Tax Fraud & Corporate Criminal Liability
The criminal act committed was within the scope of the individual’s employment.
The criminal act was committed in furtherance of the corporation’s business.
Specific criminal intent existed.
It is important that the agent, director, or employee had a particular level of authority within the corporate structure before his knowledge is imputed to the corporation. Additionally, the corporation must actually benefit from the agent’s criminal activity in to hold the corporation liable for the acts of an agent, director, or employee.
With respect to corporate agents tying the corporation to criminal liability, the majority of jurisdictions focus on whether the agent’s corporate responsibility comprised the general area in which the particular criminal offense occurred. With respect to tax fraud, the issue would deal with the preparation of the corporate tax returns. For example, a corporation may be held liable for tax evasion based upon the fraudulent acts of its internal accountant.
However, under the Model Penal Code, a corporation may only be criminally liable for the crimes of its agents if the commission of the offense was authorized, requested, or recklessly tolerated by the board of directors or by a high managerial agent acting in behalf of the corporation. A high managerial agent is defined as a corporate officer or agent of the corporation having such status so that one may deduce that his conduct represented the corporate policy. The Model Penal Code provides a much stricter test to determine a corporation’s liability with respect to the criminal acts of its agents.