Section 7201 of the Internal Revenue Code punishes attempts to evade the payment of tax. The current penalty for a Section 7201 felony convic­tion? Up to five years in prison and/or a fine of up to $100,000 for indi­viduals and $500,000 for corporations. As I’ve said before, Section 7201 is the premier tax evasion statute in the government’s arsenal.

‘While, at first glance, it may look like failure to file an income tax return is simply that and nothing more, this is not necessarily so. The horrendous fact is that sometimes failure to file (Section 7203) can easily trigger a tax evasion charge (Section 720 1).

Two cases demonstrate the very real danger. They raise what I call the “Positive Action” principle. . . .

Case one. An accountant whose business was preparing other peoples tax returns, taking their money, and turning over both to the I.R.S., failed to file a few returns and turn over some of the money. Convicted under Section 7201 for evading taxes, he appealed, contending that, at worst, he’d com­mitted only a Section 7203 failure to file offense. His conduct, he argued, was too “passive” to amount to the kind of “willful” behavior that Section 7201 requires. On this much the defendant (an accountant) and the government agreed: mere failure to file returns and pay taxes didn’t constitute a willful attempt to evade those taxes. There must be something more, some positive attempt to evade. But the defendant and the government disagreed about whether that something more had actually occurred in his case. more