7 August 2001

See contents of full IRS Handbook of Criminal Investigation: http://cryptome.org/irs-ci/irs-ci.htm

## Handbook 9.1 Criminal Investigation Mission, Authority, Organization and Directives Chapter 3 Criminal Statutory Provisions and Common Law
### Contents [9.1] 3.1 OVERVIEW [9.1] 3.2 DEFINITIONS OF LAW [9.1] 3.2.1 Statutory Law [9.1] 3.2.2 Common Law [9.1] 3.2.3 Substantive Law [9.1] 3.2.4 Adjective Law [9.1] 3.2.5 Criminal Law [9.1] 3.2.5.1 Title 18 Section 1--Definition of Crimes [9.1] 3.2.5.2 Parties to Criminal Offenses [9.1] 3.2.6 Civil Law [9.1] 3.2.7 Statutes of Limitations [9.1] 3.3 TITLE 26--CRIMINAL PENALTIES APPLICABLE TO FRAUD AND MISCELLANEOUS INVESTIGATIONS [9.1] 3.3.1 IRC 6050I. Structuring Transactions to Evade Cash Reporting Requirements [9.1] 3.3.2 IRC 7201. Attempt to Evade or Defeat Tax [9.1] 3.3.2.1 Avoidance Distinguished from Evasion [9.1] 3.3.2.2 IRC 7201-- Elements of the Offense [9.1] 3.3.2.2.1 Additional Tax Due and Owing [9.1] 3.3.2.2.2 Attempt to Evade or Defeat Any Tax [9.1] 3.3.2.2.3 Willfulness [9.1] 3.3.3 IRC 7202. Willful Failure to Collect or Pay Over Tax [9.1] 3.3.3.1 IRC 7202-- Elements of the Offense [9.1] 3.3.3.1.1 Duty to Collect, Account for, and Pay Taxes [9.1] 3.3.3.1.2 Willfulness [9.1] 3.3.3.1.3 Statute of Limitations [9.1] 3.3.4 IRC 7203. Willful Failure to File Return, Supply Information, or Pay Tax [9.1] 3.3.4.1 IRC 7203-- Elements of the Offense [9.1] 3.3.4.1.1 A Duty to Make a Return (Pay a Tax Due and Owing, Keep Records, or Supply Information) [9.1] 3.3.4.1.2 Failure to Make a Return when Due [9.1] 3.3.4.1.3 Willfulness in IRC 7203 [9.1] 3.3.4.1.3.1 Willful Failure to Pay Tax [9.1] 3.3.4.1.3.2 Willful Failure to Keep Records [9.1] 3.3.4.1.3.3 Willful Failure to Supply Information [9.1] 3.3.4.1.4 Statute of Limitations [9.1] 3.3.5 IRC 7204. Fraudulent Statement or Failure to Make Statement to Employees [9.1] 3.3.5.1 IRC 7204-- Elements of the Offense [9.1] 3.3.6 IRC 7205. Fraudulent Withholding Exemption Certificate or Failure to Supply Information [9.1] 3.3.6.1 Elements-- Fraudulent Withholding Exemption Certificate or Failure to Supply Information-- Withholding on Wages (IRC 7205(a)) [9.1] 3.3.6.2 Elements--False Certification or Affirmation about Interest or Dividends (IRC 7205(b)) [9.1] 3.3.6.2.1 Statute of Limitations [9.1] 3.3.7 IRC 7206. Fraud and False Statements [9.1] 3.3.7.1 Elements--False or Fraudulent Return, Statement, or Other Document Made Under Penalty of Perjury (IRC 7206(1)) [9.1] 3.3.7.2 Elements--Aid or Assistance in Preparation or Presentation of False or Fraudulent Return, Affidavit, Claim or Other (IRC 7206 (2)) [9.1] 3.3.7.3 Elements--Removal or Concealment with Intent to Defraud (IRC 7206(4)) [9.1] 3.3.7.3.1 Statute of Limitations-- (IRC 7206(4)) [9.1] 3.3.8 IRC 7207. Fraudulent Returns, Statements, or Other Documents [9.1] 3.3.9 IRC 7208. Offenses Relating to Stamps [9.1] 3.3.10 IRC 7209. Unauthorized Use or Sale of Stamps [9.1] 3.3.11 IRC 7210. Failure to Obey Summons [9.1] 3.3.12 IRC 7211. False Statements to Purchasers or Lessees Relating to Tax [9.1] 3.3.13 IRC 7212. Attempts to Interfere with Administration of Internal Revenue Laws [9.1] 3.3.13.1 Elements--Forcible Rescue (IRC 7212(b)) [9.1] 3.3.14 IRC 7215. Offenses with Respect to Collected Taxes [9.1] 3.3.14.1 Elements-- (IRC 7215) [9.1] 3.3.15 Other Criminal Statutes in the IRC within the Jurisdiction of CI [9.1] 3.4 TITLE 18-- CRIMINAL PENALTIES APPLICABLE TO FRAUD AND MISCELLANEOUS INVESTIGATIONS [9.1] 3.4.1 Section 2. Principals [9.1] 3.4.2 Section 3. Accessory after the Fact [9.1] 3.4.3 Section 4. Misprision of Felony [9.1] 3.4.4 Section 111. Assaulting, Resisting, or Impeding Certain Officers or Employees [9.1] 3.4.5 Section 115. Influencing, Impeding, or Retaliating Against a Federal Official by Threatening or Injuring a Family Member [9.1] 3.4.6 Section 201. Bribery of Public Officials and Witnesses [9.1] 3.4.7 Section 285. Taking or Using Papers Relating to Claims [9.1] 3.4.8 Section 286. Conspiracy to Defraud the Government with Respect to Claims [9.1] 3.4.9 Section 287. False, Fictitious or Fraudulent Claims [9.1] 3.4.9.1 Elements--False, Fictitious or Fraudulent Claims (18 USC 287) [9.1] 3.4.10 Section 371. Conspiracy to Commit Offense or to Defraud the United States [9.1] 3.4.10.1 Conspiracy in General [9.1] 3.4.10.2 Klein Conspiracy [9.1] 3.4.10.3 Tax Conspiracy [9.1] 3.4.10.4 Elements-- Conspiracy to Commit Offense or to Defraud the United States (18 USC 371) [9.1] 3.4.10.4.1 Combination of Two or More Persons [9.1] 3.4.10.4.2 Agreement [9.1] 3.4.10.4.3 Overt Act [9.1] 3.4.10.4.4 Statute of Limitation [9.1] 3.4.10.4.5 Duration of the Conspiracy [9.1] 3.4.11 Section 372. Conspiracy to Impede or Injure Officer [9.1] 3.4.12 Section 401. Power of Court [9.1] 3.4.13 Section 402. Contempts Constituting Crimes [9.1] 3.4.14 Section 912. Impersonating an Officer or Employee of the United States [9.1] 3.4.15 Section 913. Impersonator Making Arrest or Search [9.1] 3.4.16 Section 1001. Statements or Entries Generally [9.1] 3.4.16.1 Elements--Willfully Making False Statements (18 USC 1001) [9.1] 3.4.16.1.1 Jurisdiction [9.1] 3.4.16.1.2 Falsification and Materiality [9.1] 3.4.16.1.3 Knowledge [9.1] 3.4.17 Section 1002. Possession of False Papers to Defraud the United States [9.1] 3.4.18 Section 1073. Flight to Avoid Prosecution or Giving Testimony [9.1] 3.4.19 Section 1114. Protection of Officers and Employees of the United States [9.1] 3.4.20 Section 1501. Assault on Process Server [9.1] 3.4.21 Section 1503. Influencing or Injuring Officer, or Juror Witness Generally [9.1] 3.4.22 Section 1505. Obstruction of Proceedings before Departments, Agencies, and Committees [9.1] 3.4.23 Section 1510. Obstruction of Criminal Investigations [9.1] 3.4.24 Section 1512. Tampering with a Witness, Victim, or an Informant [9.1] 3.4.25 Section 1513. Retaliating Against a Witness, Victim, or an Informant. [9.1] 3.4.26 Section 1621. Perjury Generally [9.1] 3.4.26.1 Elements--Perjury (18 USC 1621) [9.1] 3.4.26.1.1 Oath [9.1] 3.4.26.1.2 False Statement [9.1] 3.4.26.1.3 Material Matter [9.1] 3.4.26.1.4 Willfulness, Knowledge, and Intent [9.1] 3.4.27 Section 1622. Subornation of Perjury [9.1] 3.4.28 Section 1623. False Declarations Before Grand Jury or Court [9.1] 3.4.29 Section 1952. Interstate and Foreign Travel or Transportation in Aid of Racketeering Enterprises [9.1] 3.4.30 Section 1956. Laundering of Monetary Instruments [9.1] 3.4.31 Section 1957. Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity [9.1] 3.4.32 Prohibition of Illegal Money Transmitting Businesses [9.1] 3.4.33 Section 1962. Prohibited Activities (of Racketeer Influenced and Corrupt Organizations) [9.1] 3.4.34 Section 2071. Concealment, Removal or Mutilation [9.1] 3.4.35 Section 2231. Assault or Resistance [9.1] 3.4.36 Section 2232. Destruction or Removal of Property to Prevent Seizure [9.1] 3.4.37 Section 2233. Rescue of Seized Property [9.1] 3.4.37.1 Elements--Rescue of Seized Property (18 USC 2233) [9.1] 3.5 TITLE 31 [9.1] 3.5.1 31 Sections 5322(a) and (b) Criminal Penalties [9.1] 3.5.2 31 Section 5324--Structuring Transactions to Evade Reporting Requirement Prohibited [9.1] 3.6 PERIODS OF LIMITATION ON CRIMINAL PROSECUTION [9.1] 3.6.1 IRC 6531. Periods of Limitation [9.1] 3.6.1.1 IRC 6513. Time Return Deemed Filed and Tax Considered Paid [9.1] 3.6.2 Title 18 Section 3282 General Statute of Limitations [9.1] 3.6.3 Running of the Statute [9.1] 3.6.4 Tolling of the Statute of Limitations [9.1] 3.6.4.1 IRC Section 6531 [9.1] 3.6.4.2 Title 18 Section 3290 [9.1] 3.6.4.3 Criminal Sanctions for Flight to Avoid Prosecution or Testimony [9.1] 3.7 CRIMINAL FINES AND PENALTIES Exhibit [9.1] 3-1 TITLE 26, 18, and 31 STATUTES WITHIN THE JURISDICTION OF CRIMINAL INVESTIGATION
### [9.1] 3.1 (07-29-1998) OVERVIEW
Federal crimes are exclusively statutory crimes since the general police power is still lodged in the several states. Federal prosecution is limited to the areas prescribed by federal statute. The initial section of this chapter defines various aspects of the law. The following sections of the chapter contain: The complete text of the more frequently used penal sections of the United States Code, Title 26, Internal Revenue Code, and some elements that need to be established to sustain prosecution. The complete text of the penal sections of the United States Code, Title 18, that are within the jurisdiction of Internal Revenue Service (IRS), and some elements that need to be established to sustain prosecution. The complete text of the penal statutes of the United States Code, Title 31, that are within the jurisdiction of IRS. The complete text of the statutes governing the Periods of Limitation for criminal prosecution for both Title 26 and Title 18 prosecutions. Information relating to criminal fines and penalties. This chapter does not include the text of the civil and criminal forfeiture statutes within CI jurisdiction. See the Asset Seizure and Forfeiture Handbook, 9.7 concerning those topics. Exhibit 3-1 provides a list of those statutes within the jurisdiction of Criminal Investigation (CI) including the forfeiture statutes.
### [9.1] 3.2 (07-29-1998) DEFINITIONS OF LAW
Laws are rules of conduct which are prescribed or formally recognized as binding and are enforced by the governing power.
### [9.1] 3.2.1 (07-29-1998) Statutory Law
Statutory law refers to laws enacted and established by a legislative body. All federal crimes are statutory, but common law is frequently used for defining words used in the statutes. For example, statutes provide penalties for attempted evasion of income tax but they do not define the terms "attempt" and "evasion."
### [9.1] 3.2.2 (07-29-1998) Common Law
Common law comprises the body of principles and rules of action relating to government and security of persons and property which derive their authority solely from usages and customs or from judgments and decrees of courts recognizing, affirming, and enforcing such usages and customs.
### [9.1] 3.2.3 (07-29-1998) Substantive Law
Substantive law creates, defines, and regulates rights, duties, responsibilities, and obligations, whereas adjective or remedial law provides rules for enforcing rights or obtaining redress for their invasion.
### [9.1] 3.2.4 (07-29-1998) Adjective Law
Adjective law provides rules of practice concerning proceedings before, during, and after trial, and rules of evidence relating to the admission of evidence at trials and the testing of the credibility and competency of witnesses.
### [9.1] 3.2.5 (07-29-1998) Criminal Law
Criminal law is that branch of law which defines crimes and provides punishments. The criminal sanctions, generally involving imprisonment and fines, are covered in Chapter 75 of the Internal Revenue Code (IRC). In addition, some of the criminal sanctions in Title 18, and Title 31 United States Code, also apply to Internal Revenue matters.
### [9.1] 3.2.5.1 (07-29-1998) Title 18 Section 1--Definition of Crimes
An act is a crime against the United States only if committed or omitted in violation of a statute forbidding or commanding it, or in violation of a regulation having legislative authority. Crimes are classified and defined in Section 1, Title 18, United States Code, as follows: Notwithstanding any Act of Congress to the contrary: (1) "Any offense punishable by death or imprisonment for a term exceeding one year is a felony." (2) "Any other offense is a misdemeanor." (3) "Any misdemeanor, the penalty for which does not exceed imprisonment for a period of six months or a fine of not more than $500, or both, is a petty offense."
### [9.1] 3.2.5.2 (07-29-1998) Parties to Criminal Offenses
See Sections 3.4.1 and 3.4.2 in this chapter pertaining to United States Code Title 18, sections 2 and 3.
### [9.1] 3.2.6 (07-29-1998) Civil Law
Civil law relates to the establishment, recovery, or redress of private and civil rights The civil sanctions, generally assessed as additions to the tax and also referred to as ad valorem penalties, are covered in Chapter 68 of the Internal Revenue Code. Some of these penalties are: The delinquency penalty (not exceeding 25 percent) for failure to file a return or a timely return (26 IRC 6651). The 20 percent negligence penalty for negligence or intentional disregard of rules and regulations (26 IRC 6662). The 75 percent fraud penalty on an underpayment of any part of which is due to fraud (26 IRC 6663). For more information concerning the civil aspects of a criminal investigation or prosecution, see Handbook 9.6.
### [9.1] 3.2.7 (07-29-1998) Statutes of Limitations
Statutes of limitations are founded upon the liberal theory that prosecutions should not be allowed to remain open endlessly in the files of the government to be surfaced only after witnesses and proof necessary to the protection of the accused have become unavailable by sheer lapse of time. They amount to legislative restraints on the executive power to punish wrongdoers, which grant malefactors complete immunity from prosecution after stated periods of time. "The statute (of limitations) is not a statute of process to be scantily and grudgingly applied, but an amnesty, declaring that after a certain time oblivion shall be cast over the offense." (Wharton, Criminal Procedure, 415 (10th Ed. 1918).) In other words, the statute is liberally interpreted in favor of the accused. Section 3.6 of this chapter is a general discussion of the periods of limitation. If there is something unique about the statute of limitations concerning a particular offense, it will be discussed in the subsection describing that offense. Also see Chapter 5 of the Multifunctional Handbook entitled, Statute of Limitations.
### [9.1] 3.3 (07-29-1998) TITLE 26--CRIMINAL PENALTIES APPLICABLE TO FRAUD AND MISCELLANEOUS INVESTIGATIONS
Chapter 75 of the Internal Revenue Code of 1986, entitled Crimes, Other Offenses, and Forfeitures, is effective for offenses committed after August 16, 1986. The following penal sections of Chapter 75 apply to all taxes imposed by Title 26, United States Code (Internal Revenue Code), unless the particular section states that it applies to a specific tax. The subsections which follow will provide the wording of the statute and in some instances the elements of an offense and common law interpretations. IRC 6050I is also stated. It provides for a criminal penalty as well.
