Title 18, United States Code, Section 1001 makes concealing material facts and making false material representations a crime, and provides as follows:
(a) …. whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully-
(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
(2) makes any materially false, fictitious, or fraudulent statement or representation; or
(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;
shall be fined under this title, imprisoned not more than 5 years…..
This statute, in the perspective of criminal tax, is generally utilized when an individual provides false documents or statements to a revenue agent or special agent during an audit or investigation. Therefore, the element of concealment will not be discussed.
Although argument can be made that a criminal tax charge under § 1001, a felony, should more appropriately be brought under 26 U.S.C. 7207, a misdemeanor, it is the government’s choice.
In order for the government to achieve a conviction under § 1001, in the perspective of criminal tax charge of providing false documents or statements, it must prove the following five elements beyond a reasonable doubt:
- a statement, representation, or document was made or used,
- it was false, fictitious, or fraudulent,
- it was material,
- it was made or used knowingly and willfully, and
- it related to an action within the authority of the relevant federal agency.
Statements or Representations
The first element the government must prove is that a statement, representation, or document was made or used.
A “statement,” in the context of § 1001, can be either oral or written.
For example: An individual can be charged with a false statement, under § 1001, if they forge another’s signature on tax refund check and present it to a bank for payment.
For example: An individual responding to the examiner’s questioning, in order to avoid possible seizure, replies they do not own any real property.
The “statement” is not required to be rendered under oath, nor does it have to be legally mandated to violate § 1001.
For example: Considering the first example above, the false statement was directly presented to the bank and indirectly to the government.
It also does not have to be made directly to the government or received by the government.
For example: An individual prepares a false document to be electronically filed, but is arrested before the document is transmitted.
False, Fictitious, or Fraudulent
The second element the government must prove is that the claim is false, fictitious, or fraudulent. Because this section utilizes the word “or,” a charge under this section can presented as either a false, fictitious, or fraudulent claim.
False – Deliberately untrue. Unlawful. An action with intent to perpetrate a betrayal of trust or fraud. Done or said to fool or deceive someone. Adjusted or made so as to deceive.
Fictitious – false, feigned, or pretended. Not real or true. Made-up or fabricated.
Fraudulent – Based on or tainted by fraud. Done, made, or effected with a purpose or design to carry out a fraud. Obtained, done by, or involving deception, especially criminal deception.
The manner and mode by which an individual can make a false, fictitious, or fraudulent statement or make/use a false, fictitious, or fraudulent document in violation of § 1001 are nearly limitless.
For example: An individual provides an IRS examiner with falsified receipts to support falsely claimed business expenses.
Material
The third element the government must prove is the statement, representation, or document that was false, fictitious, or fraudulent was material.
Although material matter in a § 1001 prosecution is ultimately determined by the jury (see United States v. Gaudin , 515 U.S. 506 (1995)), generally speaking a matter is material in a criminal tax charge under § 1001 if it affects or impacts the legal duties of the IRS and/or is likely to affect the accurate calculation of tax due and payable.
The false material matter does not, however:
- have to result in a tax loss,
- be believable, or
- be legally mandated.
Willfulness
Willfulness is the fourth element that the government must prove in a tax crime case under § 1001. In the context of a §1001 charge, willfulness means that an individual knew what the truth or correct facts were, and voluntarily and intentionally provided facts that were incorrect. Incorrect facts provided or untrue statements made as a result of honest mistakes, misunderstanding, confusion, or faulty recollection do not rise to the level of willfulness. The willfulness element is only met when the government is able to prove, beyond a reasonable doubt, an intentionally false statement.
Some examples of willful intent, in tax evasion cases, are apparent in their design to deceive or disguise:
- providing an examiner with false invoices,
- hiding or destroying books and/or records, and
- false statements to agents.
Others examples of willful intent are less apparent, but can nonetheless support the element of willfulness:
- placing property or a business in the name of another,
- cashing checks and depositing currency in an out-of-state bank, and
- the educational background and experience an individual.
Jurisdiction of the Federal Government
The fifth element the government must prove is that the known, materially false, fictitious, or fraudulent statement, representation, or document was made or used relating to a matter within the “jurisdiction” of the federal government.
The term “jurisdiction,” as used in this statute, is not limited to the power to make final or binding determinations, but also includes matters within an agency’s investigative authority.
Venue
The venue, for purposes of § 1001, will occur in any district in which the false statement was made, a false document was prepared, or where a false document was submitted.
Statute of Limitations
The statute of limitations for a § 1001 prosecution is five years and commences upon completion of the crime, e.g., upon making of false statement or submission of false document.