26 U.S.C. § 7212 – Interference with tax administration

26 U.S.C. § 7212 – Interference with tax administration

Section 7212 of the Internal Revenue Code makes it a crime to interfere with the administration of internal revenue laws. This law prohibits actions that obstruct or impede the due administration of the tax code. Let’s break down what this law covers and what it means for taxpayers.

What does Section 7212 prohibit?

There are two main parts to Section 7212:

1. It’s against the law to “corruptly” or “by force or threats of force” interfere with the administration of internal revenue laws.
2. It’s also illegal to “corruptly or by force or threats of force” obstruct or impede the due administration of the tax code.

So in plain English, you can’t try to intentionally mess with the IRS’s ability to administer tax laws. That includes doing things like:

• Threatening or bribing an IRS employee
• Destroying or hiding documents needed for an audit
• Filing a frivolous tax return to gum up the works

If you do any of those things, you could face fines up to $5,000 and up to 3 years in prison. Threats alone, without any actions, can lead to fines up to $3,000 and 3 years behind bars.

What does “corruptly” mean?

“Corruptly” is not defined in the statute, but courts have interpreted it to mean acting with the intent to gain an unlawful benefit or advantage for oneself or another person. So any kind of dodgy, dishonest behavior aimed at interfering with the IRS could potentially be seen as corrupt.

How is Section 7212 used by prosecutors?

Over the years, the Department of Justice has used Section 7212 aggressively to go after all kinds of tax-related offenses. Prosecutors will often tack on a Section 7212 charge in addition to charges for tax evasion, filing false returns, etc. This gives them another tool to secure convictions.[6]

Courts have generally interpreted Section 7212 broadly, giving the government a lot of leeway. Simply impeding or obstructing routine IRS administration in any way can potentially violate the statute. You don’t necessarily have to use threats or force.[5]

What are some examples of Section 7212 charges?

Here are a few examples of cases where taxpayers faced charges under this statute:

• A business owner backdated checks and falsified documents during an audit. He was charged with obstructing the administration of internal revenue laws.[3]
• A man filed dozens of frivolous tax returns on behalf of himself and others to gum up IRS operations. He was convicted of corruptly endeavoring to obstruct tax administration.[4]
• An accountant threatened and assaulted an IRS agent who was auditing his client. He was charged with forcible interference.[1]

What are some potential defenses?

There are a few arguments that can potentially defend against Section 7212 charges:

• Lack of intent – The government has to prove you acted “corruptly” and with intent to obstruct the IRS. If you can show there was no such intent, that may defeat the charges.
• First Amendment – The courts have said Section 7212 can’t be used to punish free speech that’s critical of the IRS. So if your actions were protected speech, that’s a defense.
• Ignorance – If you can convince the court you didn’t understand how your actions violated the law, that may also help defend against willfulness charges.

But in reality, these defenses are uphill battles. The government has a broad arsenal of tools at its disposal to prove corrupt intent. Any obstruction charges should be taken very seriously.

Takeaways

The bottom line is you don’t want to mess with Section 7212. This law gives the IRS and prosecutors a big stick to go after people who interfere with tax administration. Even actions that seem minor can potentially draw charges. The risks simply aren’t worth it. If the IRS comes knocking, get experienced legal help right away.