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Tax evasion is a crime that is committed when someone lies on their tax return or fails to file a tax return in order to avoid paying the taxes that he or she rightfully owes. The crime is complete when the tax return is filed, even if there is still time to amend it.

However, there are two general exceptions to the rule that the crime is complete once filed. The first exception is if the person filed the return before the normal due date. In order to avoid potential criminal culpability, the individual can file an amended return by the normal due date that does not contain fraudulent information. Another exception is if the superseding return removes the fraud because of an extension period that applies. In most cases in which a fraud charge is a possibility, these exceptions do not apply.

Different Approaches

Due to the exceptions most likely not applying, there are different approaches that people may take in this situation. Practitioners may advise against filing an amended return since doing so can basically prove the government’s case. Key elements of tax evasion include tax due and owed. By admitting to this crime by filing an amended return, the filing itself may be used as evidence against the criminal defendant.

One approach is to amend the tax return. This school of thought is premised on the possibility that an exception may exist through the voluntary disclosure program. This is a policy-based program that promises a taxpayer will not be prosecuted if he or she voluntarily discloses to the IRS his or her misconduct. This program encourages individuals to be honest with the system and seeks to receive the monies due to it. Without this type of program, the government would likely lose revenue since taxpayers would have no incentive to come forward and admit their misdeeds.

This train of thought is also supported by the idea that the government would be less likely to be able to prove its case. It is difficult to show that the defendant acted in a willful manner if the defendant later tried to correct a mistake.

Jury Determination

It is often up to the jury to determine whether the defendant acted in a willful manner. A jury may rule in favor of the notion that the defendant acted in a negligent manner rather than a willful manner if the defendant came forward to correct his or her return before being audited by the IRS. Even if the jury may believe that the defendant did act in a willful manner, it may still feel more compassion for a defendant that tried to do the right thing, even if it was late. While this second determination does not change the legal elements of the crime, the jury may still acquit based on jury nullification.

Qualifying for the Voluntary Disclosure Program

Before a defendant agrees to come forward about misinformation in a previous filing, he or she should know whether or not the defendant is eligible for the program. The first consideration is whether the report is made in a timely manner. The relevant point in time is whether the taxpayer informed the IRS of the information before the IRS gave notice of its intent to audit the taxpayer.

Another consideration is based on whether the defendant cooperated with authorities. This typically means that the taxpayer has made a good-faith effort to pay delinquent taxes, penalties and all interest. Even if these considerations weigh in favor of the defendant, he or she should be made aware that there are no guarantees because the voluntary disclosure policy is merely a policy and not an official law. There is no guarantee that there will be no prosecution. The IRS may find some fact or circumstance particularly compelling to refer the case to the Department of Justice, such as the notorious nature of the crime, the defendant being a public official or publicity surrounding the case.