Willful Omission Case Study

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There are two kinds of tax evasion: the willful attempt to evade or defeat the assessment of a tax, and the willful attempt to evade or defeat the payment of a tax. The most common attempt to evade a tax is the affirmative act of filing a false return that omits income and/or claims deductions to which the taxpayer is not entitled. The tax reported on the return is falsely understated and creates a deficiency. Willful under reporting constitutes an attempt to evade or defeat tax by evading the correct assessment of the tax. Evasion of payment generally occurs after the existence of a tax due and owing has been established. Either by the taxpayer reporting the amount of tax or by the I.R.S. assessing the amount of tax deemed to be due and owing (Daly, n.d). The IRS typically claims a taxpayer concealed assets or money from which the tax …show more content…

This element requires more than passive neglect of a statutory duty. A mere act of willful omission does not satisfy the affirmative act requirement of I.R.C. § 7201. Examples of affirmative acts include: filing of a false return, filing of a false amended return, failure to file return coupled with an affirmative act of evasion is commonly referred to as a “Spies evasion.” Passive failure to file tax returns is not tax evasion. If a person failed to file a return, an evasion case can only be prosecuted if the taxpayer engaged in an affirmative act to conceal or mislead.
In Spies v. United States, 317 U.S. 492, 498-99 (1943). The Supreme Court set out examples of conduct which can constitute affirmative acts of evasion: (A) Keeping a double set of books. (B) Making false or altered entries. (C) Making false invoices. (D) Destruction of records. (E) Concealing sources of income. (F) Handling transactions to avoid usual records. (G) Any other conduct likely to conceal or mislead (Daly,

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