II. Good-Faith Belief Defense

A key element of most tax crimes is willfulness. The government must show that the defendant willfully evaded taxes or willfully filed a false return. This means that the government must prove that (1) the defendant knew what was required by law and, (2) notwithstanding, intentionally violated the law.

This definition raises several opportunities for the defense. For example, the defendant may introduce evidence that he was mistaken as to the state of the law or that he had a good-faith misunderstanding as to what the law provided. Such a defense would negate willfulness and would enable the jury to acquit. On the other hand, a good-faith belief that the law is unconstitutional is not a defense to willfulness. See Cheek v. United States, 498 U.S. 192, 201-06 (1991).

Can a defendant assert reliance on the advice of counsel or other tax professional to show a lack of willfulness? Like most things in the law, it depends upon the circumstances. If the defendant argues that he did not know what the law provides or that he believed a transaction to be legitimate, he may properly assert a reliance defense.

One court has held: “It is a valid defense to a charge of filing a false return if a defendant provides full information regarding his taxable income and expenses to an accountant qualified to prepare federal tax returns, and that the defendant adopts and files the return as prepared without having reason to believe that it is incorrect.” United States v. Whyte, 699 F.2d 375, 379-80 (7th Cir. 1983). However, if the charge is failure to file a tax return, the law is clear that a taxpayer may not rely on or delegate to a professional the duty to file a timely tax return. United States v. Boyle, 469 U.S. 241, 249-50 (1985).

Next:  III. Cash-Hoard Defense

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