### [9.1] 3.3.1 (07-29-1998) IRC 6050I. Structuring Transactions to Evade Cash Reporting Requirements
IRC 6050I establishes the requirement of businesses to file Form 8300 when in receipt of $10,000 in cash from one transaction or two or more related transactions. IRC 6050I(f) is the part of the statute that prohibits structuring transactions to evade the reporting requirements. It states, (1) In general . . .No person shall for the purpose of evading the return requirements of this section-- (A) cause or attempt to cause a trade or business to fail to file a return required under this section, (B) cause or attempt to cause a trade or business to file a return required under this section that contains a material omission or misstatement of fact, or (C) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more trades or businesses. (2) Penalties. A person violating paragraph (1) of this subsection shall be subject to the same civil and criminal sanctions applicable to a person who fails to file or completes a false or incorrect return under this section. For more information concerning the penalties associated with a violation 6050I see the note under section 3.3.4 of this chapter.
### [9.1] 3.3.2 (07-29-1998) IRC 7201. Attempt to Evade or Defeat Tax
IRC 7201 states; "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."
### [9.1] 3.3.2.1 (07-29-1998) Avoidance Distinguished from Evasion
Avoidance of taxes is not a criminal offense. Any attempt to reduce, avoid, minimize, or alleviate taxes by legitimate means is permissible. The distinction between avoidance and evasion is fine, yet definite. One who avoids tax does not conceal or misrepresent. He shapes events to reduce or eliminate tax liability and, upon the happening of the events, makes a complete disclosure. Evasion, on the other hand, involves deceit, subterfuge, camouflage, concealment, some attempt to color or obscure events, or makes things seem other than they are. For example, the creation of a bona fide partnership to reduce the tax liability of a business by dividing the income among several individual partners is tax avoidance. However, the facts of a particular case may show that an alleged partnership was not, in fact, established and that one or more of the alleged partners secretly returned his or her share of the profits to the real owner of the business, who, in turn, did not report this income. This would be an instance of attempted evasion.
### [9.1] 3.3.2.2 (07-29-1998) IRC 7201-- Elements of the Offense
The elements of the offense of willfully attempting in any manner to evade or defeat any tax or the payment of any tax are the same, but the courts have interpreted the terms differently in some instances. The differences are noted in the explanation. The elements of the offense are: Additional tax due and owing. An attempt in any manner to evade or defeat any tax. Willfulness.
### [9.1] 3.3.2.2.1 (07-29-1998) Additional Tax Due and Owing
The government must establish that at the time the offense was committed the taxpayer owed more "tax than he reported." However, it is not necessary to prove evasion of the full amount alleged in the indictment. It would be sufficient to show that a substantial amount of the tax was evaded, and this need not be measured in terms of gross and net income or by any particular percentage of the tax shown to be due and payable. NOTE: The element of tax due and owing for IRC 7201 in reference to the evasion or attempted evasion of payment of tax is slightly different. When the government charges attempted evasion to pay, it must establish that a tax is due and owing at the time the offense is committed (like evasion). Unlike evasion, this amount need not be any additional tax or deficiency but could be the amount of tax shown on the original return which had not been paid. Carryback losses are technically no legal impediment to prosecution for years in which they eliminate the tax liability. However, the probability of conviction could be lessened where it is shown that a tax deficiency does not exist by operation of law. Likewise, the acceptance by government agents of agreement Form 870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment) does not bar prosecution. However, experience has demonstrated that attempts to pursue both the criminal and the civil aspects of a case concurrently may jeopardize the successful completion of the criminal case. As a result, Policy Statement P-4-84 provides, among other things, that the consequences of civil enforcement actions on matters involved in the criminal investigation and prosecution case should be carefully weighed.
### [9.1] 3.3.2.2.2 (07-29-1998) Attempt to Evade or Defeat Any Tax
The substance of the offense under IRC 7201 is the term "attempt in any manner" . The statute does not define attempt, nor does it limit or define the means or methods by which the attempt to evade or defeat any tax may be accomplished. However, it has been judicially determined that the term "attempt" implies some affirmative action or the commission of some overt act. The actual filing of a false or fraudulent return is not requisite for the commission of the offense though the filing of such a return is the usual attempt to evade or defeat the tax. A false statement made to Treasury agents for the purpose of concealing unreported income has also been judicially determined to be an attempt to evade or defeat the tax. The willful omission of a duty or the willful failure to perform a duty imposed by statute does not per se constitute an attempt to evade or defeat. However, a willful omission or failure (such as a willful failure to make and file a return) when coupled with affirmative acts or conduct from which an attempt may be inferred would constitute an attempt. In the case of Spies v. United States , the Supreme Court gave certain illustrations of acts or conduct, which may infer "the attempt to evade or defeat any tax" ; such as: Keeping a double set of books. Making false entries, alterations, invoices, or documents. Destroying books or records. Concealing assets or covering up sources of income . Handling one's affairs to avoid making the records usual in transactions of the kind. Any conduct, the likely effect of which would be to mislead or to conceal. Attempt does not mean that one whose efforts are successful cannot commit the crime of willful attempt. The crime is complete when the attempt is made and nothing is added to its criminality by success or consummation, as would be the case with respect to attempted murder. It has been held that "attempts cover both successful and unsuccessful endeavors or efforts." As the courts have stated, "The real character of the offense lies, not in the failure to file a return or in the filing of a false return, but rather in the attempt" to evade any tax. It is well settled that a separate offense may be committed with respect to each year. Therefore, an attempt for 1 year is a separate offense from an attempt for a different year. There may also be more than one violation in one year resulting from the same acts such as the willful attempt to evade the payment of tax and the willful attempt to evade tax. Likewise, there may be charged a willful attempt to evade tax and a willful failure to file a return for the same year. In an attempt to evade or defeat the payment of any tax, the mere failure or willful failure to pay any tax does not constitute an attempt to evade or defeat the payment of any tax. The comments set out above with respect to attempts also apply to this offense. The attempt implies some affirmative action or the commission of some overt act. Examples of such action or conduct relating to the attempted evasion of the payment of the tax are found in the Giglio case. These are: Concealing assets. Reporting income through others. Misappropriating, converting, and diverting corporate assets. Filing late returns. Failing to withhold taxes as required by law. Filing false declarations of estimated taxes. Filing false tentative corporate returns.
### [9.1] 3.3.2.2.3 (07-29-1998) Willfulness
The attempt in any manner to evade or defeat any tax must be willful. Willfulness has been defined as an act or conduct done with a bad or evil purpose. Mere understatement of income and the filing of an incorrect return does not in itself constitute willful attempted tax evasion. The offense is made out when conduct such as exemplified in the Spies case (supra) is present. Courts have held that disbursement of available funds to creditors other than the government , or to corporate stockholders is not of itself an attempt to evade or defeat payment of taxes. This definition of willfulness applies to all Title 26 offenses where willfulness is an element, unless stated otherwise.
### [9.1] 3.3.3 (07-29-1998) IRC 7202. Willful Failure to Collect or Pay Over Tax
IRC 7202 states; "Any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution." Violations under this section usually involve failure to truthfully account for and pay over withholding, social security, and excise taxes with the exception of wagering excise taxes. Failure to file returns would involve violations of IRC 7203 and filing false and fraudulent returns would constitute violations under IRC 7201.
### [9.1] 3.3.3.1 (07-29-1998) IRC 7202-- Elements of the Offense
The elements of a criminal violation under this Code section are: Either a duty to collect any tax or a duty to account for and pay over any tax or both. Either failure to collect any tax or failure to truthfully account for and pay over any tax or both. Willfulness. (The subject of willfulness is covered above in 3.3.2.2.3.)
### [9.1] 3.3.3.1.1 (07-29-1998) Duty to Collect, Account for, and Pay Taxes
Willful failure to truthfully account for and pay over is considered to be an inseparable dual obligation. (Chief Counsel memo, 5-8-64, CC:E-172.) Failure to pay, even though an accounting is made in the sense of a return filed, leaves the duty as a whole unfulfilled. Section 406.603, Code of Federal Regulations, states, "The return shall be signed and verified by...the President, Vice-President, or other principal officer, if the employer is a corporation." However, considerable difficulty has been encountered in determining the person charged with the duty of collecting, accounting for and paying over taxes, especially in cases involving small corporations where the precise duties of the officers are not clearly defined or rigidly carried out. For example, in one case, it was determined that although the president of the corporation was the dominating force in the management of the firm, the fact that there were other officers who signed some returns and engaged in financial activities on behalf of the corporation made it doubtful whether the president was the officer under a duty to perform the required acts, and the indictment was dismissed. Another case held that the term "person" includes a chief executive officer of a corporation who possesses the authority to determine how corporate funds should be expended. Accordingly, it is imperative to ascertain the various activities and responsibilities of all officers of a corporation before recommending prosecution against any one of them as the "person" defined in IRC 7343.
