This is a bit off topic, but I wanted to say something about it anyway. I just picked up this article, Mitchell N. Berman, Originalism Is Bunk, 84 N.Y.U. L. REV. 1 (2009), that I think is quite good on interpretation. There is first summary here and then the article itself here.
The debate over the scope and approach to interpretation echoes my view of Biblical interpretation (it's all about the text and interpretation, hardly a radical insight). How do you determine originalism -- a feat that for much of the Hebrew Bible is nigh impossible, and very difficult for the Christian Bible and, as I understand it, the Koran? Jim Kugel makes the point that, well, at least for much of the Hebrew Bible, we really can't know what the author of the ancient cryptic text meant; the relevant intent is not the original author(s) but the intent -- or interpretation -- of the community when the text was adopted as canonical. (You can listen to a variation on that theme in Kugel's talk, Can the Torah Make It's Peace with Modern Biblical Scholarship, at JTS here which I highly recommend.) In the case of the Hebrew Bible, the canonization process took a couple of hundred years a couple of thousand years ago, but long after much of the text was written. By that time, the community had interpreted the text in ways that were far from the original author(s) intention. Song of Songs - Song of Solomon in the Christian Bible -- is Kugel's classic proof text where a love, even bawdy, text about very human lovers was re-imagined a text of love between God and humanity. There are many other less dramatic examples. A similar process happened with the Christian Bible; I don't know enough about the Koran, but I do understand that all of these canonical texts can be interpreted in a bad way or a good way and it is up to the community to take the high road. See Robert Wright, The Evolution of God (2009), The process of interpretation that takes the high road permits a progressive re-imagination of the text for the needs of the ongoing community. The community cannot and should not be wed irrevocably to any original intention either of the authors or the community at canonization even when that can be discerned, but should be controlled by the needs of the ongoing community. After all, we have long since reinterpreted and essentially re-written the proscription of eye for an eye. And that process continues as we rethink attitudes in the ancient text that are no longer relevant to and, in some sense, destructive to the ongoing moral imagination of the community. I guess all of this to say is that it is all about interpretation which must interpret any text to meet the needs of the ongoing community, guided but not controlled by the original intent of whatever referrant point you want. I think that is Professor Berman's point, although he states it and develops it far more elegantly than I do.
Friday, November 20, 2009
Is the Criminal Statute of Limitations Suspended under the Wartime Suspension Act?
There are rumors that the government in a tax shelter case is seeking to suspend the criminal statute of limitations under the "wartime suspension act", 18 USC Section 3287. The text of the statute is:
I had not heard that the Government was doing that and have not researched the issue. The concern, of course, is that the statute of limitations is suspended on tax crimes as well as other crimes involving fraud or attempted fraud against the U.S. If any reader has any thoughts on this, I would appreciate hearing about it either as a comment to the blog or by separate email to jack@tjtaxlaw.com. I will post follow-through information as I learn it.
When the United States is at war or Congress has enacted a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544(b)), the running of any statute of limitations applicable to any offense (1) involving fraud or attempted fraud against the United States or any agency thereof in any manner, whether by conspiracy or not, or (2) committed in connection with the acquisition, care, handling, custody, control or disposition of any real or personal property of the United States, or (3) committed in connection with the negotiation, procurement, award, performance, payment for, interim financing, cancelation, or other termination or settlement, of any contract, subcontract, or purchase order which is connected with or related to the prosecution of the war or directly connected with or related to the authorized use of the Armed Forces, or with any disposition of termination inventory by any war contractor or Government agency, shall be suspended until 5 years after the termination of hostilities as proclaimed by a Presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress.I have highlighted the portion upon which the Government is apparently relying.
Definitions of terms in section 103 of Title 41 shall apply to similar terms used in this section. For purposes of applying such definitions in this section, the term "war" includes a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544(b)).
I had not heard that the Government was doing that and have not researched the issue. The concern, of course, is that the statute of limitations is suspended on tax crimes as well as other crimes involving fraud or attempted fraud against the U.S. If any reader has any thoughts on this, I would appreciate hearing about it either as a comment to the blog or by separate email to jack@tjtaxlaw.com. I will post follow-through information as I learn it.
Audit Avoidance as Tax Crimes Issue
Last night, I had my annual party for my current tax procedure class. We had a nice dinner with appropriate libations. We then settled into the living room and had a skit, in which members of the class played the roles of lawyer and family members in developing an aggressive tax plan for gifting stock in a close held corporation to a daughter with significant discounts. A key part of the plan as developed included how best to structure and present it on the gift tax returns so as to avoid audit of the valuation with the discounts. This type of planning is often called audit avoidance.
