Opinion ID: 3033843
Heading Depth: 2
Heading Rank: 1

Heading: Aid, Assist In, Procure, Counsel, or Advise

Text: [23] Although Smith and Bates did not actually prepare their clients’ tax returns, the plain language of § 7206(2) is 13100 UNITED STATES v. SMITH satisfied by aid, assistance, procurement, counsel, or advice in the preparation or presentation of a false or fraudulent return — there need not be actual preparation of the return at issue. Unsurprisingly, we do not require defendants engaged in tax schemes to physically “prepare” the tax returns to be found guilty of § 7206(2). See, e.g., United States v. Crum, 529 F.2d 1380, 1382 (9th Cir. 1976) ( “[T]he reach of Section 7206(2) is clearly not limited to acts of tax return ‘preparers[.]’ ”). [24] A review of the record reveals ample evidence of aid, assistance and advice in the preparation of the defendants’ clients’ false tax returns. To promote their tax shelter scheme, the defendants explicitly advised their clients to transfer all of their income and assets to the UBO, and then not to file any tax returns (for the business trust, personal income, or otherwise). Smith advised UBO clients to have their employers issue pay checks, commission checks, or other income sources in the name of the UBO instead of the clients’ names. Further, defendants established mechanisms for the UBO income to go undetected by the IRS, such as keeping end-ofthe-year income below a certain threshold through “distributions,” false “business deductions,” and non-interest-bearing accounts. These actions directly caused clients to file false and fraudulent returns.8 8 Defendants mistakenly argue that this case is “indistinguishable” from United States v. Dahlstrom, 713 F.2d 1423, 1429 (9th Cir. 1983), which held that “[p]rosecution for advocacy of a tax shelter program in the absence of any evidence of a specific intent to violate the law is offensive to the first and fifth amendments of the United States Constitution.” Dahlstrom’s holding is limited to pure advocacy or speech cases. See United States v. Schulman, 817 F.2d 1355, 1359 (9th Cir. 1987) (Dahlstrom is properly read as an advocacy case); United States v. Russell, 804 F.2d 571, 576 (9th Cir. 1986) (Ferguson, J., concurring) (as a member of the Dahlstrom panel, describing the case as “primarily a First Amendment case involving pure advocacy”). UNITED STATES v. SMITH 13101