### [9.1] 3.3.3.1.2 (07-29-1998) Willfulness
Willfulness under this Code section refers to motive or purpose and includes some element of an evil motive and want of justification in view of all the financial circumstances of the taxpayer. It is not enough merely to prove that the acts were knowingly and intentionally committed. For example, a successful prosecution under this section was based upon the following facts: The taxpayer filed timely employment tax returns but habitually failed to pay the amount of tax shown to be due thereon. He willingly signed agreements for partial payments, made the first payment, and then ignored further requests for payments. When his bank accounts were levied upon, he closed the accounts and made arrangements with his customers to receive future payments in cash. All his assets were then transferred to the names of others. His only defense was that he used the money withheld from his employees to meet current operating expenses. An analysis of his bank accounts and records of personal expenditures showed that, contrary to his contentions, a profit was realized from the business in all years and funds were available to pay the taxes shown on the returns.
### [9.1] 3.3.3.1.3 (07-29-1998) Statute of Limitations
The courts have held in one case of IRC 7202 (Willful Failure To Collect Or Pay Over Tax) that the statute of limitations is 6 years and in another case that the statute of limitations is 3 years. The position of the Department of Justice, Tax Division, is that the statute of limitations is 6 years, as provided in IRC 6531(4).
### [9.1] 3.3.4 (07-29-1998) IRC 7203. Willful Failure to File Return, Supply Information, or Pay Tax
IRC 7203 states; "Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulation shall, in addition to other penalties provide by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 1 year, or both, together with the costs of prosecution. In the case of any person with respect to whom there is a failure to pay any estimated tax, this section shall not apply to such person with respect to such failure if there is no addition to tax under Section 6654 or 6655 with respect to such failure. In the case of a willful violation of any provision of section 6050I, the first sentence of this section, shall be applied by substituting "felony" for "misdemeanor" and "5 years" for "1 year" ." While all part of the same statute, any one of the following violations at the time or times required by law or regulation, is considered a separate offense: Willful failure to make any type of required return. Willful failure to pay any estimated tax or tax. Willful failure to keep records. Willful failure to supply information. NOTE: After September 3, 1982, any taxpayer qualifying under an exception to the civil penalty rules of IRC 6654 or 6655 will not be subject to criminal fine or imprisonment for failing to file a declaration of estimated tax. NOTE: Section 6050I of the IRC requires any person involved in a trade or business (except certain financial institutions) who receives more than $10,000 in cash in one transaction or two or more related transactions to make a return (i.e., file a Form 8300). Failure to file a form 8300 is prosecuted as a felony under section 7203 of the IRC carrying a maximum sentence of not more than 5 years imprisonment.
### [9.1] 3.3.4.1 (07-29-1998) IRC 7203-- Elements of the Offense
The following elements of the offense must be established to sustain a conviction of IRC 7203: A duty, as required by law or regulations, to make a return (pay a tax due and owing, keep records, or supply information) for the year or period involved. Failure to fulfill the legal duty at the time required by law or regulation. Willfulness. See section 3.3.2.2.3 of this Chapter. The following paragraphs give some additional information concerning the elements as they pertain to specific situations.
### [9.1] 3.3.4.1.1 (07-29-1998) A Duty to Make a Return (Pay a Tax Due and Owing, Keep Records, or Supply Information)
The general requirements for making a return are set forth in IRC 6012 to 6046. Persons liable under IRC 7203 include those described in IRC 7343 as follows: "The term ``person'' as used in this chapter includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs." In corporate cases, the person responsible for filing corporate returns may be any of several officials, and it will be a matter of fact to be developed by competent evidence as to which one has the duty. This evidence may be proof of signing past federal returns or any state returns, or it may be in the corporate bylaws or minutes of directors' meetings. The general requirement or duty to keep records is provided for in IRC 6001. However, the types of records kept by various individuals are not alike, and neither the statute nor the regulations defines minimum standards for specific transactions or for types of business. For example, a showing that his returns were prepared from third-party records (banks, brokers, employers) may obviate the necessity for a taxpayer to keep records. Examination procedures provide for the service of a notice, Letter to Taxpayer Regarding Inadequate Records (Form 7020 or 7021), and procedures to be followed where taxpayers have failed to maintain proper records.
### [9.1] 3.3.4.1.2 (07-29-1998) Failure to Make a Return when Due
The government must establish that a return was due within the time provided by law or regulations and that there was a failure to file such return within such time. The time within which a return must be filed has been held to be the date set out in the Code or under regulations prescribed by the Secretary, plus the last date covered in any extension of time granted by the Secretary or the Secretary's delegate. The date when a return is due under the Code or regulations varies, depending upon the type of tax involved or the type of return required to be filed. Thus, individual income tax returns, self-employment tax returns, and partnership returns made on the basis of the calendar year shall be filed on or before the 15th day of April following the close of the calendar year; or, if made on a fiscal year basis, the return shall be filed on the 15th day of the 4th month following the close of the fiscal year. (26 USC 6072(a)) Corporate returns for calendar years are due on the 15th day of March; or, if on a fiscal year basis, returns are due on the 15th day of the 3rd month following the close of the fiscal year (26 USC 6072(b)). IRC 6075 relates to the time for filing estate and gift tax returns, and IRC 6071 and the regulations promulgated there under to the time for filing excise tax returns and other forms of returns required under the particular type of tax involved. In addition to showing that a return was due, the government must establish that the person did not file a required return on the due date. Usually, this is accomplished by proving that the defendant did not file a return in the district of his or her legal residence or principal place of business or service center.
### [9.1] 3.3.4.1.3 (07-29-1998) Willfulness in IRC 7203
Willfulness means a voluntary, intentional, violation of a known legal duty. The government must establish willfulness in the failure to file a return. However, as distinguished from willfulness in a tax evasion case, the government need not prove a tax evasion motive. Willfulness denotes something "done with a bad purpose, or done without justifiable excuse, or done stubbornly or obstinately or perversely, or with bad motive." As applied to this offense, willful means voluntary, purposeful, deliberate, and intentional, as distinguished from accidental, inadvertent, or negligent; and the only bad purpose or bad motive which the government must prove is the deliberate intention not to file returns, which such person knew ought to have been filed, so that the government would not know the extent of his or her liability.
### [9.1] 3.3.4.1.3.1 (07-29-1998) Willful Failure to Pay Tax
Although an additional tax due is not an essential element of the offense, willfulness is difficult to establish without proof of a substantial tax liability. When charging willful failure to pay tax, repeated failure to pay taxes, coupled with large expenditures for luxuries when taxes were owing, may be evidence of willfulness within the meaning of the statute.
### [9.1] 3.3.4.1.3.2 (07-29-1998) Willful Failure to Keep Records
Willfulness will also be inferred if the concealment motive plays any part of the failure to keep records. However, an important factor in the probability of conviction in these cases may be a substantial deficiency attributable to the failure to keep records. The Internal Revenue Manual Part 4, provides for the service of a notice, Letter to Taxpayer Regarding Inadequate Records (Form 7020 or 7021), and the procedure to be followed where taxpayers have failed to maintain proper records. The deliberate, intentional, and utter disregard of this notice with evil intent and a bad purpose may be deemed a circumstance from which willfulness may be inferred.
### [9.1] 3.3.4.1.3.3 (07-29-1998) Willful Failure to Supply Information
The willfulness required to be shown when charging willful failure to supply information would be the deliberate and intentional withholding and failure to supply the required information with the evil and bad purpose of concealing income, property, or other required or requested information. For example, the intentional and deliberate failure and refusal to furnish a schedule of the partnership assets and liabilities as required on the partnership return was held to be willful. Disclosure of such information revealed considerable cash on hand.
### [9.1] 3.3.4.1.4 (07-29-1998) Statute of Limitations
The statutory period of limitations for willful failure to file returns, IRC 7203 (other than information returns), or to pay tax is 6 years. A 3-year period of limitations applies to willful failure to file information returns such as partnership returns, and to willful failure to keep records or supply information. The statutory period of limitations for willful failure to file a Form 8300 is 3 years.
