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Court Holds that Definition of "Willful" Is Not The Same In FBAR Civil Penalty Case As In Criminal Tax Cases

Defendants in a FBAR penalty case argued that the Chief Counsel of the Internal Revenue Service has opined that the willfulness standard for purposes of 31 U.S.C. § 5321 is the same as the criminal standard. IRS CCA 200603026. However, the Court held that Chief Counsel Advice may not be used or cited as precedent. 26 U.S.C. § 6110(k)(3) Defendant also argued that the IRS manual stated that the definition of "willfully" was the same for criminal and civil cases. The Court held that the IRS was not bound by statements made in its manual. The Court held that the definition of "willfully" included reckless disregard for the tax laws.

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Definition of "Willful" in Civil Cases

Definition of "Willful" in Civil Cases

District Court finds in FBAR penalty trial that the definition of willful in civil cases includes reckless disregard of tax laws. The Court found that the burden of proof in a civil FBAR penalty case was a mere preponderance of the evidence. The IRS was not bound by the opinion of General Counsel or its own manual that state that the definition of willful should be the same in civil cases as in criminal cases.

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When Does Statute of Limitations Start to Run in Criminal Tax Cases?

When Does Statute of Limitations Start to Run in Criminal Tax Cases?

The statute of limitations for tax crimes may not begin to run on the later of the date the tax return was due or the date the return was filed. With regard to certain tax crimes, such as 7202, the date that the statute of limitation begins is the date that the taxpayer acted willfully. This will often be a question of fact that must be decided by the jury. As a result, a motion to dismiss based upon dates set forth in the indictment may be denied.

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Selecting a Criminal Tax Attorney

Selecting a Criminal Tax Attorney

Selecting a criminal tax attorney to represent you during a criminal tax investigation by the Criminal Investigation Division of the IRS may be a substantial factor in determining whether you will be indicted and ultimately whether you will prevail at trial with a jury verdict of NOT GUILTY on all counts.

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The Refusal of the Court to Instruct the Jury

In a tax evasion case in which the taxpayer is charged pursuant to section 7201 of the Code, it is reversible error for the trial court to refuse the taxpayer's request to instruct the jury that willful failure to pay a tax under section 7203 is a lesser included offense, if the facts of the case would permit a reasonable jury to find willful failure to pay and not the additional act of concealment required to prove tax evasion.

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Court Interest and Penalties in Its Calculation of Tax Loss For Sentencing Purposes Under the Federal Sentencing Guidelines

Generally, the Federal Sentencing Guidelines are based upon tax loss. The definition normally does not include interest and penalties. However, when a taxpayer is convicted of a tax offense in which he attempted to evade payment of the tax, interest and penalties, the Court may include interest and penalties in its calculation of tax loss.

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