three times fraud.

Isn't federal tax evasion a felony?

This is the point at which one hires a tax attorney. There is no bright-line test for willful intent. Each case stands on its own.

Also from my index file, an excerpt from an American Law Review article. I don't have the citations.

b. Affirmative Act Constituting Evasion

The Supreme Court has long interpreted [section] 7201 to require a positive attempt to evade or defeat any tax. (84) It requires more than mere "passive neglect." (85) Thus, an act to evade tax must be a commission rather than an omission. (86) The "affirmative act" language has been broadly construed (87) and includes: (i) filing false returns; (88) (ii) keeping two sets of books; (89) (iii) making false entries or alterations; (90) (iv) making false invoices or documents; (91) (v) destroying books or records; (92) (vi) concealing assets or covering up sources of income; (vii) handling one's affairs to avoid making records usually kept for transactions; and (viii) conduct where the likely effect would be to mislead or conceal. (93)

Generally, affirmative acts associated with evasion involve concealment of the taxpayer's ability to pay taxes or the removal of assets from the reach of the IRS. (94) An affirmative act may be inferred even if the actions undertaken can be attributed to motivations other than the intent to evade taxes. (95) Moreover, the argument that the methods a taxpayer used were not likely to mislead or conceal and, thus, do not constitute an affirmative act of evasion is not a viable defense. (96)

c. Willfulness

The Supreme Court has defined "willfulness" as the voluntary, intentional violation of a known legal duty. (97) The willfulness requirement is closely related to the affirmative act requirement because evidence of affirmative acts is often used to show willfulness. (98)

To prove willfulness, the government must show the taxpayer had a specific intent to commit the violation. (99) The government must demonstrate more than mere carelessness on the part of the defendant, (100) though it need not prove bad faith. (101) Thus, even an unreasonable misunderstanding of the law may negate a finding of willfulness. (102) The defendant's subjective belief regarding the applicability of a legal duty is a question of fact. (103)

Some courts have held that "proof of willfulness usually must be accomplished by means of circumstantial evidence." (104) Willfulness can be inferred from both the surrounding circumstances and the defendant's affirmative acts of evasion. (105) When applied, this inference often blurs the distinction between willfulness and affirmative acts. (106)

It depends upon the level an manner of the tax evasion. The IRS refers to these things as "Badges of Fraud".

Dick

Criminal tax fraud is a felony. Civil tax fraud is not a crime of any sort.

I found the SCOTUS citations. Spies vs US, 317 US 492 Sansone vs US, 380 US 343 Cheek vs US, 498 US 192

Also see US vs Cor-Bon Custom Bullet, 287 F.3d 576 (6th Circuit) Certiorari to SCOTUS denied.

The original post asked about tax evasion and the definition of intent. This falls under Section 7201 of the IRC. My answers relate to that section and how the courts have responded.

Sec. 7201. Attempt to evade or defeat tax Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.

I should have added, that the full article of the above excerpt can be found at:

Willful can usually be satisfied if the activity generating the excluded income is itself illegal. However, that by itself may not be enough. Note that there's not necessarily an attempt to evade if the illegally sourced income is laundered (and therefore reported) through an activity that itself reports the income as part of its gross receipts.

There has always been a debate under 26 USC 6103 as to whether it permits the IRS to disclose non-tax violations (i.e. illegal occupations) in situations where there is no tax violation. 6103(i)(6) is the only section governing IRS-initiated disclosures of this type - and simply says "may" disclose; not "should" or "must." However, it appears that disclosure can only be to other FEDERAL agencies; disclosure to states must have a tax-adminstration purpose - 6103(d) - with the exception of imminent death to a person.