26 USC 7203 – Willful Failure to File A Tax Return Translated

The first element the government must establish beyond a reasonable doubt is that an individual was required to file an income tax return for the tax year(s) in question.

During the relevant tax year the law required anyone having a gross income over a certain amount was required to file an income tax return, regardless of whether a tax was due for that year. Therefore, the government must establish, beyond a reasonable doubt, a person’s gross income for the calendar year ending was more than the minimum amount.

Federal income taxes are levied upon income derived from compensation for personal services of every kind and in whatever form paid, whether as wages, commissions, or money earned for performing services. The tax is also levied upon profits earned from any business, regardless of its nature, and from interest, dividends, rents and the like. The income tax also applies to any gain derived from the sale of a capital asset. In short, the term “gross income” means all income from whatever source unless it is specifically excluded by law. On the other hand, the law does provide that funds acquired from certain sources are not subject to the income tax. The most common non-taxable sources are loans, gifts, inheritances, the proceeds of insurance policies, and funds derived from the sale of an asset to the extent those funds equal the cost of the asset.

The second element the government must establish beyond a reasonable doubt is a person failed to file an income tax return for the tax year(s) in question at or before the time required. An individual taxpayer who must file an income tax return is required to file their return on or before April 15 of the year following the taxable year in question.

The existence of a tax deficiency or loss to the government is not an element of the offense. United States v. Olgin, 745 F.2d 263, 272 (3d Cir. 1984). In Gollapudi, the defendant argued unsuccessfully that “the literal truth of the information on a tax return is a complete defense, even if the response on the return was highly misleading.” 130 F.3d at 72. The Third Circuit concluded nevertheless that there was ample evidence for the District Court to find that Gollapudi filed a false statement. First, an IRS agent testified that Gollapudi admitted that he prepared and signed the W-2 forms and that they were false. Additionally, although Gollapudi presented evidence that the withholding amounts were true based on his “gross up” method, the District Court found this theory to be without merit based on the testimony of another IRS agent who demonstrated that no withholding was actually made. Moreover, it was established that the alleged withholding was never submitted to the IRS, but rather, was maintained in Gollapudi’s corporate checking account. * * * [H]e misstated the amount of his withholdings. Despite the fact that he understood his obligations, he submitted a form which he did not believe was true and accurate as to every material matter. 130 F.3d at 72 (citation omitted).

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26 USC 7203 Defined

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 regulations, shall, in addition to other penalties provided 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”.