What is 26 USC 7206?

| by Max Soni

Thanks for visiting Spodek Law Group – we’re a second-generation law firm managed by Todd Spodek, with over 40 years combined experience in federal criminal defense. You’ve probably heard about some of our cases – Todd represented Anna Delvey in the Netflix series “Inventing Anna,” we handled the Ghislaine Maxwell juror misconduct case, and we’ve been featured in the New York Post, Newsweek, and Bloomberg. If you’re reading this, you’re probably facing a 26 USC 7206 charge, and you need to understand what that actually means.

26 USC 7206 is the federal false return statute – it’s what prosecutors charge when they catch you lying on a tax return. Not tax evasion, not failure to file, but knowingly putting false information on forms you sign under penalty of perjury. The IRS Criminal Investigation division obtained a 90% conviction rate in fiscal year 2024, and they’re not slowing down. In 2025, federal prosecutors are using 7206 charges more aggressively than ever because they’re easier to prove than tax evasion under 26 USC 7201.

Federal tax fraud – that’s what they’re calling this. You’re looking at up to three years in federal prison, fines up to $250,000 for individuals, and the government seizing assets they claim came from unpaid taxes. IRS-CI identified over $9.1 billion in fraud in fiscal year 2024 alone, and they recovered $1.2 billion in seized criminal assets. Those aren’t statistics, those are people’s lives destroyed.

What 26 USC 7206 Actually Covers

There are two subsections you need to understand because prosecutors charge them differently. Section 7206(1) applies when you sign a false return – when you knowingly put incorrect information on your own tax documents and sign under penalties of perjury claiming it’s true. Section 7206(2) applies to anyone who helps prepare a false return for someone else, like accountants, tax preparers, or business partners who assist in filing fraudulent documents.

The statute makes it a crime to sign documents under penalties of perjury that contain false information on material matters. That language matters because the government doesn’t have to prove you owed additional tax – they just have to prove you lied.

Material matters include underreporting income, claiming false deductions, hiding assets, mischaracterizing expenses. One of our clients got charged under 7206(1) for overstating charitable donations by $40,000 on three consecutive tax years – the IRS didn’t care that he actually donated some money, they cared that he lied about the amounts and signed the returns anyway.

How 26 USC 7206 Differs From Tax Evasion

Prosecutors love 7206 charges because they’re simpler than 26 USC 7201 tax evasion charges. Tax evasion under 7201 requires the government to prove affirmative acts of evasion – hiding money in offshore accounts, using shell companies, destroying records, that kind of conduct. The maximum penalty for 7201 is five years in prison because it’s harder to prove.

With 7206, federal prosecutors don’t need to prove affirmative evasion. They just need to prove you signed a false return knowing it was false. That’s it. Did you report $80,000 in income when you actually made $150,000? Did you claim your vacation as a business expense? Did you list personal purchases as deductible supplies? If you signed that return under penalties of perjury, you violated 7206.

The government files 7206 charges when they can’t prove full-blown tax evasion but they know you lied on your return. It’s a fallback charge, and it’s effective – because most people did lie about something, even if they weren’t running an elaborate evasion scheme.

The Willfulness Element and Good Faith Defense

To convict you under 26 USC 7206, prosecutors must prove you acted willfully – that you knew what the tax law required and you intentionally violated that duty. This is where criminal defense becomes critical, because willfulness is a state of mind element that creates defense opportunities.

If you made an honest mistake, if you relied on bad advice from your accountant, if you misunderstood what qualified as a deduction – those scenarios can defeat the willfulness element. The government must prove you knew the information was false when you signed the return. A defendant who acts on a good faith misunderstanding of tax law doesn’t act willfully, even if that understanding turns out to be wrong.

We’ve used good faith defenses successfully when clients genuinely believed their tax preparer’s advice, when they misunderstood complex deduction rules, when they made mathematical errors without criminal intent. But here’s what doesn’t work – claiming you disagree with tax laws or you don’t think they’re fair. Disagreeing with the law isn’t good faith, it’s just refusing to follow it.

The burden is on prosecutors to prove willfulness beyond a reasonable doubt. They’ll use your emails, your communications with accountants, prior years’ returns, witness testimony from anyone who heard you discuss taxes. If they can show you knew what you were doing was wrong – even if you didn’t know the specific statute number – that’s enough for willfulness.

What Happens If You’re Charged

Federal prosecutors don’t file 26 USC 7206 charges lightly. By the time you’re indicted, IRS Criminal Investigation has already spent months building the case – they’ve analyzed your returns going back six years (that’s the statute of limitations for 7206 prosecutions), interviewed witnesses, issued summonses for bank records and financial documents, and built a timeline of what they claim is fraudulent conduct.

You’re probably looking at charges for multiple tax years. The government files separate counts for each false return, so three years of fraudulent returns means three felony counts. IRS-CI boasts a 90% conviction rate because they don’t prosecute weak cases – if they’ve indicted you, they believe they have the evidence to convict. That doesn’t mean you’re out of options, it means you need an aggressive defense immediately.

Why You Need a Federal Criminal Defense Lawyer Now

If IRS-CI contacts you, if you receive a target letter from the Department of Justice Tax Division, if federal agents show up asking questions about your tax returns – you need a criminal defense attorney who handles federal tax cases, not your regular accountant or a civil tax lawyer. This is criminal prosecution, not an audit dispute.

At Spodek Law Group, we’ve represented clients in federal tax fraud cases where the government claimed hundreds of thousands in fraudulent deductions, where prosecutors alleged multi-year schemes, where IRS-CI had already built what they thought was an airtight case. Our job is finding the weaknesses in their case – challenging their willfulness evidence, questioning their tax loss calculations, filing pretrial motions to suppress evidence, negotiating with prosecutors before charges get filed.

The worst mistake you can make is talking to IRS agents or federal prosecutors without counsel. They’re not your friends, they’re not trying to help you, and anything you say will be used to build the 7206 case against you. Your Fifth Amendment right against self-incrimination exists specifically for situations like this – exercise it, then call a lawyer who knows how federal tax prosecutions actually work. We’re available 24/7 because federal investigations don’t run on business hours – if you’re facing a 26 USC 7206 charge or you think you might be under investigation, the time to act is now.