I thought readers of this blog might be interested in the materials for the skit as well as how two thoughtful lawyers discuss the issues raised by the skit. The articles are David M. Richardson, Audit Avoidance via Intent Modification -- Is Fred Corneel onto Something ... or Not, 2001 TNT 131-93; and Frederic G. Corneel, Audit Avoidance: A Response to David Richardson, 2001 TNT 131-91. Readers may find those articles in the materials for my class here. (Look for the link to Townsend Tax Procedure Materials (Fall 2008); the articles are at the end of these materials.) I also discuss these articles in my recent article John A. Townsend, Tax Obstruction Crimes: Is Making the IRS’s Job Harder Enough?, 9 HOUS. BUS. & TAX L.J. 260 (2009), here, at pp. 267 - 273. I think the articles by Richardson and Corneel are excellent presentations of the ethical issues in audit avoidance which, in its broad outlines, is a common feature of tax practice. And, although not the focus, their presentations do raise criminal concerns that should be considered by tax practitioners.
Enjoy!
I thought readers of this blog might be interested in the materials for the skit as well as how two thoughtful lawyers discuss the issues raised by the skit. The articles are David M. Richardson, Audit Avoidance via Intent Modification -- Is Fred Corneel onto Something ... or Not, 2001 TNT 131-93; and Frederic G. Corneel, Audit Avoidance: A Response to David Richardson, 2001 TNT 131-91. Readers may find those articles in the materials for my class here. (Look for the link to Townsend Tax Procedure Materials (Fall 2008); the articles are at the end of these materials.) I also discuss these articles in my recent article John A. Townsend, Tax Obstruction Crimes: Is Making the IRS’s Job Harder Enough?, 9 HOUS. BUS. & TAX L.J. 260 (2009), here, at pp. 267 - 273. I think the articles by Richardson and Corneel are excellent presentations of the ethical issues in audit avoidance which, in its broad outlines, is a common feature of tax practice. And, although not the focus, their presentations do raise criminal concerns that should be considered by tax practitioners.
Enjoy!
Tax Perjury, § 7206(1), as Aggravated Felony for Immigration Purposes
This morning a petition for certiorari caught my eye in reviewing Tax Notes Today and think it is an issue that Tax Crimes practitioners and students need to be aware of. I checked the Supreme Court's docket here and find that the case will go to conference on November 24, 2009. I don't have a link to the petition itself, but here is the link to the Solicitor General's brief in opposition to the petition. The brief fairly presents the issues and is a good background discussion, although from an advocate's perspective. The Solicitor General states the issues as:
QUESTIONS PRESENTED
In 8 U.S.C. 1101(a)(43)(M), the term “aggravated felony” is defined as including an offense that—
(i) involves fraud or deceit in which the loss to the victim or victims exceeds $10,000; or
(ii) is described in section 7201 of title 26 (relating to tax evasion) in which the revenue loss to the Government exceeds $10,000.
The questions presented are:
1. Whether a conviction for a felony tax offense other than tax evasion in violation of 26 U.S.C. 7201 qualifies as an aggravated felony under 8 U.S.C. 1101(a)(43)(M)(i), where the offense involves fraud or deceit in which the loss to the victim or victims exceeds $10,000.
2. Whether a conviction for filing a false tax return qualifies as an aggravated felony under 8 U.S.C. 1101(a)(43)(M)(i), where petitioner did not dispute a finding in the pre-sentence investigation report that petitioner owed $75,982 in additional taxes during the year in which the false tax return was filed.
JAT Comments:
The first issue is one that most practitioners will face at some point in a career where tax crimes is a significant part of their practice. I cover this point in my book and just cut and past that discussion here (without the footnotes):
The second subpart [of the statute quoted above] thus makes clear that a conviction under § 7201 (tax evasion) is an aggravated felony. The question arises, however, whether other tax crimes that, in general parlance, might be viewed to include fraud or deceit are covered in the first subpart. For example, as we have noted, the Government often charges § 7206(1) (tax perjury) in a case where it could have charged tax evasion, and then the sentencing phase will require proof of a tax loss number that is the number the taxpayer fraudulently sought to avoid reporting or paying. ICE, the government agency charged with administering the immigration laws, takes the position that § 7206(1) may constitute an aggravated felony as defined in the first subpart. There is currently a split in the circuits as to whether tax felonies other than evasion (such as § 7206(1) ) can constitute an aggravated felony.
