Stan Veliotis analyzes fictitiously overstating taxable income
Associate Professor and Center co-director Stan Veliotis has published in 2021 his article, 'Fictitiously Overstating Taxable Income,' in University of San Francisco Law Review.
Analysis of income tax fraud is typically about understatement of taxable income. The Article details and contrasts the wide range of settings in which a taxpayer is motivated to fictitiously do the opposite: overstate taxable income. Understanding these different settings helps answer critical questions related to the overstating, such as which taxpayer is doing the overstating? why are they doing it? for what years are they doing it? and how is it being accomplished? Is it being done for tax purposes, or is the fictitious tax filing a conforming side-effect of overstating in other contexts, such as loan applications or financial reports?
The purpose of the Article is not merely to catalog interesting cases of how the complicated Internal Revenue Code leads to perverse results such that overstating taxable income can actually reduce taxes or to shine a light on scams in non-tax settings that use fictitious tax returns as a tool. Instead, the detailed examples are offered as a roadmap to government, counsel and others tasked with analyzing such settings. The Article ends by detailing considerations in applying the Code’s tax crime provisions to the various types of fictitious overstatement settings. The wrongdoers’ goals and methods of overstating can be subtly different and are relevant to government investigations, as well as to which Code crime provision(s) apply and government’s ability to prove the requisite state of mind in tax prosecutions (and even in non-tax prosecutions where tax filings are relevant).