The Bar to Charge Tax Evasion Cases as Felonies Just Got Lowered by the Minnesota Court of Appeals: What You Need to Know

There is not much caselaw in Minnesota on how to interpret the law on criminal tax evasion under Minnesota Statute 289A.63. It can be charged as a gross misdemeanor if you “knowingly” fail to file or pay taxes. Or it can be charged as a felony if you “willfully” fail to pay or file taxes. What that means can be difficult to parse out. I have previously written a blog post on there only being one case in Minnesota that squarely addresses the statute and that it was the non-precedential case of State v. Beattie that still left open questions of interpretation. However, the recent precedential opinion State v. O’Day just lowered the bar for what constitutes a felony.

The Background of the State v. O’Day Opinion

In State v. O’Day, the defendant made a motion to dismiss the case for lack of probable cause because the State could not produce independent evidence that the defendant, “willfully attempt(ed) in any manner to evade or defeat a tax.” Essentially, the defendant was arguing that the willful evasion is a separate element for the State to prove to make the case a felony rather than a misdemeanor which only requires knowingly failure to file or pay. The judge at the district court agreed and dismissed the felony charges for lack of probable cause, while keeping open the gross misdemeanor charges. However, the State appealed the decision to dismiss the felony charges. They argued that willful evasion was just a part of the criminal intent for the charges that should be decided by a jury, just as criminal intent must be proved to a jury in most cases.

The O’Day Court of Appeals Opinion is Troublesome but there is Hope in the Minnesota Supreme Court

Unfortunately, the Court of Appeals agreed with this argument and overturned the dismissal, saying there is no separate act required. The opinion is troubling because the Supreme Court case of United States v. Spies has already interpreted what willfully evading a tax means and said required the government to prove a separate evasive act “taken with the intent to trick, deceive, or mislead.” The O’Day Court parts paths from the Supreme Court and says that they do not have to follow United State v. Spies because that opinion was deciding a different federal statute rather than this Minnesota statute. In doing so, the Minnesota Court of Appeals has blurred the lines between felony and gross misdemeanor charges. This is a case that is ripe for appeal to the Minnesota Supreme Court because of how it flattens the Minnesota statute and deviates from the Supreme Court of the United States. As of today’s date, the case has not been appealed to the Minnesota Supreme Court. But this is something that Subzero Criminal Defense will be monitoring closely as criminal defense of tax crimes is something that we focus on.

Conclusion

If you are charged with criminal tax crimes for either failure to pay or failure to pay tax crimes, do not hesitate to reach out to Subzero Criminal Defense. Not many criminal defense attorneys have experience in this area of law. This is not the same as a routine DWI case. You want somebody who knows the law and how to leverage the laws in your favor. Contact Subzero Criminal Defense today. 651-248-5142. Subzero Criminal Defense, a law firm built to handle the difficult season.