305 371-8101

Convicted For False Tax Returns After IRS Audited and Disallowed Deductions for Prior Year

U.S. v. Davis, U.S. App. Lexis 7546  (5th Cir. April 2010)

Defendant Richard Davis was convicted for assisting in the preparation of false tax returns for co-defendant Madison Lee Oden. During the 1990s and for tax years 2000 through 2002, Davis prepared Oden's personal federal tax returns. Oden signed and filed these returns with the IRS.

In November 1994, the IRS issued a notice of deficiency to Oden that disallowed certain expenses reported on his 1991 Form 1040 for Oden's home-based "auto finance/sales" business.

The IRS later audited Oden's 1993 Form 1040, which Davis had prepared. It was determined that Oden had failed to substantiate deductions for the alleged losses that his auto finance business and two partnerships had suffered. In taxes years 2000 through 2002, Davis prepared Oden's Forms 2040, but those contained deductions that were similar to those that the IRS had disallowed previously. Davis informed Oden that the returns were correct, and Oden accepted Davis's word without challenge.

Davis and Oden were charged in a nine-count indictment, with one count of conspiracy to defraud the U.S. by impeding, impairing, and obstructing the functions of the IRS in violation of 18 U.S.C. 371 in October 2006. Oden was also charged with four counts of filing false federal tax returns for calendar years 1999 through 2002 in violation of 26 U.S.C. 7206(1), and Davis was charged with four counts of aiding and assisting in the filing of Oden's false returns for calendar years 1999 through 2002, in violation of 26 U.S.C. 7206(2).

On appeal, the defendant claimed that the government failed to prove beyond a reasonable doubt that he aided in preparing false tax returns, but the judgment of the district court was affirmed.

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