It’s that time of the year again: tax season. Over the next seven days millions of Americans will perform their annual rite by filing their 2011 tax returns (yes, the IRS pushed the filing deadline back by two days this year). So, it’s only fitting that today’s post features an intercircuit conflict involving tax law.
The federal tax code is largely dependent on voluntary compliance. Individual taxpayers who receive above a certain amount of income in a given year are required by law to file a tax return on which the IRS relies to determine the amount of taxes owed to the government. To deter unscrupulous individuals from helping others evade taxes, 26 U.S.C. § 7206(2) makes it a crime to willfully aid or assist another in the “preparation or presentation” of fraudulent documents in connection with matters arising under the tax code.
Last December, the Seventh Circuit called attention to the existence of a circuit split over the question of whether the statute is violated where a defendant assists in either the preparation or the filing of a false tax return, or whether a violation can only occur in cases where the defendant assists with both the preparation and the filing of a false return.
The appellate panel, which consisted of Judge Flaum, Judge Kanne, and Judge Sykes, described the division between the circuits as follows:
Section 7206(2) literally says that a person commits the crime by assisting in “the preparation or presentation” of fraudulent documents in connection with matters arising under the internal revenue laws. This court and the Ninth Circuit, however, read the statute in the conjunctive to require that a defendant assist in both preparing and filing the document. See United States v. Kellogg, 955 F.2d 1244, 1248–49 (9th Cir. 1992) (citing United States v. Dahlstrom, 713 F.2d 1423, 1429 (9th Cir. 1983)). Five other circuits appear to have a contrary view. Three circuits have held—although two of them in unpublished decisions—that preparing a fraudulent return or other document, whether or not filed, is sufficient to violate the statute. United States v. McLain, 646 F.3d 599, 604 (8th Cir. 2011); United States v. Borden, 269 F. App’x 903, 904–05 (11th Cir. 2008) (nonprecedential decision); United States v. Feaster, 843 F.2d 1392, 1988 WL 33814, at *2 (6th Cir. Apr. 15, 1988) (nonprecedential decision). Two other circuits have expressed doubt that the act of filing is an essential element under § 7206(2); both courts hold that even if filing is an element, that element is met when a defendant gives a false return to a third party who is obligated by law to file the return with the IRS. United States v. Cutler, 948 F.2d 691, 694–95 (10th Cir. 1991); United States v. Monteiro, 871 F.2d 204, 209–10 (1st Cir. 1989). It is not necessary to resolve this issue here because there is no question that Joyner‐Williams both prepared and filed false tax returns. Moreover, the district court instructed the jury using this court’s conjunctive reading of § 7206(2), which, as recognized by the circuits that disagree with us, is more favorable to defendants than the statutory language would seem to permit.
United States v. Joyner-Williams, No. 3:10cr14‐001, at 2 n.1 (7th Cir. Dec. 9, 2011) (nonprecedential decision).