USA V. Walter Prezioso (9th Cir. 2019) Unpublished, No.18-50056. (http://cdn.ca9.uscourts.gov/datastore/memoranda/2019/07/25/18-50056.pdf) Full Disclosure was set up in a jury instruction as a prerequisite to a “following in good faith” exception to ” willful intent.” Defense objection was had, but to no avail.
Without stating it explicitly, the key issue in this case seemed to have been an implied allegation that the taxpayer didn’t tell the “whole story” to the accountant at the time the advice was sought. Of what does this case remind? If you make up a justifying fairy-tale and are then told that your fairy-tale justifies a path advantageous to you, it detracts from any “advice-of-accountant” justification. In the Supreme Court holding in Cheek v. United States, 498 U.S. 192, 200 (1991), the only mention of “advice-of-accountant” was:
“However, if the person was told by a lawyer or by an accountant erroneously that the statute is unconstitutional, and it’s my professional advice to you that you don’t have to follow it, then you have got a little different situation.”
Thus, the “advice-of-accountant” example in Cheek was an opinion of a tax practitioner based upon constitutionality, and not upon disclosure of a taxpayer’s particular circumstance. The lesson of Prezioso is clear.
(1) a taxpayer should disclose all of the pertinent facts to the tax advisor, and preferably have the tax advisor investigate to make certain of the facts.
(2) a taxpayer should also know that the intake forms and correspondence of any “incomplete disclosure” will likely readily be available to the court.
(3) As in Prezioso, any hint of omissive manipulation by taxpayer will be used in an instruction to negative the benefit of “good faith”.
Cheek dealt with a tax defier that manifested a good faith belief that labor earnings were not subject to tax. There was no intervening “advice-of-accountant” mechanism in Cheek. The fact that defendant’s proposed expert on accountant duties was denied the right to testify indicates that the accountants failure was a non-existent non-relevant matter in this case.
Without stating it explicitly, the key issue in this case seemed to have been an implied allegation that the taxpayer didn’t tell the “whole story” to the accountant at the time the advice was sought. Of what does this case remind? If you make up a justifying fairy-tale and are then told that your fairy-tale justifies a path advantageous to you, it detracts from any “advice-of-accountant” justification. In the Supreme Court holding in Cheek v. United States, 498 U.S. 192, 200 (1991), the only mention of “advice-of-accountant” was:
“However, if the person was told by a lawyer or by an accountant erroneously that the statute is unconstitutional, and it’s my professional advice to you that you don’t have to follow it, then you have got a little different situation.”
Thus, the “advice-of-accountant” example in Cheek was an opinion of a tax practitioner based upon constitutionality, and not upon disclosure of a taxpayer’s particular circumstance. The lesson of Prezioso is clear.
(1) a taxpayer should disclose all of the pertinent facts to the tax advisor, and preferably have the tax advisor investigate to make certain of the facts.
(2) a taxpayer should also know that the intake forms and correspondence of any “incomplete disclosure” will likely readily be available to the court.
(3) As in Prezioso, any hint of omissive manipulation by taxpayer will be used in an instruction to negative the benefit of “good faith”.
Cheek dealt with a tax defier that manifested a good faith belief that labor earnings were not subject to tax. There was no intervening “advice-of-accountant” mechanism in Cheek. The fact that defendant’s proposed expert on accountant duties was denied the right to testify indicates that the accountants failure was a non-existent non-relevant matter in this case.