Wednesday, April 20, 2011

Of Principals, Accomplices, Causers and Pinkerton Conspirators

I have drafted an article on concepts of criminal liability in the federal system. The crime I address is tax evasion. Tax evasion has three elements -- tax due and owing, an affirmative act, and willfulness of the actor. The actor liable for this crime is usually the taxpayer but others may also be liable even when the taxpayer is innocent (or at least not guilty). The setting for discussion is the promotion of tax shelters such as involved in the spate of Son-of-Boss shelters in the late 1990s and early 2000s. The Government finds these shelters offensive and has prosecuted multiple promoters related to KPMG, E & Y, BDO Seidman and Jenkens & Gilchrist in the promotion of such SOB shelters. My theses are:

1. In the setting addressed in the article (promoters prosecuted with guilty or innocent taxpayers), the conduct required to make the promoter defendants principals in the crime of tax evasion is the same conduct that would make them derivatively liable as accomplices and causers and perhaps, depending on the facts, as Pinkerton conspirators as well. Stated alternatively, the conduct required to make them principals directly in the commission of the crime is the same conduct that would make them derivatively liable, and vice-versa. If they are not direct principals in the commission of the crime, they are not liable under any derivative theory, and vice-versa.
2. If the first thesis is valid, then instructing the jury as to the derivative theories of criminal liability for the crime of tax evasion is not helpful.
3. Indeed, instructing the jury on these alternative theories -- particularly if they are presented as something different from principal liability -- risks jury confusion and erosion of confidence in the system.

Before sending the article out for consideration of publication, I would greatly appreciate the critique of any reader having the time and interest to read the article. For a copy of the draft article, readers can email me at jack@tjtaxlaw.com.

1 comment:

  1. Jack,

    "Tax evasion has three elements -- tax due and owing, an affirmative act, and willfulness of the actor."

    It is clear for all those UBS/HSBC clients who were convicted for tax evasion have three these elements. They owed tax, they did the act and they willfuly covered up.

    For some folks (like some low income immigrants), they have very low tax rate in US, and the money the left at their home countries were also taxed at local level (with much higher rate, like in China, 20% flat withthold). Had they moved the money in US bank, they might get much better deal tax (as their tax rate is low because their income level). It would be hard to prove them to evade tax for having the money "off shore" for personal gain.

    Would the financial gain for the accused be a motive for the court to consider tax evasion case ? or simply because tax due to IRS ?

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