Tax fraud

“ This demonstrates that the special agent may well conduct his investigation jointly with an agent from the Audit Division; that their combined efforts are directed to both civil and criminal infractions; and that any decision to recommend prosecution comes only after the investigation is complete or is sufficiently far along to support appropriate conclusions. The fact that a full-scale tax fraud investigation is being made does not necessarily mean that prosecution ensues when tax liability becomes apparent. ”

“ The first authorizes forfeiture of taxable 'articles' found in the possession, custody, or control of any person 'for the purpose of being sold or removed by him in fraud of the internal-revenue laws.' The second authorizes forfeiture of 'raw materials found in the possession of any person intending to manufacture the same into articles of a kind subject to tax,' with intent to defraud the revenue. ”

“ It has been the settled law of the country for a great many years, that an injunction bill to restrain the collection of a tax, on the sole ground of the illegality of the tax, cannot be maintained. There must be an allegation of fraud ”

“ Fraud. If any part of any deficiency is due to fraud with intent to evade tax, then 50 per centum of the total amount of the deficiency (in addition to such deficiency) shall be so assessed, collected, and paid.'
The question for decision is whether assessment of the addition is barred by the acquittal of the defendant on an indictment under section 146 (b) of the same act 26 U.S.C.A. § 145 (b) and note, for a willful attempt to evade and defeat the tax. ”

“ The fraudulent, episodic, petty-cash peculations of a clerk at a regulatory agency are frauds upon that agency, and although taxpayers generally are injured by the fraud and in that sense are the ultimate objects of it, the mailings by which the tax proceeds are collected which constitute the vast government funds out of which the agency's funds are taken, are, as a matter of practical good sense by which law determines such issues of causation, see Gully v. ”

“ Engaging in illegal activity, even if the taxpayer is not charged with a tax crime, is circumstantial evidence of fraud. Niedringhaus v. Commissioner, 99 T.C. at 211; see also Asbury v. Commissioner, T.C. Memo. 2011-107, slip op. at 19-20; Langille v. Commissioner, T.C. Memo. 2010-49, slip op. at 48-49.
In 2006 petitioner was convicted of structuring transactions in order to avoid cash transaction reporting requirements. The record supports a finding that petitioner engaged in this illegal activity to conceal income from Federal authorities, and we so find. ”

“ As we move towards the 21st century, we need to establish a progressive tax system capable of consistently meeting the costs of development and modernization. Government also owes conscientious tax-payers the duty of prosecuting tax frauds and tax evaders -- all those who seek a free ride on the public good without contributing to its provision. We will be especially severe on tax evasion by the powerful and the free-loaders-- and on corruption among our tax functionaries. ”

“ It can scarcely be doubted that if conclusiveness for federal tax purposes were attributed to any lower state court degree, whether the product of genuinely adversary litigation or not, there would be many occasions on which taxpayers might readily obtain favorable, but entirely inaccurate, determinations of state law from unsuspecting state courts. One need not, to envision this hazard, assume either fraud by the parties or any lack of competence or disinterestedness among state judges ”

“ The undoubted fact is there was co-operation between the defendants to use the tax certificate to the detriment of the complainant's rights; and there being such cooperation, the defense of multifariousness cannot prevail. The one purpose of the bill is to relieve the complainant from the effect of this tax certificate and of the tax title based upon it.'
For the reason that we agree with the finding that there is no evidence whatever of any fraud or wrongdoing by anyone concerned, we are constrained to disagree with the conclusion that the complainant was entitled to relief. ”

“ If 'moral turpitude' depends on the amount involved, respondent is probably entitled to a place in its higher brackets. Whether by popular test the magnitude of the fraud would be an extenuating or an aggravating circumstance, we do not know. We would suppose the basic morality of a fraud on the revenues would be the same for petty as for great cheats. But we are not aware of any keen sentiment of revulsion against one who is a little niggardly on a customs declaration or who evades a sales tax, a local cigarette tax, or fails to keep his account square with a parking meter. ”

“ FN1. Appellants also contend that the subject matter of this tax fraud prosecution, together with the sheer volume of complicated exhibits, turned this trial into one of mesmerizing complexity. We believe the case was not so complex as to be beyond the grasp of the jury. While the trial lasted over six weeks and there were hundreds of exhibits introduced, very few of them were complicated. The jury's task came down to deciding the basic issue of ownership of the Chase accounts and the Tong Il stock. ”

“ The common question is whether money received as exemplary damages for fraud or as the punitive two-thirds portion of a treble-damage antitrust recovery must be reported by a taxpayer as gross income under § 22 (a) of the Internal Revenue Code of 1939. [1] In a single opinion, 211 F.2d 928, the Court of Appeals affirmed the Tax Court's separate rulings in favor of the taxpayers. ”

“ If a taxpayer has filed fraudulent returns, a tax liability exists without regard to any period of limitations. Section 7602 authorizes the Commissioner to investigate any such liability. [12] If, in order to determine the existence or nonexistence of fraud in the taxpayer's returns, information in the taxpayer's records is needed which is not already in the Commissioner's possession, we think the examination is not 'unnecessary' within the meaning of § 7605 (b) . ”

“ This time however, its claim was for income tax. The taxpayer opposed payment in full, by demanding recoupment of the amount mistakenly collected as estate tax and wrongfully retained. Had the government instituted an action at law, the defense would have been good. The United States, we have held, cannot, as against the claim of an innocent party, hold his money which has gone into its treasury by means of the fraud of their agent. ”

“ Ordinarily, once the fraud is proved its scope is not a matter of dispute. But when, as here, the fraud involves the abuse of a position of public trust, closer analysis is required. Petitioners seek to denude their scheme of its range and pervasiveness. They construct an artifact whereby their fraudulent scheme was, as it were, intramural, unrelated to taxpayers to whom they sent the tax bills, and so the mails, the ingenuous argument runs, were not used in the fraud because the wrongdoing only arose after the mails had fulfilled their function by bringing the returns. ”

