Minnesota criminal tax fraud

Published On: 6th October 2010

A few thoughts on Minn.Stat. §289A.63 subd. 1, which criminalizes as a felony the failure to file a Minnesota return or pay Minnesota tax, if done with the intent to “evade or defeat” tax.  The ‘evade or defeat’ language is the same as the ‘evade or defeat’ language in I.R.C. §7201, the general federal tax fraud statute.  There does not seem to be much Minnesota case law on point defining ‘evade or defeat’ but reasonably it should be interpreted consistently with the federal case law under Spies v. United States, 317 U.S. 492 (1943), whereby the mere failure to file a return or pay tax, without more, does not meet the ‘evade or defeat’ standard.  It is also worth noting that under the Spies case law, several cases have indicated that multiple failures to file or pay, without more, cannot cumulatively meet the ‘evade or defeat’ standard, e.g. United States v. Masat, 896 F.2d 88 (5th Cir. 1990), or United States v. Jannuzzio, 184 F.Supp. 460 (D.Del. 1960), although it does not appear that any federal case addresses the ‘multiple failures’ issue at length: likely such cases simply are not prosecuted at the federal level, because the Justice Department realizes that such cases would not survive scrutiny under Spies.

The felony provisions of Minn.Stat. §289A.63 subd. 1 thus should reasonably be read to include as an element that there must be some concrete act of deception (an ‘affirmative act’ in the language of Spies) beyond mere failing to file or pay.