Preparing False Return is Tax Crime Even if Not Sent

By David & Mary Mellem, EAs

The issue is whether a tax practitioner can be convicted under §7206(2) for preparing a fraudulent return and presenting it to the taxpayer with the expectation that the taxpayer will file the return or whether the return has to be presented to IRS for processing in order for the code section to apply.

Linda Ann Borden was convicted of 27 counts of violating IRC §7206(2) which applies when any person “willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, on 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.” She now asks this District Court to acquit her on one charge since IRS, at the request of the taxpayer, did not process the return for the taxpayer.

The 1st, 10th, and 9th Circuits of the Court of Appeals have addressed this to some extent.

The 1st and 10th Circuits of the Court of Appeals have both stated “even assuming that ‘filing’ of the tax form is required for an offense under §7206(2), when a form relating to a taxpayer is required to be filed by an intermediary rather than the taxpayer, an offense under §7206(2) is complete when the document or information has been presented to the entity required by law to transmit the information to the IRS.” ( 871 F.2d 204, 1st Circuit, 1989; Cutler 948 F.2d 691, 10th Circuit, 1991).

The 9th Circuit Court of Appeals held explicitly that §7206(2) does contain a requirement that the returns be filed with IRS (Dahlstrom, 713 F.2d 1429, 1983).

The US District Court Middle District of Florida is in the 11th Circuit and the found no specific determination in the 11th Circuit on this issue. The court states it was persuaded by Judge Goodwin’s dissent in the Dahlstrom case. Judge Goodwin’s position focused partly on the words “preparation or” in §7206(2) stating preparation and presentation must

be two different things otherwise the words “preparation or” would be superfluous (unnecessary).

The Florida district court also stated if presentation of a fraudulent return to IRS was required in order for the penalty to apply, a sting operation would never result in this penalty since the returns would never be filed nor would the “taxpayer” in a sting operation ever intend to file them.

US v Borden, 99 AFTR 2d 2007-2243

This text has been shared with you courtesy of: David
& Mary Mellem, EAs & Ashwaubenon Tax Professionals,

920-496-1065 (fax 920-496-9111)
and marymellem[at]

©2007 Ashwaubenon Tax Professionals. No reproduction

of this article is permitted without the express
consent of Ashwaubenon Tax Professionals, 2140
Holmgren Way, Suite 1040, Green Bay, WI 54304.


TaxMama note: Also think of folks who ask their tax professionals to produce a more favorable tax return so you can get a mortgage loan or some other “harmless” thing. Are you trying to get your tax professional into trouble while you are comitting bank fraud? Don’t even ask us for fake tax returns. Frankly, I’ve thrown more people out of my office who’ve come in with that kind of request. And, over the years, this has cost me some friends, too.

If you want to falsify your finances, please do it yourself and leave your tax professional, your friends, and anyone else you like, totally out of it!



June 8 ­ Texas Chapter of NATP in Dallas, TX. David &
Mary are presenting the topics of Schedule D,
Retirement Plans, Elections, and “Ask”. For more
information contact Nina Voronin at


June 25 & 26 ­ Pennsylvania Society of Enrolled Agents
in State College, PA. Mary & David are presenting
Research, Elections, Ethics, Bankruptcy including debt

forgiveness, Form 4797, Audit Proofing Business
Returns, and “Ask”. For more information contact Bill
Matesevac at wpmatzea[at]

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