Evasion, false returns, failure to file, failure to pay over payroll taxes. Look at the text of each criminal tax statute and you will find the same word: willfully. It is the element that separates a tax problem from a tax crime, and it is the element most criminal tax cases are fought over.
This guide explains what willfulness means, using the IRS's own definition and the Supreme Court's decisions. It is general legal information. Whether your conduct was willful is the central question in any exposure analysis, and it should be answered with a lawyer, under privilege.
The definition
The IRS manual defines it in one line. IRM 25.1.1.5: "Willfulness is defined as a voluntary, intentional violation of a known legal duty. A good faith misunderstanding of the law or good faith belief that one is not violating the law negates willfulness."
The IRS uses the same idea to decide who belongs in its Voluntary Disclosure Practice. The IRS VDP page says willfulness "is not simply making a mistake," but "the intentional, purposeful, deliberate act to hide income or assets and therefore evade filing requirements or payment of tax."
How the Supreme Court got there
The leading case is Cheek v. United States, 498 U.S. 192 (1991). The opinion traces the history. Ordinarily, ignorance of the law is no defense to a crime. But because of the complexity of the tax laws, the Court long ago interpreted "willfully" in the criminal tax statutes as carving out an exception.
The Cheek opinion describes the line of cases. In United States v. Murdock, the Court said Congress did not intend that a person, "by reason of a bona fide misunderstanding as to his liability for the tax, as to his duty to make a return, or as to the adequacy of the records he maintained, should become a criminal by his mere failure to measure up to the prescribed standard of conduct." Later decisions refined the standard to "a voluntary, intentional violation of a known legal duty."
What Cheek held
The defendant in Cheek, an airline pilot according to the opinion, stopped filing returns, claimed exemption from withholding, and was charged with willful failure to file under section 7203 and evasion under section 7201. He testified that, based on seminars and his own study, he sincerely believed the tax laws were being unconstitutionally enforced and that wages were not income. The trial court told the jury that only an objectively reasonable misunderstanding of the law could negate willfulness. The Supreme Court vacated the conviction and remanded.
The Court held three things that still govern:
First, the three parts of willfulness. Willfulness "requires the Government to prove that the law imposed a duty on the defendant, that the defendant knew of this duty, and that he voluntarily and intentionally violated that duty."
Second, good faith does not have to be reasonable. A good-faith misunderstanding of the law or belief that one is not violating it negates willfulness "whether or not the claimed belief or misunderstanding is objectively reasonable." The jury decides whether the belief was actually held. But the Court added that "the more unreasonable the asserted beliefs or misunderstandings are, the more likely the jury will consider them to be nothing more than simple disagreement with known legal duties."
Third, disagreeing with the law is not a defense. Claims that the tax laws are unconstitutional are different. They "reveal full knowledge of the provisions at issue and a studied conclusion, however wrong, that those provisions are invalid." The Court held that a defendant's views about the validity of the tax statutes are irrelevant to willfulness. The remedy for someone who believes a tax is invalid is to pay and sue for a refund or petition the Tax Court, not to stop complying.
Willfulness can vary with the duty
Willfulness is a word of many meanings, the Supreme Court said in Spies v. United States, 317 U.S. 492 (1943), "its construction often being influenced by its context." For failure to file, the Court said "voluntary and purposeful, as distinguished from accidental, omission to make a timely return might meet the test." For nonpayment of a tax that was not concealed, the Court would "expect willfulness in such a case to include some element of evil motive and want of justification in view of all the financial circumstances of the taxpayer."
How willfulness is proved
People rarely confess intent. Willfulness is usually proved by circumstantial evidence.
In Holland v. United States, 348 U.S. 121, the Supreme Court accepted that willfulness "involves a specific intent which must be proven by independent evidence and which cannot be inferred from the mere understatement of income." But it held that evidence of "a consistent pattern of underreporting large amounts of income," together with the failure to include all income in the books, could support the inference.
Cheek identified other sources the jury may consider in deciding whether a defendant knew the law: evidence of awareness of the relevant Code provisions or regulations, court decisions rejecting the defendant's position, IRS rulings, and the contents of return forms and instructions. In Cheek's own case, the opinion notes that he had been involved in civil cases where courts called his arguments frivolous and that an attorney had told him courts had rejected the claim that wages are not income.
The IRS fraud manual's indicators line up with these ideas. IRM 25.1.2.3 lists, among conduct indicators, the "taxpayer's knowledge of taxes and business practices where numerous questionable items appear on the tax returns," "failure to follow the advice of accountant, attorney or return preparer," and "failure to make full disclosure of relevant facts" to those advisors.
What willfulness is not
The IRS manual is explicit in the civil fraud context. IRM 25.1.6.2 says intent "is distinguished from inadvertence, reliance on incorrect technical advice, sincerely-held difference of opinion, negligence or carelessness." The Supreme Court in Spies said the same about the tax system generally: "It is not the purpose of the law to penalize frank difference of opinion or innocent errors made despite the exercise of reasonable care."
That is why the overwhelming majority of tax problems are civil. Bad bookkeeping, a misunderstood rule, an aggressive but honest position, a preparer's mistake. None of those is willful by itself.
Why willfulness drives every decision
Willfulness is not only a trial issue. It determines which path is open to you before anyone is charged.
- The IRS Voluntary Disclosure Practice, under IRM 9.5.11.9, is for taxpayers who "have criminal exposure due to their willful violation of the law." The IRS says that if the violation was not willful, taxpayers should consider other options, such as amended or past due returns. The VDP FAQs warn that a narrative describing mere negligence will lead to denial of preclearance. See the Voluntary Disclosure Practice.
- For foreign accounts, the IRS's streamlined procedures are designed for non-willful conduct, as IRM 4.63.3 describes.
- In an audit, the willfulness question decides whether you are in an ordinary exam or an eggshell audit.
Getting that call wrong in either direction is costly. Admitting willfulness you do not have, or claiming good faith you cannot support, both create problems. A careful, privileged assessment of the facts comes first.
The bottom line
Willfulness is a question about knowledge and intent, proved mostly by circumstantial evidence, including what a person says once the IRS starts asking questions. Statements made without counsel can supply the knowledge element the government needs. That is the practical reason to have a lawyer present before any interview. See your rights in an IRS criminal interview.
Cheek also noted that a defendant who believed a tax was invalid had lawful options: pay and sue for a refund under IRC 7422, or petition the Tax Court under IRC 6213.
Frequently asked questions
What does willful mean in a criminal tax case?
A voluntary, intentional violation of a known legal duty. Under Cheek v. United States, the government must prove the law imposed a duty, the defendant knew of it, and the defendant voluntarily and intentionally violated it.
Does my belief have to be reasonable to negate willfulness?
No. Cheek held that a good-faith misunderstanding of the law negates willfulness whether or not it is objectively reasonable, though the more unreasonable the belief, the more likely a jury will see it as disagreement with a known duty.
Is believing the income tax is unconstitutional a defense?
No. Cheek held that a defendant's views about the validity of the tax statutes are irrelevant to willfulness. The proper course is to comply and challenge the law through refund suits or the Tax Court.
Can the IRS prove willfulness without a confession?
Yes. It is usually proved circumstantially. The Supreme Court in Holland v. United States said a consistent pattern of underreporting large amounts of income can support an inference of willfulness.
General information only, not legal advice. Reading this page does not create an attorney-client relationship. Laws and IRS procedures change; the sources cited were reviewed on the date shown above.