A Point of No Return

BY LAURA LEE MANNINO

Is filing of a return required for a conviction of false return preparation? A recent case held it was not.

Linda Borden of Florida was convicted by a federal jury in March 2007 of 27 counts of preparing or presenting false or fraudulent returns under IRC section 7206(2). However, she asked the court to enter an acquittal with respect to one of those counts relating to a return prepared for a client, Brian White. Borden delivered the return to White, but he decided not to file it because he believed it to be incorrect. After his wife accidentally mailed it to the IRS, White contacted the IRS and requested that the return not be processed, and the IRS acquiesced.

Borden argued that section 7206 requires filing of a false return, and since the IRS had not processed White’s return, she could not be guilty of the offense. The government pointed out that section 7206(2) mentions “preparation or presentation” of a false return but doesn’t specifically require that it be filed. The court agreed, basing its decision on the plain language of the statute. The presentation, or filing, of a fraudulent return is a separate crime from its preparation.

Borden is appealable to the Eleventh Circuit, which has not spoken on this issue. In reaching its decision, the district court referred to a dissenting opinion in a Ninth Circuit case, U.S. v. Dahlstrom , 52 AFTR2d 83-5836, in which the majority held that filing is required for conviction. The district court noted, along with the dissent in Dahlstrom , that the decisions relied on by the majority in that case dealt with when the statute of limitations begins to run, not the question at hand.

Additionally, the Florida court noted that if filing was a prerequisite to the crime of false preparation, offenders could not be convicted as a result of undercover operations. Finding this result inconsistent with Congress’ intent, the court held that a preparer commits the crime of fraudulent preparation once the return is delivered to the client with the belief that the client will file it, whether or not the return is ultimately filed.

U.S. v. Borden , 99 AFTR2d 2007-2243

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