### [9.1] 3.3.5 (07-29-1998) IRC 7204. Fraudulent Statement or Failure to Make Statement to Employees
This statute applies to withholding statements required of employers. "In lieu of any other penalty provided by law (except the penalty provided by section 6674), any person required under the provisions of section 6051 to furnish a statement who willfully furnishes a false or fraudulent statement or who willfully fails to furnish a statement in the manner, at the time, and showing the information required under section 6051, or regulations prescribed thereunder, shall, for each such offense, upon conviction thereof, be fined not more than $1,000, or imprisoned not more than 1 year, or both."
### [9.1] 3.3.5.1 (07-29-1998) IRC 7204-- Elements of the Offense
The elements of a criminal violation under this Code section are: A duty to deduct employment tax or to withhold income tax. (26 USC 3102(a), 3402(a)) A duty to timely furnish to the employee a written statement showing specified information concerning the deductions. (26 USC 6051) Furnishing a false or fraudulent statement to an employee, or the failure to furnish a statement to an employee at the required time and in the required manner, Willfulness. See section 3.3.2.2.3. of this Chapter. A successful prosecution under this Code section was based upon the following facts. In order to attract and hold workers, a taxpayer put into effect a scheme whereby actual weekly wages paid were recorded on regular weekly payroll sheets, the sum total of which was deducted for income tax purposes. Individual payroll sheets were also maintained for most of the employees, but the amounts of gross wages shown on the sheets were understated to accommodate the employees so that they would not have to report their entire wages for income tax purposes. The tax withheld from the wages was based upon the understated figure. In some instances, individual payroll sheets were not maintained for employees. At the end of the year, the employees whose names were shown on individual payroll sheets were furnished false and fraudulent withholding statements, Forms W-2, based upon the false payroll sheets, and the employees whose names did not appear on payroll sheets did not at any time receive withholding statements. The failure to furnish withholding statements to some employees and the furnishing of false and fraudulent statements to other employees constitute separate violations under this Code section.
### [9.1] 3.3.6 (07-29-1998) IRC 7205. Fraudulent Withholding Exemption Certificate or Failure to Supply Information
IRC 7205 states; (a) Withholding on Wages. "Any individual required to supply information to his employer under Section 3402 who willfully supplies false or fraudulent information, or who willfully fails to supply information thereunder which would require an increase in the tax to be withheld under Section 3402, shall in addition to any other penalty provided by law, upon conviction thereof, be fined not more than $1,000, or imprisoned not more than 1 year, or both." (b) Backup Withholding on Interest and Dividends. "If any individual willfully makes a false certification under paragraph (1) or (2)(C) of section 3406(d), then such individual shall, in addition to any other penalty provided by law, upon conviction thereof, be fined not more than $1,000, or imprisoned not more than 1 year, or both."
### [9.1] 3.3.6.1 (07-29-1998) Elements-- Fraudulent Withholding Exemption Certificate or Failure to Supply Information-- Withholding on Wages (IRC 7205(a))
The elements of a criminal violation under this Code section are: A duty to supply information to employer (26 USC 3402(f)(2)) Furnishing false or fraudulent information or failure to supply information which would require an increase in tax to be withheld. Willfulness. See section 3.3.2.2.3 of this Chapter. The employee is required to notify his employer within 10 days of a change in his withholding exemption status which would require an increase in tax to be withheld. There is no penalty for failing to supply information which would require a decrease in tax to be withheld, and a certificate is not considered false or fraudulent if it contains information showing fewer exemptions than the employee is entitled to claim.
### [9.1] 3.3.6.2 (07-29-1998) Elements--False Certification or Affirmation about Interest or Dividends (IRC 7205(b))
This criminal provision applies to interest and dividend income. Generally, they are not subject to the withholding tax. However, the Code provides a system of backup withholding which applies when: the payee fails to provide a taxpayer identification number (TIN); the IRS notifies the payor that the payee's TIN is incorrect; the IRS notifies the payor that the payee is underreporting interest and dividends; or the payee fails to certify to the payor, when opening a new account after 1983, that he or she is not subject to backup withholding. The elements of a criminal violation under this Code section are: Making false certification of affirmation on any statement required by a payor who is attempting to satisfy certain dividend or interest information reporting requirements, or; Making a false certification about not being subject to backup withholding. Willfulness. See section 3.3.2.2.3 of this Chapter.
### [9.1] 3.3.6.2.1 (07-29-1998) Statute of Limitations
A 3-year period of limitations is applicable (26 USC 6531), and the offense is a misdemeanor. In a case which involves furnishing false or fraudulent information, the offense is committed and the period of limitations begins the date the document is filed. No known reported case has stated whether willful failure to supply information to an employer is a continuing offense for purposes of determining the date from which the period of limitations is to run. The safe practice is to assume that it is not continuing, and that the offense is committed and statute begins to run on the date when it becomes a duty for the employee to supply information, which he or she willfully fails to do. However, if all other facts indicate that prosecution should be recommended for this offense, the continuing offense theory may be employed. In a case which involves furnishing false or fraudulent information about interest or dividends, the offense is committed and the period of limitations begins the date the document is filed.
### [9.1] 3.3.7 (07-29-1998) IRC 7206. Fraud and False Statements
IRC 7206 states; "Any person who--" "(1) Declaration Under Penalties of Perjury. Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; or" "(2) Aid or Assistance. Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document; or" "(3) Fraudulent Bonds, Permits, and Entries. Simulates or falsely or fraudulently executes or signs any bond, permit, entry, or other document required by the provisions of the internal revenue laws, or by any regulation made in pursuance thereof, or procures the same to be falsely or fraudulently executed, or advises, aids in, or connives at such execution thereof; or" "(4) Removal or Concealment With Intent to Defraud. Removes, deposits, or conceals, or is concerned in removing, depositing, or concealing, any goods or commodities for or in respect whereof any tax is or shall be imposed, or any property upon which levy is authorized by section 6331, with intent to evade or defeat the assessment or collection of any tax imposed by this title; or" "(5) Compromises and Closing Agreements. In connection with any compromise under section 7122, or offer of such compromise, or in connection with any closing agreement under section 7121, or offer to enter into any such agreement, willfully--" "(A) concealment of property. Conceals from any officer or employee of the United States any property belonging to the estate of a taxpayer or other person liable in respect of the tax, or" "(B) Withholding, falsifying, and destroying records. Receives, withholds, destroys, mutilates, or falsifies any book, document, or record, or makes any false statement, relating to the estate or financial condition of the taxpayer or other person liable in respect of the tax;" "shall 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 3 years, or both, together with the costs of prosecution."
### [9.1] 3.3.7.1 (07-29-1998) Elements--False or Fraudulent Return, Statement, or Other Document Made Under Penalty of Perjury (IRC 7206(1))
A person who willfully makes and subscribes, under penalty of perjury, any return, statement, or other document which he or she does not believe to be true and correct, as to every material matter, commits a criminal offense. The elements of a criminal violation under this Code section are: Making and subscribing a return, statement or other document under penalty of perjury. Knowledge that it is not true and correct as to every material matter. Willfulness. See section 3.3.2.2.3 of this Chapter. This Code section imposes the penalty of perjury upon a person who willfully falsifies a return as to a material matter, whether or not his or her purpose was to evade or defeat the payment of taxes. Prosecution is appropriate when the government is able to prove falsity of a partnership return, the issue being falsity rather than evasion. The test of materiality is whether the false statement was material to the contents of the return. It is not necessary that the government actually rely on the statement. It is sufficient that it be made with the intention of inducing such reliance. Although the offense is complete upon signing the statement or document, prosecutions under this Code section should involve only false returns or statements presented to or filed with the IRS. This sanction is appropriate when it is possible to prove falsity of a return but difficult to establish evasion of an ascertainable amount of tax, or, when the falsification results in a relatively small amount of tax evaded in relationship to the total tax liability. If an individual files a false and fraudulent return, it is possible for him or her to incur criminal liability for attempting to defeat and evade the payment of tax and for making a false and fraudulent statement under the penalty of perjury even though both offenses relate to the same return and the making of the false statement is an incidental step in the consummation of the completed offense of attempting to defeat and evade taxes.
