The Difference Between § 7206(2) Aiding and Assisting and 18 USC § 2(a) Aiding and Abetting (11/22/18)

I speak in this blog entry on one of my pet peeves in federal tax crimes practice.  One of the principal tax crimes is § 7206(2), here, provides that a person is guilty of a three-year felony if the person --

(2) Aid or assistance  Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document.

This is often referred to as the substantive tax crime of "aiding and assisting."  One person acting alone can be guilty of this crime and does not require another actor guilty of some crime.

This aiding and assisting tax crime is not the same as aiding and abetting under 18 USC § 2(a), here, which provides

§ 2. Principals
(a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.

I focus on the second part dealing with aiding and abetting.  The first part merely states the common law that the person committing the substantive offense is punishable as a principal.  Of course, that person is a principal.

Aiding and abetting is not itself a substantive crime but simply makes someone who is not otherwise a principal of a substantive crime a deemed principal of the crime by virtue of aiding and abetting.  One person alone cannot be guilty of Title 18's aiding and abetting crime without some criminal conduct of another.   (I address the concepts that can make person guilty of a crime that he or she did not otherwise commit in my article John A. Townsend, Theories of Criminal Liability for Tax Evasion (5/15/12), SSRN https://ssrn.com/abstract=2060496.)

So, what brings this topic up now?  Back in July, DOJ Tax announced here a conviction with the following opening paragraph:

A jury in the Northern District of California convicted a San Francisco area Certified Public Accountant late yesterday of three counts of aiding and abetting the filing of a false tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and Acting U.S. Attorney Alex G. Tse for the Northern District of California.

I have bold faced the words I focus on in this blog.  In fact, the conviction was for aiding and assisting under § 7206(2).  I attach here the jury's verdict making this clear.

And, I do note that the judge in a recent order in the case (here, p. 3) so describes § 7206(2) as aiding and abetting.

And DOJ Tax makes this claim in DOJ CTM ¶ 13.03, here.

Section 7206(2) has been described as the Internal Revenue Code’s “aiding and
abetting” provision. United States v. Williams, 644 F.2d 696, 701 (8th Cir. 1981) (citing
United States v. Crum, 529 F.2d 1380, 1382 (9th Cir. 1976)), abrogated on other
grounds as noted in United States v. Brooks, 174 F.3d 950, 956 (8th Cir. 1999). 

As I state in footnote 149 of Michael Saltzman and Leslie Book, IRS Practice and Procedure (Thomsen Reuters current web edition):

149 CTM 13.03 (2012 ed.) states the following: “Section 7206(2) has been described as the Internal Revenue Code's 'aiding and abetting' provision.” For reasons that should be apparent when we discuss aiding and abetting below, the analogy is imperfect. Aiding and abetting requires some other criminally culpable party who commits the substantive offense. Section 7206(2) does not; one person alone can be guilty. For example, a tax return preparer prepares a false return for an innocent taxpayer. The only person guilty of a crime is the return preparer. CTM 13.05[3] (2012 ed.). Furthermore, a defendant who aids and assists is a principal in the crime and not an aider or abettor, with the result that the defendant can be tried only in the district where he acted; whereas, if he were an aider and abettor, he could be tried in the district where he acted or where the principal he aided and abetted committed the crime. United States v. Griffin, 814 F2d 806 (1st Cir. 1987) . 

CTM 13.04 (2012 ed.) states that the language of the statute “effectively incorporates into this statute the theory behind accomplice liability,” thus obviating the need for the indictment to add 18 USC § 2. This is just to say that the person is directly a principal of the tax perjury crime and thus the aiding and abetting deemed principal status has no relevance.

I have ranted about this before.  See Fifth Circuit Opinion on Aiding and Assisting and Trial Management (Federal Tax Crimes Blog 8/27/16), here.