United States vs Brimberry, Janice A, 961 F.2d 1286 (1992)

The case of United States v. Brimberry, Janice A. directly addresses the legal consequences of submitting a false IRS Collection Information Statement (Form 433A) and the standards for criminal liability under 26 U.S.C. § 7206(1).

Legal Framework:

• 26 U.S.C. § 7206(1): This statute makes it a felony for any person to willfully make and subscribe any return, statement, or other document, verified by a written declaration under penalties of perjury, which the person does not believe to be true and correct as to every material matter. The penalty can include a fine up to $100,000 ($500,000 for corporations), imprisonment up to 3 years, or both.

Facts and Application in Brimberry:

• Janice Brimberry submitted IRS Form 433A, a Collection Information Statement, in connection with a large tax liability. On this form, she declared under penalty of perjury that she had no real property and no assets that could be used to pay the tax.
• Evidence showed that, at the time of signing, she actually owned significant assets, including a house and over $69,000 in jewelry, which she failed to disclose.
• The court found that Brimberry’s actions—such as structuring the purchase of a house in another person’s name while making all payments herself, and hiding jewelry—demonstrated willfulness in making false statements on the form.

Key Legal Points from the Case:

1. Materiality: The false statements must be material. In Brimberry, the omitted assets were material because they could have been used to satisfy the tax liability.
2. Willfulness: The government must prove that the false statement was made willfully, meaning voluntarily and intentionally, with the specific intent to violate a known legal duty. The court found ample evidence of willfulness in Brimberry’s conduct, including her efforts to conceal assets and mislead the IRS.
3. Reliance on Professional Advice: A defense based on good faith reliance on an accountant’s advice requires full disclosure of all material facts to the advisor and actual reliance on their advice. In Brimberry, the court rejected this defense because there was no evidence that Brimberry fully disclosed her assets to her accountant or that the accountant advised her to omit them.
4. Sufficiency of Evidence: The court held that even if some assets (like jewelry) were occasionally worn in public, this did not negate the willfulness of failing to disclose them on the form, especially given the other evidence of concealment.

IRS Form 433A Requirements:

• IRS Publication 1854 and Form 433A instructions require full disclosure of all assets, including real estate, vehicles, bank accounts, investments, and personal property such as jewelry and collectibles.
• The form is signed under penalty of perjury, and any willful omission or misstatement of material facts can result in criminal prosecution under § 7206(1).

Conclusion:

• Submitting a false IRS Collection Information Statement (Form 433A) by willfully omitting material assets constitutes a felony under 26 U.S.C. § 7206(1). The Brimberry case illustrates that the government must prove both materiality and willfulness, and that defenses based on reliance on professional advice require full disclosure and actual reliance. The penalties for violation are severe, including substantial fines and imprisonment.