Monthly Archives: July 2016

Tax Return and the Willfulness Element

download-14Willfulness Element

A willful act not to pay is at the heart of many charges of this nature. An act is considered willful if it is an intentional violation of a known legal duty. The prosecution bears the responsibility of proving that the defendant acted willfully. This must be proven by proof beyond a reasonable doubt. In tax cases, proving willfulness usually comes down to showing that the defendant knew about the requirement to report and that he or she made a conscious choice not to comply with this mandate.

Willfulness is a mens rea or mental state. Since the defendant may not admit to this state of mind and there likely are no witnesses to this offense, the government can show that the defendant acted in a willful manner based on circumstantial conduct in which this mental state can be inferred.

Inferences of Fraud

The jury can consider if there are suspicious actions that seem to show that the defendant had the mental state to defraud the government. This may be shown through presenting a double set of books that the defendant has, proof of false entries, invoices or documents, destruction of records, the hiding of assets or the source of income or any other conduct that has the likelihood of misleading or concealing information.

Criminal Charges

The government often has the option of which charges to file. It may file a charge for the willful failure to file. In this case, the crime is considered a misdemeanor that carries a potential maximum sentence of one year in prison for each tax year. Another potential charge is that of tax evasion, which is a felony that carries a maximum sentence of five years imprisonment for each relevant tax year.

Tax Assessments

The IRS also has the power to make a tax assessment by using a substitute for return procedure. This is the IRS basically filing the return on behalf of the taxpayer with the information known to it. However, the IRS is not required to include any standard deductions. A substitute return only permits two types of filing status: filing single or married filing separate. The second option limits the potential tax liability that a person may face.

Failure to File a Return Elements

The government has the burden of establishing three elements to prove its case. The first is that the defendant was required to file a return. The second was that the defendant failed to file at the time required by law. The third is that such failure was willful. The government is not required to prove an evil motive or a bad purpose since this is not one of the essential elements.

Proving the Case

One common way that the government makes its case by showing a pattern that the defendant failed to file tax returns for several years on end when returns should have been filed. This may be before or after the tax year subject to prosecution. Other ways to prove the case is to show that the defendant mailed tax protests to the IRS, disregarded IRS warning letters or filed contradictory forms such as one form stating that the defendant is exempt and another showing a filing listing multiple allowances.

In some cases, the prosecution relies on common sense to establish the willfulness element in a failure to file case. For example, the government may provide information about the defendant’s background. For example, if the defendant had a college education and accounting knowledge, he or she likely understands laws about tax filing requirements. Likewise, some cases have shown that the defendant was familiar with accounting books and operated a business. The government may show the filing of returns in previous years that indicate the defendant’s knowledge that he or she is required to file a return. If the defendant received a W-2 Form, this information may be used against the defendant to infer that he or she had knowledge about the duty to file. The jury can look at such information as a reminder that it is soon time to file.

Networks are Used for Identity Theft

Internet Fraud Schemes

Internet fraud occurs over a variety of platforms, including websites, chat rooms and social networks. Many victims are minors. Online deception uses the Internet to help induce fraudulent solicitations and conduct deceptive transactions. Common places to lure in victims include email, message boards, forums, chat rooms and social networking sites.

Often, these criminals attempt to acquire personal private information, including the Social Security number, financial account information, credit card number and date of birth.

Social Security Fraud

One common way that criminalizes victimize others is by stealing their Social Security Number and using it for their own benefit. They may reroute benefits to themselves in this manner. In some instances, children are the beneficiaries of such accounts and may have them stolen by individuals when they engage in communications under their parents’ radar, such as in social networking sites, email or chat rooms. Another type of fraud that may occur is someone may work under another person’s Social Security number and not pay required taxes. This can result in the real person being pursued for unpaid taxes.

Prevalence of the Problem

Children are particularly susceptible to being lured into these schemes. Online experts estimate that nearly 41 percent of American children under the age of 18 have received a request from an anonymous person to add them as a friend on a social networking site. Additionally, 63 percent of minors have replied to an online scam or responded to spam.

Preventing Identity Theft

The most important way that parents and others can help is by taking steps to prevent identity theft. Parents must be ever vigilant in protecting their children in this way. They should monitor their children’s use of social networking sites like Facebook, Snapchat, Twitter, Instagram and YouTube. Additionally, they should require their children to provide their username and password for these accounts. They should also look for duplicate accounts in case their children only use the one that parents supervise as a dummy account while actively engaging on another account. Knowing that a child is constantly on a social networking site but that his or her status has not been updated in months is often a red flag that he or she has other accounts.

Parents can help change the privacy settings on their children’s account so that unknown individuals do not have access to their children. This can also help limit the amount of information that the public can see about the child. Parents should also be aware of the various ways that children may be able to access the Internet, such as use at school, at their friend’s house or through many portable gaming devices. Additionally, special apps often help children hide activity, so parents should be current on the latest trends.

Parents should also help educate their children about the dangers of having a presence online. They should teach their children safe ways to be online and dangers to avoid. They should instruct their children not to give out personal information on social networking sites, to disengage location services that pinpoint their exact location and to use a code word that is unique to the family in case anyone tries to insinuate themselves into the child’s life. Special educational campaigns help provide a foundation on these issues. Parents may contact their local school or library to get information on available resources.