### [9.1] 3.3.7.2 (07-29-1998) Elements--Aid or Assistance in Preparation or Presentation of False or Fraudulent Return, Affidavit, Claim or Other (IRC 7206 (2))
The elements of a criminal violation under this Code section are: The defendant aided or assisted in, procured, counseled, or advised the preparation or presentation of a document in connection with matters arising under the internal revenue laws. The document was false as to a material matter. The act of the defendant was willful. See Section 3.3.2.2.3 of this Chapter. The false document must be filed with the IRS in order for the crime to be complete but pecuniary loss to the government is not necessary. Any impairment of its governmental function is sufficient. The crime is complete on the submission of the false document notwithstanding the fact that had the defendant filed a different and truthful document, the defendant or his principal might have been entitled to equivalent relief or benefit. Generally, income tax returns or partnership information returns are involved but any document required or authorized to be filed can give rise to this offense. If two partners execute a false partnership return and file it, they may each commit a criminal offense, but if there is evidence that only one of the partners willfully aided, assisted, procured, counseled or advised in the preparation or the presentation of such return, then only he or she could be held liable for this offense. The aiding and assisting in the preparation of a false return and the subscribing of a false return are two separate offenses. A defendant can, therefore, be prosecuted under IRC 7206(1) for subscribing a false return and under this Code section for aiding and assisting in the preparation of the same false return. It is sufficient to establish that the defendant willfully and knowingly prepared false and fraudulent income tax returns for another although the fraud involved was without the knowledge and consent of the person required to make the return. For example, in a case the defendants, who conducted a "refund factory," interviewed taxpayers for 10 or 15 minutes and obtained information which was written on worksheets. Signed blank income tax returns were then obtained from the taxpayers and they were told the amounts of the refunds allegedly due, but they were not furnished any of the details relative to the deductions to be claimed on the returns, which were prepared at later dates. At the trial the clients testified that they did not furnish the defendants the information relating to deductions shown on their completed returns and that the information was placed on the returns without their knowledge or consent. On the other hand, if the taxpayers who testify against the defendant are shown to have had knowledge that their returns were false, resulting in fraud penalties or successful prosecutions, for evasion, the defendant is entitled to have the court caution the jury to weigh accomplice testimony carefully. In all race track payoff cases, IRC 7206(2) should be used either as the primary statutory provision or, at least, as a supplement to 18 USC 1001, when prosecuting either the "ten percenter" or the true winner.
### [9.1] 3.3.7.3 (07-29-1998) Elements--Removal or Concealment with Intent to Defraud (IRC 7206(4))
The elements of a criminal violation under this Code section are: Tax imposed on the property, or; Property upon which tax is imposed or levy is authorized. Removal or concealment. With intent to evade or defeat assessment or collection of any tax. Concealment under this Code section does not mean merely to secrete or hide away, but includes also "to prevent the discovery or to withhold knowledge of." Thus, it is not necessary for the government to prove a physical removal, concealment or transfer from one place to another. A violation of this Code section may be committed by making false book entries indicating transfer of property rights.
### [9.1] 3.3.7.3.1 (07-29-1998) Statute of Limitations-- (IRC 7206(4))
It is probable that the period of limitations for this offense is 3 years (26 U.S.C. 6531).
### [9.1] 3.3.8 (07-29-1998) IRC 7207. Fraudulent Returns, Statements, or Other Documents
IRC 7207 states; "Any person who willfully delivers or discloses to the Secretary any list, return, account, statement, or other document, known by him to be fraudulent or to be false as to any material matter, shall be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned not more than 1 year, or both. Any person required pursuant to subsection (b) of section 6047 or pursuant to subsection (d) or (e) of section 6104 to furnish any information to the Secretary or such other person who willfully furnishes to the Secretary or such other person any information known by him to be fraudulent or to be false as to any material matter shall be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned not more than 1 year, or both." Any person who willfully delivers or discloses to the Secretary any list, return, account, statement, or other document, known by him to be fraudulent or to be false as to any material matter, shall be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned not more than 1 year, or both. Any person required pursuant to subsection (b) of section 6047 or pursuant to subsection (d) or (e) of section 6104 to furnish any information to the Secretary or such other person any information known by him to be fraudulent or to be false as to any material matter shall be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned not more than 1 year, or both. As of September 28, 1976, the Department of Justice has modified its long-standing policy of not authorizing prosecution under Section 7207. The current policy allows for use of Section 7207 in cases commonly referred to as altered-document-type cases whenever the computed tax deficiencies are such as to be considered de minimus in relation to the circumstances of the particular case under consideration and the means and methods utilized in committing the offense are commensurate with charging a misdemeanor rather than a felony. The policy otherwise remains unchanged in that Section 7207 is neither suitable nor appropriate in tax cases other than the altered-document-type case. This modification is strictly limited to cases arising out of presentation of false or altered documents by taxpayers in response to requests for substantiation of claimed deductions during the course of examination activity.
### [9.1] 3.3.9 (07-29-1998) IRC 7208. Offenses Relating to Stamps
This offense relates primarily to counterfeiting, using or fraudulently removing tax stamps. It is most occurs in the excise tax area. The full text of this statute is not recorded here. See the IRC for the specifics concerning this offense.
### [9.1] 3.3.10 (07-29-1998) IRC 7209. Unauthorized Use or Sale of Stamps
This offense relates primarily to excise taxes. The full text of this statute is not recorded here. See the IRC for the specifics concerning this offense.
### [9.1] 3.3.11 (07-29-1998) IRC 7210. Failure to Obey Summons
IRC 7210 states; "Any person who, being duly summoned to appear to testify, or to appear and produce books, accounts, records, memoranda, or other papers, as required under sections 6420(e)(2), 6421(g)(2), 6427 (j)(2), 7602, 7603, and 7604(b), neglects to appear or to produce such books, accounts, records, memoranda, or other papers, shall, upon conviction thereof, be fined not more than $1,000, or imprisoned not more than 1 year, or both, together with costs of prosecution."
### [9.1] 3.3.12 (07-29-1998) IRC 7211. False Statements to Purchasers or Lessees Relating to Tax
IRC 7211 states; "Whoever in connection with the sale or lease, or offer for sale or lease, of any article, or for the purpose of making such sale or lease, makes any statement, written or oral--" (1) "intended or calculated to lead any person to believe that any part of the price at which such article is sold or leased, or offered for sale or lease, consists of a tax imposed under the authority of the United States, or" (2) "ascribing a particular part of such price to a tax imposed under the authority of the United States,""knowing that such statement is false or that the tax is not so great as the portion of such price ascribed to such tax, shall be guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than $1,000, or by imprisonment for not more than 1 year, or both."
### [9.1] 3.3.13 (07-29-1998) IRC 7212. Attempts to Interfere with Administration of Internal Revenue Laws
IRC 7212 states; "Corrupt or Forcible Interference." (a.) "Whoever corruptly or by force or threats of force (including any threatening letter or communication) endeavors to intimidate or impede any officer or employee of the United States acting in an official capacity under this title, or in any other way corruptly or by force or threats of force (including any threatening letter or communication) obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title, shall, upon conviction thereof, be fined not more than $5,000, or imprisoned not more than 3 years, or both, except that if the offense is committed only by threats of force, the person convicted thereof shall be fined not more than $3,000, or imprisoned not more than 1 year, or both. The term "threats of force" , as used in this subsection, means threats of bodily harm to the officer or employee of the United States or to a member of his family." "Forcible Rescue of Seized Property." (b.) "Any person who forcibly rescues or causes to be rescued any property after it shall have been seized under this title, or shall attempt or endeavor so to do, shall, excepting in cases otherwise provided for, for every such offense, be fined not more than $500, or not more than double the value of the property so rescued, whichever is the greater, or be imprisoned not more than 2 years."
