False Return / Aiding False Return Defenses

A charge under 26 U.S.C. § 7206 is met component by component. For the subscribing subsection the government must establish a document verified by a written declaration made under the penalties of perjury, falsity as to a material matter, the signer’s disbelief in its truth as to that matter, and willfulness. For the aiding subsection it must establish assistance in preparing or presenting a document that was false or fraudulent as to a material matter, and willfulness. Defeating any component defeats the count.

What follows describes where these matters are contested. It is a structural account rather than a menu, and which arguments a particular set of facts will support is a question for counsel with the file.

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Materiality

Materiality asks whether the statement was capable of influencing the taxing authority in the administration of the tax laws. It is a component to be established, not an assumption to be made from the fact that an entry was wrong.

Arguments arise where a charged entry had no effect on liability, where an item was misclassified but disclosed in full elsewhere on the same return, where the question was one of timing rather than substance, and where an omission concerned a schedule that did not bear on the computation. The government sometimes charges the entry rather than its effect, so counsel examines the return as a whole and traces the charged item through to the liability before conceding anything.

Belief, for the Person Who Signed

The subscribing subsection turns on what the signer believed about the document at the time of signing. A taxpayer who supplied complete information to a preparer and signed what came back has a different position from one who saw a figure they knew to be invented.

Proving that is documentary work: the engagement materials, the organizer or questionnaire returned to the preparer, the records handed over, any question asked and answer given, and the preparer’s own working papers. Where the relevant facts were disclosed and the advice received was followed, reliance on a qualified professional is a recognized route to negating both belief and willfulness. Where a return was signed without being read, that is a separate problem and it is addressed on its own terms rather than ignored.

Knowledge and Willfulness, for the Preparer

Willfulness means the voluntary and intentional violation of a known legal duty. It is not established by carelessness, by supervision that failed, or by a position that later proved wrong.

Where a client supplied false figures, altered source documents before delivering them, or withheld records the preparer asked for, the preparer’s belief about the return can be genuine even though the return was wrong. The defense is built from intake forms, notes of what clients said, retained source documents, requests for material that was never produced, and the order in which entries were made. Volume practices additionally face an inference drawn from patterns across many files, and answering that inference requires the files themselves.

The Practice File Is the Case

In preparer matters the contemporaneous record almost always outweighs later recollection, both the client’s and the preparer’s. What a client wrote on an intake form, which documents they brought, what they were asked and did not answer, and what the preparer noted at the time will decide questions that testimony cannot.

That is why the file is preserved exactly as it stands from the moment of first contact, including electronic systems, drafts, and metadata. Alteration or destruction after notice creates a separate and simpler case for the government and forfeits arguments that would otherwise be available. Tidying a file is not neutral housekeeping once an enquiry exists.

Testing the Government’s Sources

These prosecutions are usually assembled from three sources, and each has weaknesses.

Clients interviewed after their own returns were examined are speaking under the shadow of their own liability, and they have an obvious incentive to place responsibility on the preparer. What they said at the time is often recorded in the file rather than in their memory. Statistical comparisons across a client base can reflect a genuine clientele rather than a scheme, particularly where a practice serves a specific trade, community, or income profile, and the comparison group the government selected is itself a proper subject of enquiry. Returns prepared at the request of undercover personnel are prepared from scripted facts, and the script, the recordings, and the instructions given to the person presenting them are discoverable.

The Conduct of the Investigation

Some defenses have nothing to do with the returns. Statements obtained in circumstances that make them inadmissible can be suppressed. Material seized under a warrant can be challenged where the warrant lacked support or where the seizure went beyond it, which matters in practices where a search sweeps up files belonging to clients who are not implicated.

Where a civil examination continued after the examiner had grounds to suspect fraud, and the taxpayer was not told the character of the enquiry, the material gathered in that period raises a distinct problem that has been litigated for decades. The timeline of the examination is therefore worth reconstructing precisely, from the examiner’s own records rather than from the account given later.

Frequently Asked Questions

My client gave me false figures. Is that a defense?

It goes directly to willfulness. The subsection requires a voluntary and intentional violation of a known legal duty, and a preparer who entered figures supplied by a client, with no reason to doubt them, has not made that choice. Establishing it depends on the file: intake forms, retained source documents, notes of what the client said, and any request for records the client did not produce. This is why the practice file is preserved untouched.

Is every mistake on a return a material matter?

No. Materiality asks whether the statement was capable of influencing the taxing authority in administering the tax laws. Entries with no effect on liability, items disclosed elsewhere on the same return, and timing questions rather than substantive ones are all arguable. Counsel traces each charged entry through to the liability before treating materiality as settled, because the government sometimes charges the entry rather than its effect.

I signed a return I did not read. Where does that leave me?

It is a real problem and it is addressed directly rather than avoided. The component is what the signer believed about the document, and a signature given without attention is not the same as a signature given knowing a figure was invented. What was supplied to the preparer, what was asked, and what came back all bear on it. Counsel will want the engagement materials and the preparer’s file before advising on the position.

The government compared my returns to other preparers. Does that prove anything?

By itself, no. A comparison shows a difference; it does not show why the difference exists. Practices serving a particular trade, community, or income profile produce patterns for ordinary reasons. How the comparison group was selected, whether the sampled clients were chosen because they were already under examination, and whether individual files in the sample were in fact accurate are all open to enquiry.

Can I talk to my clients about the investigation?

Route it through counsel. Clients who are potential witnesses may be interviewed, and contact from the practice can be characterized in ways that create a second problem entirely. That applies to employees as well, who may have exposure of their own and may need separate representation. Declining to discuss the matter informally is not an admission of anything.

Is it too late to raise defenses after an indictment?

No, but the position is better before one. Prosecution of a Title 26 charge requires authorization from the Tax Division of the Department of Justice, which creates an audience for a written submission on materiality, willfulness, and the scope of any extrapolation. After indictment, the Eastern District of Virginia sets early deadlines and enforces them, so the choice of which components to contest has to be made quickly.

Working With Law Offices Of SRIS, P.C.

Defending a false return matter is file work. The contemporaneous record decides questions that no amount of later testimony can settle.

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 defenses to charges 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.

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These defences apply to one offence. Our page on false return aiding false return charges sets out that offence from start to finish.