“ There is little doubt now that where unlawful gains are secured by the fraud of the taxpayer they are taxable. [10] In the instant case it is not questioned that the $250,000 would have been taxable to petitioner if he had obtained it by fraudulently inducing Reinfeld to believe petitioner's false claims to be true. That being so, it would be an extraordinary result to hold here that petitioner is to be tax free because his fraud was so transparent that it did not mislead his victim and his victim paid him the money because of fear instead of fraud. ”

“ The internal revenue law is very specific in the details of that which is necessary to prevent fraud, especially in regard to the tax on whiskey and tobacco, and it was still found necessary to authorize the bureau which had charge of the collection of that tax to prescribe regulations for conducting the business of making and selling whiskey, and to adopt forms of reports in the information which it must receive from the officers engaged in collecting the tax, and the parties who should pay the tax. ”

“ Poole, Inspecting Physician of the Quarantine Station at Grosse Isle, further explains the fraud, saying, 'These falsifications are, first, for the purpose of evading the emigrant tax, which is levied in proportion to age, and the common fraud is to understate the age; and, secondly, for the purpose of carrying more passengers than the law allows, by counting grown persons as children, of which last, the law allows a larger proportion to tonnage than of grown persons. ”

“ They are easily assessed, and misrepresentation or fraud is scarcely possible. Ad valorem duties are a certain rate per cent upon the invoice value of the goods. In these, frauds are abundant, and experts are required to prevent them. Specific duties are relatively heavy upon the consumers of goods of cheaper quality. A tax of 25 cents on each yard of cloth worth a dollar is five times as heavy as the same tax on cloth worth five dollars. ”

“ We thus have this singular and, I venture to say, unprecedented fact, in the history of judicial decisions in this country, that the property of a citizen honestly acquired, without suspicion of wrong in his vendor, is forfeited and taken from him because such vendor, at some period whilst owning the property, conceived the intent to defraud the government of the tax thereon, although such intent was never developed in action, and for the execution of which no step was even taken. ”

“ The statute does not prescribe a punishment simply for the intent to defraud the United States of the tax on spirits distilled, but for the act of engaging in and carrying on the business of a distiller with that intent. The act and the fraudulent intent together constitute the offence. That Congress, as a means of protecting the revenue and of securing taxes rightfully due the government, may declare such an act, when accompanied by such an intent, to be a public offence, and prescribe a punishment therefor, we do not doubt. ”

“ As long therefore as a management continues to improve a tax newly laid on, I should not think of farming it: but when, either from the extent of the imposition, or the nature of it, frauds begin to multiply, and management begins to become more and more difficult, then is the time immediately to put it into farm, either for different districts of a country, or in sub-farms. If this be delayed, frauds will daily increase; and the difficulty of preventing them will carry government to the expedient of imposing penalties, severe in proportion to the frequency of the crime. ”

“ GOOD SENSE AND GOOD BUSINESS Dishonest returns by one taxpayer defraud the citizen who is honest, because they place a heavier burden of taxation upon the latter. Moreover, the dishonest taxpayer and good cheats himself along with others, for the lower the business valuation of property, the higher the rate of taxation, or the poorer the service received from the government. "It is good sense and good business for a state to show up with large tax values and low tax rates. It shows a brisk and lively prosperity that is attractive to outside capital and enterprise." ”

“ Some offenses are subject to putative establishment by blunt and concise factual allegations, e.g., A saw narcotics in B's possession,' whereas 'A saw B file a false tax return' does not mean very much in a tax evasion case. Establishment of grounds for belief that the offense of tax evasion has been committed often requires a reconstruction of the taxpayer's income from many individually unrevealing facts which are not susceptible of a concise statement in a complaint. ”

“ And every person who removes, deposits, or conceals, or is concerned in removing, depositing, or concealing any goods or commodities for or in respect whereof any tax is or shall be imposed, with intent to defraud the United States of such tax or any part thereof, shall be liable to a fine or penalty of not more than $500. ”

“ Whether reference be had to revenue, the primary object in the imposition of taxes, or to the incidents which necessarily flow from their imposition, this is entirely true. Extravagant duties defeat their end and object, not only by exciting in the public mind an hostility to the manufacturing interests, but by inducing a system of smuggling on an extensive scale and the practice of every manner of fraud upon the revenue, which the utmost vigilance of Government can not effectually suppress. ”

“ Appellees were indicted for crimes relating to allegedly false income tax returns. The District Court dismissed Counts 4 and 6 of the indictment, charging as attempt to evade taxes by filing of a false return (26 U.S.C. § 7201) and aiding in the preparation and presentation of a false return (26 U.S.C. § 7206 (2) ) , on the ground that the six-year statute of limitations, 26 U.S.C. § 6531, barred prosecution under those counts. ”

“ Thus, although it was not the law yesterday, it will be the law tomorrow that funds embezzled hereafter are taxable income; and although past embezzlers could not have been prosecuted yesterday, maybe they can and maybe they cannot be prosecuted tomorrow for the crime of tax evasion. (The question of the civil tax liability of past embezzlers is left equally unclear.) We do not challenge the wisdom of those of our Brethren who refuse to make the Court's new tax evasion crime applicable to past conduct. ”

“ But such a scheme of taxation applied to communities whose exclusive and paramount legislation proscribes the taxed pursuit as common and public nuisances, imputes every step in such pursuit as a crime, and punishes every transaction out of which the tax is raised by fine and imprisonment, and requires every grand jury to be specially charged to inquire into every perpetration of these crimes, is an absurdity. ”