### [9.1] 3.3.13.1 (07-29-1998) Elements--Forcible Rescue (IRC 7212(b))
The essential elements of this offense are: That there is a forcible rescue or attempt to forcibly rescue. That the property is under valid seizure under Title 26. "Forcible" does not necessarily mean actual violence to the person of an officer. It includes "threatening language, or conduct calculated and intended to intimidate prudent, cautious, and ordinarily brave men and make them desist from the performance of official duty from well-grounded apprehension of serious bodily harm." The term, "threats of force," as used in this subsection, means threats of bodily harm to the officer or employee of the United States or to a member of his family. "It has been held that a forcible rescue, under IRC 7212(b), includes the use of force against property, such as the breaking of a bank window, the removal of the Service's seal on a safe deposit box, and the removal of the box and its contents from the bank." Cases interpreting forcible rescue under both IRC 7212(b) and 18 USC 2233 permit prosecution for rescuing or dispossessing, or attempting to rescue or dispossess property of which the government has taken legal possession, against a stranger as well as a former owner. To charge forcible rescue under 18 USC 2233 or IRC 7212, the taking by the government must have been made with at least some semblance of authority, i.e., the seizure must be valid on its face. It should be shown that the person retaking the property had knowledge of the seizure or of the fact that the property is in the possession of the government. A seizure valid on its face will generally support a rescue conviction even if the seizure could be invalidated by court proceedings. It is no defense that the person retaking claims to be the real owner and that the property was seized by mistake. A person's remedy is judicial, not self-help. NOTE: Title 18 section 2233 is also a forcible rescue statute that IRS has concurrent jurisdiction with the Federal Bureau of Investigation (FBI). By present practice, determination of whether an alleged forcible rescue is to be investigated by the Criminal Investigation Division or the FBI depends on whether the property was taken before or after it was adjudicated government property. The elements of 18 USC 2233 are provided in the section on Title 18 statutes.
### [9.1] 3.3.14 (07-29-1998) IRC 7215. Offenses with Respect to Collected Taxes
IRC 7215 states; (a) "Penalty." "Any person who fails to comply with any provision of section 7512(b) shall, in addition to any other penalties provided by law, be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not more than one year; or both, together with the costs of prosecution." (b) "Exceptions." This section shall not apply-- "(1) to any person, if such person shows that there was reasonable doubt as to (A) whether the law required collection or tax, or (B) who was required by law to collect tax, and" "(2) to any person, if such person shows that the failure to comply with the provisions of section 7512(b) was due to circumstances beyond his control." "For purposes of paragraph (2), a lack of funds existing immediately after the payment of wages (whether or not created by the payment of such wages) shall not be considered to be circumstances beyond the control of a person." It is a criminal offense to fail, after due notice (26 USC 7512), to collect and deposit, in a special trust account for the United States, employment, withholding, and certain excise taxes (Employment Taxes imposed by Subtitle C and Miscellaneous Excise Taxes imposed by Chapter 33 which pertain to Communications and Transportation of persons by air) and to keep the funds in the account until payment over to the United States.
### [9.1] 3.3.14.1 (07-29-1998) Elements-- (IRC 7215)
The elements of a criminal violation under this Code section are: A duty to collect or a duty to account for and pay over employment taxes or certain miscellaneous excise taxes. Failure to collect or failure to truthfully account for and pay over employment taxes or certain miscellaneous excise taxes. Notice, delivered in hand, instructing the taxpayer to collect and deposit employment taxes or certain miscellaneous excise taxes in a separate bank account designated as a special fund in trust for the United States and to keep the taxes so collected in the account until payment over to the United States. Once the taxpayer is in receipt of the notice, failure to collect or to deposit or to keep the collected taxes in a special trust account until payment over to the United States. Absence of information showing that the person had reasonable doubt as to whether the law required the collection of the tax, or that he or she had reasonable doubt that he or she was the one who was required by law to collect the tax; or absence of information showing that the failure to collect, deposit and to keep the tax in a separate account was due to circumstances beyond the control of the taxpayer. In the case of a corporation, partnership, or trust, notice delivered in hand to an officer, partner, or trustee is deemed to be notice delivered in hand to the corporation, partnership, or trust and to all officers, partners, trustees, and employees thereof. A lack of funds immediately after the payment of wages (whether or not resulting from the payment of wages) is not considered a circumstance beyond a person's control. For example, if an employer received the required notice and had gross payroll requirements of $1,000 with respect to which he or she was required to withhold $100 of income tax and if he or she had on hand only $900 and paid out the entire amount in wages, withholding nothing, the fact that the net wages due equaled that amount would not relieve him or her of the penalty imposed by this Code section. (Senate Committee on Finance Report (No. 1182, 85th Congress) (Jan. 23, 1958) 3 U.S. Cong. News '58, Page 255.) Circumstances causing a lack of funds after the payment of wages (but not immediately after) which are considered beyond a taxpayer's control include: theft, embezzlement, or destruction of the business by fire, flood, or other casualty, occurring within the period before which the person was required to deposit the funds; or the failure of the bank in which the person deposited the funds prior to transferring them to the government's trust account. A lack of funds due to the payment of creditors would not be considered such a circumstance.
### [9.1] 3.3.15 (07-29-1998) Other Criminal Statutes in the IRC within the Jurisdiction of CI
See Exhibit 3-1 for the other criminal statutes within the Internal Revenue Code. The text of these other statutes are not recorded here. See the IRC for specifics concerning these offenses.
### [9.1] 3.4 (07-29-1998) TITLE 18-- CRIMINAL PENALTIES APPLICABLE TO FRAUD AND MISCELLANEOUS INVESTIGATIONS
The following sections of Title 18 apply to violations that are within the jurisdiction of CI in connection with appropriate IRS-CI investigations.
### [9.1] 3.4.1 (07-29-1998) Section 2. Principals
Title 18 Section 2 states; (a) "Whoever commits an offense against the United States, or aids, abets, counsels, commands, induces, or procures its commission, is punishable as a principal." (b) "Whoever willfully causes an act to be done, which if directly performed by him or another would be an offense against the United States, is punishable as a principal." NOTE: This statute can only be used by CI when it relates to some other tax or money laundering violation for which CI has jurisdiction. An aider and abettor may be convicted even if the person who commits the offense has not been indicted, tried or convicted. One who causes a criminal act may be convicted even if the performer of the act is acquitted. While conviction of the principal is not a prerequisite to the conviction of an aider and abettor, the government must nevertheless establish beyond a reasonable doubt that the alleged offense was committed by someone and that the person charged as an aider and abettor assisted in the commission of the crime. To aid and abet, a defendant must associate himself with a venture, whether or not there is a conspiracy, and try to make it succeed. Thus, if the crime of attempted tax evasion by the main defendant was based on alleged concealment of his interest in, and income from, gambling clubs, his co-defendants could be held guilty because they consciously were parties to the concealment by pretending to be proprietors even if they did not actually share in the making of false returns. A defendant need not be present physically to be guilty as an aider and abettor in embezzlement. It is sufficient that he induced or procured another to embezzle. A principal is not liable for a crime committed by an agent solely because of the relationship. He or she will be liable only if the act of the agent is with his or her knowledge or consent, or he or she otherwise comes within the provisions of section 2 of Title 18. The agent is criminally responsible for his or her own actions. A corporation may be convicted for criminal acts of its agents, under the theory of respondeat superior, but criminal liability may be imposed on the corporation only where its agent is acting within the scope of employment. However, the officers themselves may also be criminally liable for these same acts.
### [9.1] 3.4.2 (07-29-1998) Section 3. Accessory after the Fact
Title 18 Section 3 states; "Whoever, knowing that an offense against the United States has been committed, receives, relieves, comforts or assists the offender in order to hinder or prevent his apprehension, trial, or punishment, is an accessory after the fact." "Except as otherwise expressly provided by any Act of Congress, an accessory after the fact shall be imprisoned not more than one-half the maximum term of imprisonment or (notwithstanding section 3571) fined not more than one-half the maximum fine prescribed for the punishment of the principal, or both; or if the principal is punishable by life imprisonment or death, the accessory shall be imprisoned not more than 15 years." NOTE: This statute can only be used by CI when it relates to some other tax or money laundering violation for which CI has jurisdiction. A principal becomes an accessory after the fact if, with knowledge of the commission of a crime, he or she assists in preventing or hindering the apprehension, trial, or punishment of the perpetrator.
### [9.1] 3.4.3 (07-29-1998) Section 4. Misprision of Felony
Title 18 Section 4 states; "Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority under the United States, shall be fined under this title or imprisoned not more than three years, or both." NOTE: This statute can only be used by CI when it relates to some other tax or money laundering violation for which CI has jurisdiction. A person is guilty of misprision of felony if he or she has knowledge of the actual commission of a felony, conceals it, and does not make this known to a person in authority as soon as possible.
