Moving past cute, I provide the following that I have just added to my ongoing draft of the Federal Tax Crimes book (some footnotes omitted).
e. Tax Due and Owing.
(1) No Tax, No Tax Evasion.
Where there is no tax due and owing, there is no tax evasion. Hence, tax due and owing is an element of the offense.
I pause here to address a point of potential semantical confusion with regard to this element of the crime of tax evasion. This element of the crime of tax evasion is often articulated as requiring a “tax deficiency” rather than a “tax due and owing.” What’s the difference? Deficiency is a term of art in the tax code, which defines deficiency as meaning the tax that is due less the tax that is owed. n164 As thus defined and employed elsewhere in the Code itself, deficiency is essentially a civil tax term of art. I have been concerned that the use of the term tax deficiency could sow unnecessary confusion with its more common use in the civil context. I recognize that my concern is perhaps only a semantical quibble. Elements of all crimes must be proved beyond a reasonable doubt. Hence, this element must be proved beyond a reasonable doubt. So, when the Government puts on evidence of the “tax deficiency” to meet that burden in an evasion case, it will not – or should not – put on evidence of the portion of the civil tax deficiency that it cannot prove beyond a reasonable doubt. Stated otherwise, this element of the crime of tax evasion is only the portion of the civil tax deficiency that the Government can prove beyond a reasonable doubt that the taxpayer intended to evade. n165 In that sense, the use of the term tax deficiency would be correct because of the role of the burden to prove the deficiency beyond a reasonable doubt. For purposes of this text, however, I prefer to use the term tax due and owing as a term of art meaning only the portion of the tax deficiency that, as proved beyond a reasonable doubt, the taxpayer intended to evade. While even the term “tax due and owing” is not descriptive of the criminal concept because, read literally, it could mean the same as tax deficiency; still, as I understand that term, it has become a term of art in the tax evasion context, although I recognize that tax deficiency is also used as a term of art for this element of tax evasion. n166 Still, I prefer to avoid the use of tax deficiency because the term tax due and owing is not commonly used in any potentially confusing context.
n164 This is a fair summary of § 6211(a) for present purposes.[§ 6211(a) is here.]
n165 This concept of dividing the tax deficiency between the portions attributable to tax evasion and not attributable to tax evasion is recognized § 6663, the civil penalty counterpart to § 7201 evasion. Section 6663 imposes the civil fraud penalty only on the portion of the tax attributable to fraud. So too, as I shall explain, only the portion of the tax deficiency attributable to evasion meets this element of tax evasion.
n166 I did a LEXIS-NEXIS federal court search in the combined federal court cases database on “7201 w/20 ‘tax due and owing’” and received 73 hits, most of which used the term tax due and owing in this sense. E.g. United States v. Farr, 536 F.3d 1174, 1181 (10th Cir. 2008) (“ the first element of Section 7201 -- a substantial tax due and owing”). None of the cases were Supreme Court cases. I did the same search for tax deficiency (substituting “tax deficiency” for “tax due and owing”) and obtained 277 hits, quite a bit more, and several of the cases were Supreme Court cases. E.g., Boulware v. United States, 552 U.S. 421, 425 ( ) (quoting Sansone v. United States, 380 U.S. 343 (1965) as follows: “[T]he elements of § 7201 are willfulness[,] the existence of a tax deficiency, . . . and an affirmative act constituting an evasion or attempted evasion of the tax.”).