Charged Under 26 U.S.C. 7206 What Happens Next

A charge under 26 U.S.C. § 7206 comes at the end of an investigation that has usually been running quietly for a long time. Before an indictment issues, agents have gathered returns and working papers, interviewed clients or advisers, and in preparer matters compared files across a client base, and the Tax Division of the Department of Justice has authorized the prosecution. The defense begins behind and has to close the gap on a short schedule.

This page sets out what follows in the Eastern District of Virginia and what tends to matter at each stage. It is general information about federal procedure rather than advice about any particular matter.

On this page

From Charge to First Appearance

A tax matter can begin with an indictment returned by a grand jury or, where there has been negotiation, with a charging document filed by agreement. Notice arrives either through a summons to appear or through arrest, and counsel engaged early can often arrange a self-surrender instead of an arrest.

At the initial appearance the charge is stated, counsel is identified, and release is addressed. Arraignment follows, a plea of not guilty is ordinarily entered so that the schedule opens, and the court sets deadlines. Because § 7206 is charged per document, an indictment may contain many counts, and the count total tends to alarm defendants more than it should: the structure of the counts is a separate question from what actually drives exposure.

Release Conditions and a Working Practice

Release is usually uncontroversial in principle and detailed in practice. Conditions frequently address travel, surrender of a passport where foreign accounts or foreign residence are in the picture, restrictions on transferring assets, and in preparer matters the defendant’s continued role in preparing returns for others.

That last condition can end a livelihood at the outset of a case, and it is easier to shape when release is first addressed than to alter later. Anyone whose income depends on the practice should have counsel raise it before conditions are set.

Discovery in a Document Case

Discovery here is heavy and almost entirely documentary. What matters is the set of returns charged, the working papers behind them, the client files the government relies on, any statistical comparison it has run across a client base and the method behind it, statements attributed to clients and employees, and, where undercover personnel presented returns, the script, the recordings, and the instructions they were given.

Requests should ask for methods and inputs rather than conclusions. Where the government has extended a sample across a wider client base to build a loss figure, how the sample was drawn is as important as what it showed. That analysis is slow, which is why an accountant instructed by the defense is retained early rather than after discovery closes.

Employees, Clients, and Separate Exposure

In a practice, other people are exposed. Employees who prepared returns under supervision may need their own counsel, and a principal cannot properly advise them about their own position. Clients contacted by agents will often call the practice, and those calls should be routed to counsel rather than answered informally, because contact from a defendant with a potential witness can be characterized in ways that create a second problem.

Where several people in one practice are involved, any joint defense arrangement needs to be documented and its limits understood at the outset rather than assumed.

The Pace of This District

The Eastern District of Virginia sets early deadlines and enforces them. Motions practice is compressed, the interval between arraignment and trial is shorter than in many districts, and continuances are not readily assumed. In a matter whose substance is a file-by-file dispute about materiality and a loss figure, that pace is the central practical problem, because the analysis is slow and the schedule is not.

Preserving the File

From the moment of notice the file is preserved exactly as it stands, including electronic systems, drafts, backups, and metadata. Alteration or destruction after notice creates a separate and simpler case for the government and forfeits arguments that would otherwise be available. Ordinary retention routines that delete material automatically should be suspended, and that step should be documented.

Statements stop at the same moment. Agents may still make contact. Declining politely and referring them to counsel is not an admission of anything, and it prevents an informal conversation from becoming a record written by someone else.

Frequently Asked Questions

The indictment has many counts. Does that mean a longer sentence?

Not in the way the count total suggests. Counts of this kind ordinarily group for guideline purposes, so the advisory range is driven by the aggregate conduct rather than multiplied by the number of documents. The count structure still matters for the record it creates and for professional consequences, and it is a subject of negotiation, but the figure that moves a sentence is the tax loss.

Can I keep preparing returns while the case is pending?

It depends on the conditions of release and on separate professional authorities that operate on their own timetables. Because conditions are set at the first appearance and are harder to change afterwards, the practical consequences for a livelihood should be put before the court when release is addressed rather than raised later.

My employees are being interviewed. What should I do?

Route everything through counsel and recognize that they may need counsel of their own. Employees who prepared returns under supervision have exposure that is not identical to the principal’s, and a practice cannot properly advise them about their own position. Any joint defense arrangement should be documented and its limits understood before information is shared.

Clients are calling me about agent visits. Can I talk to them?

Direct those calls to counsel. Clients are potential witnesses, and contact from a defendant can be characterized in ways that produce an additional and entirely avoidable problem. Counsel can respond in a way that does not create a record of the wrong kind, and can address any conflict between the practice and a former client.

How long will this take?

Less time than most people expect in this district. The Eastern District of Virginia runs a compressed schedule, and the interval between arraignment and trial leaves limited room for the file-by-file analysis these matters require. That is a reason to begin the defense analysis immediately rather than waiting for discovery to be complete.

Can it still be resolved without a trial?

Many matters are. Resolutions include a plea to fewer counts, an agreed treatment of the tax loss figure that shapes the guideline calculation, and agreements addressing the professional consequences alongside the criminal disposition. What is achievable turns on materiality, on the willfulness evidence, and on the scope of any extrapolation. No particular outcome can be promised in advance.

Working With Law Offices Of SRIS, P.C.

The first weeks decide these matters, because the file analysis that answers the government cannot be compressed into the weeks before a trial date.

Mr. Sris, Owner and Founder of Law Offices Of SRIS, P.C., is a former prosecutor and is admitted in Virginia, Maryland, the District of Columbia, New Jersey, and New York. The firm has been practicing since 1997. Mr. Sris and the firm’s Of Counsel attorneys handle criminal defense matters across those jurisdictions, which matters in federal practice because a single investigation frequently reaches conduct, witnesses, and records in more than one state. Mr. Sris brings a background in accounting and information systems from George Mason University, applied to complex financial and technology-related cases.

The firm serves Northern Virginia from 1655 Fort Myer Dr, Suite 700, Room 719, Arlington, VA 22209 and central Virginia from 7400 Beaufont Springs Drive, Suite 300, Room 395, Richmond, VA 23225. By appointment. Call (888) 437-7747 to schedule. Request a consultation. Reach our location at (888) 437-7747.

This page provides general information about what happens after a federal charge under 26 U.S.C. § 7206 and does not create an attorney-client relationship. Case results depend on a variety of factors unique to each case. Results may vary.

Attorney advertising. Prior results do not guarantee a similar outcome.

Attorney responsible for this advertising: Mr. Sris.

Being charged is one stage of the case. Our page on false return aiding false return charges sets out the offence from start to finish.