### [9.1] 3.4.4 (07-29-1998) Section 111. Assaulting, Resisting, or Impeding Certain Officers or Employees
The provisions of IRC 7212, relating to Attempts to Interfere with Administration of Internal Revenue Laws, are set forth in the previous section. This statute, while effecting the work of CI, is primarily enforced by the Internal Security function of IRS. (a) In general.-- Whoever-- "(1) forcibly assaults, resists, opposes, impedes, intimidates, or interferes with any person designated in section 1114 of this title while engaged in or on account of the performance of his official duties; or" "(2) forcibly assaults or intimidates any person who formerly served as a person designated in section 1114 on account of the performance of official duties during such person's term of service," shall, where the acts in violation of this section constitute only simple assault, be fined under this title or imprisoned not more than one year, or both, and in all other cases, be fined under this title or imprisoned not more than three years, or both. (b) Enhanced penalty.-- Whoever, in the commission of any acts described in subsection (a), uses a deadly or dangerous weapon (including a weapon intended to cause death or danger but that fails to do so by reason of a defective component) or inflicts bodily injury, shall be fined under this title or imprisoned not more than ten years, or both.
### [9.1] 3.4.5 (07-29-1998) Section 115. Influencing, Impeding, or Retaliating Against a Federal Official by Threatening or Injuring a Family Member
Title 18 Section 115 states; (a)(1) "Whoever--" "(A) assaults, kidnaps, or murders, or attempts to kidnap or murder, or threatens to assault, kidnap or murder a member of the immediate family of a United States official, a United States judge, a Federal law enforcement officer, or an official whose killing would be a crime under section 1114 of this title; or" "(B) threatens to assault, kidnap, or murder, a United States official, a United States judge, a Federal law enforcement officer, or an official whose killing would be a crime under such section,""with intent to impede, intimidate, or interfere with such official, judge, or law enforcement officer while engaged in the performance of official duties, or with intent to retaliate against such official, judge, or law enforcement officer on account of the performance of official duties, shall be punished as provided in subsection (b)." (a)(2) "Whoever assaults, kidnaps, or murders, or attempts or conspires to kidnap or murder, or threatens to assault, kidnap or murder any person who formerly served as a person a member designated in paragraph (1) or a member of the immediate family of any person who formerly served as a person designated in paragraph (1), with intent to retaliate against such person on account of the performance of official duties during the term of service of such person, shall be punished as provided in subsection (b)." (b)(1) "An assault in violation of this section shall be punished as provided in section 111 of this title." (b)(2) "A kidnapping or attempted kidnapping, or conspiracy to kidnap in violation of this section shall be punished as provided in section 1201 of this title for the kidnapping, attempted kidnapping or conspiracy to kidnap of a person described in section 1201(a)(5) of this title." (b)(3) "A murder or attempted murder in violation of this section shall be punished as provided in sections 1111, 1113, and 1117 of this title." (b)(4) "A threat made in violation of this section shall be punished by a fine under this title or imprisonment for a term of not more than five years, or both, except that imprisonment for a threatened assault shall not exceed three years." (c) "As used in this section, the term--" (c)(1) " ``Federal law enforcement officer'' means any officer, agent, or employee of the United States authorized by law or by a Government agency to engage in or supervise the prevention, detection, investigation, or prosecution of any violation of Federal criminal law;" (c)(2) " ``immediate family member'' of an individual means--" "(A) his spouse, parent, brother or sister, child or person to whom he stands in loco parentis;" "(B) any other person living in his household and related to him by blood or marriage;" (c)(3) " ``United States judge'' means any judicial officer of the United States, and includes a justice of the Supreme Court and a United States magistrate; and" (c)(4) " ``United States official'' means the President, President-elect, Vice President, Vice President-elect, a Member of Congress, a member-elect of Congress, a member of the executive branch who is the head of a department listed in 5 U.S.C. 101, or the Director of the Central Intelligence Agency." (d) "This section shall not interfere with the investigative authority of the United States Secret Service, as provided under sections 3056, 871, and 879 of this title."
### [9.1] 3.4.6 (07-29-1998) Section 201. Bribery of Public Officials and Witnesses
Title 18 Section 201 states; "(a) For the purpose of this section--" (1) "the term "public official" means Member of Congress, Delegate, or Resident Commissioner, either before or after such official has qualified, or an officer or employee or person acting for or on behalf of the United States, or any department, agency or branch of Government thereof, including the District of Columbia, in any official function, under or by authority of any such department, agency, or branch of Government, or a juror;" (a)(2) "the term ``person who has been selected to be a public official'' means any person who has been nominated or appointed to be a public official, or has been officially informed that such person will be so nominated or appointed; and" (a)(3) "the term ``official act'' means any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official's official capacity, or in such official's place of trust or profit." "(b) Whoever--" (b)(1) "directly or indirectly, corruptly gives, offers or promises anything of value to any public official or person who has been selected to be a public official, or offers or promises any public official or any person who has been selected to be a public official to give anything of value to any other person or entity, with intent--" "(A) to influence any official act; or" "(B) to influence such public official or person who has been selected to be a public official to commit or aid in committing, or collude in, or allow, any fraud, or make opportunity for the commission of any fraud, on the United States; or" "(C) to induce such public official or such person who has been selected to be a public official to do or omit to do any act in violation of the lawful duty of such official or person;" (b)(2) "being a public official or person selected to be a public official, directly or indirectly, corruptly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally or for any other person or entity, in return for:" "(A) being influenced in the performance of any official act;" "(B) being influenced to commit or aid in committing, or to collude in, or allow, any fraud, or make opportunity for the commission of any fraud on the United States; or" "(C) being induced to do or omit to do any act in violation of the official duty of such official or person;" (b)(3) "directly or indirectly, corruptly gives, offers, or promises anything of value to any person, or offers or promises such person to give anything of value to any other person or entity, with intent to influence the testimony under oath or affirmation of such first--mentioned person as a witness upon a trial, hearing, or other proceeding, before any court, any committee of either House or both Houses of Congress, or any agency, commission, or officer authorized by the laws of the United States to hear evidence or take testimony, or with intent to influence such person to absent himself therefrom;" (b)(4) "directly or indirectly, corruptly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally or for any other person or entity in return for being influenced in testimony under oath or affirmation as a witness upon any such trial, hearing, or other proceeding, or in return for absenting himself therefrom;""shall be fined under this title or not more than three times the monetary equivalent of the thing of value, whichever is greater, or imprisoned for not more than fifteen years, or both, and may be disqualified from holding any office of honor, trust, or profit under the United States." (c) "Whoever--" (c)(1) "otherwise than as provided by law for the proper discharge of official duty--" "(A) directly or indirectly gives, offers, or promises anything of value to any public official, former public official, or person selected to be a public official, for or because of any official act performed or to be performed by such public official, former public official, or person selected to be a public official; or" "(B) being a public official, former public official, or person selected to be a public official, otherwise than as provided by law for the proper discharge of official duty, directly or indirectly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally for or because of any official act performed or to be performed by such official or person;" (c)(2) "directly or indirectly, gives, offers, or promises anything of value to any person, for or because of the testimony under oath or affirmation given or to be given by such person as a witness upon a trial, hearing, or other proceeding, before any court, any committee of either House or both Houses of Congress, or any agency, commission, or officer authorized by the laws of the United States to hear evidence or take testimony, or for or because of such person's absence therefrom;" (c)(3) "directly or indirectly, demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally for or because of the testimony under oath or affirmation given or to be given by such person as a witness upon any such trial, hearing, or other proceeding, or for or because of such person's absence therefrom;""shall be fined under this title or imprisoned for not more than two years, or both." (d) "Paragraphs (3) and (4) of subsection (b) and paragraphs (2) and (3) of subsection (c) shall not be construed to prohibit the payment or receipt of witness fees provided by law, or the payment, by the party upon whose behalf a witness is called and receipt by a witness, of the reasonable cost of travel and subsistence incurred and the reasonable value of time lost in attendance at any such trial, hearing, or proceeding, or in the case of expert witnesses, a reasonable fee for time spent in the preparation of such opinion, and in appearing and testifying." (e) "The offenses and penalties prescribed in this section are separate from and in addition to those prescribed in sections 1503, 1504, and 1505 of this title." NOTE: This statute can only be used by CI when it relates to some other tax or money laundering violation for which CI has jurisdiction.
### Internal Revenue Manual | ### Hndbk. 9.1 Chap. 3 Criminal Statutory Provisions and Common Law | ### (07-29-1998)

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