Finally, a note of caution for practitioners. The attorney should advise or obtain another qualified attorney to advise the defendant of the collateral consequences, including the immigration consequences, of the charges and a plea to the charges if the defendant considers making a plea (as will usually be the case). Certainly, at least as to this immigration collateral consequence, courts have noted that the attorney has a professional duty to make sure the client is advised. So there will be a malpractice issue involved where the attorney fails to do so. In terms of a defendant’s attack on a conviction based in ineffective assistance of counsel, the courts have historically made a distinction between the attorney who failed to advise on immigration consequences and an attorney who gives erroneous advice on the immigration consequences. Failure to advise alone is not ineffective assistance of counsel, but erroneous advice is ineffective assistance of counsel. However, courts have at least suggested that they may be willing to reconsider this historical distinction because, in view of the attorney’s duty to the client, it makes no sense; if the courts do reconsider, I predict that they will hold that failure to advise is ineffective assistance of counsel also. Cover this point with your clients.
I should note that the conflict among the circuits is an interesting conflict for criminal tax practitioners. The court of appeals' decision that held that § 7206(1) is not an aggravated felony is a Third Circuit decision in Lee v. Ashcroft, 368 F.3d 218 (3d Cir. 2004). The majority decision in Lee was written by Judge Lou Oberdorfer, a D.C. District Judge, sitting by designation. Judge Oberdorfer was formerly AAG in charge of the Tax Division, and thus has considerable background in interpreting and applying the tax laws upon which the immigration issue turned. The dissent in Lee was written by Judge, now Supreme Court Justice, Alito. Maybe Justice Alito at least will have some interest in this issue and could influence the decision as to whether to accept certiorari. I have a lot of respect for Judge Oberdorfer and think he has the better position, but we will see.
The second issue is also one worthy of the practitioners' attention. The issue is whether the tax loss amount found by the sentencing judge (sometimes by inference if the defendant fails to object to that part of the Probation Office's PSR) is preclusive in the immigration proceeding. The Government must prove the amount in the immigration proceeding by clear and convincing proof, rather than just a preponderance. By contrast, in the sentencing phase the proof the tax loss is generally thought to be by a preponderance, although there may be some dispute about that generally or specifically if the tax loss dramatically increases the sentence. At any rate, it seems to me that the petitioner has the better part of this issue. I have asserted in a publication that the findings in the sentencing proceedings should be preclusive in the civil tax case following criminal conviction (John A. Townsend, Collateral Estoppel in Civil Cases Following Criminal Convictions, 2005 TNT 4-28) but in both of those proceedings (the criminal sentencing and the civil tax case) the findings are by a preponderance of the evidence with the outcome affected by the burden of proof only where the finder is in equipoise which is rare enough to be negligible. But, in the immigration proceeding, the required finding is by clear and convincing evidence. I am troubled that the use of the PSR in that context where the sentencing judge makes no explicit findings, and certainly would not have in any case required clear and convincing evidence on the state of the law now.
QUESTIONS PRESENTED
In 8 U.S.C. 1101(a)(43)(M), the term “aggravated felony” is defined as including an offense that—
(i) involves fraud or deceit in which the loss to the victim or victims exceeds $10,000; or
(ii) is described in section 7201 of title 26 (relating to tax evasion) in which the revenue loss to the Government exceeds $10,000.
The questions presented are:
1. Whether a conviction for a felony tax offense other than tax evasion in violation of 26 U.S.C. 7201 qualifies as an aggravated felony under 8 U.S.C. 1101(a)(43)(M)(i), where the offense involves fraud or deceit in which the loss to the victim or victims exceeds $10,000.
2. Whether a conviction for filing a false tax return qualifies as an aggravated felony under 8 U.S.C. 1101(a)(43)(M)(i), where petitioner did not dispute a finding in the pre-sentence investigation report that petitioner owed $75,982 in additional taxes during the year in which the false tax return was filed.
JAT Comments:
The first issue is one that most practitioners will face at some point in a career where tax crimes is a significant part of their practice. I cover this point in my book and just cut and past that discussion here (without the footnotes):
The second subpart [of the statute quoted above] thus makes clear that a conviction under § 7201 (tax evasion) is an aggravated felony. The question arises, however, whether other tax crimes that, in general parlance, might be viewed to include fraud or deceit are covered in the first subpart. For example, as we have noted, the Government often charges § 7206(1) (tax perjury) in a case where it could have charged tax evasion, and then the sentencing phase will require proof of a tax loss number that is the number the taxpayer fraudulently sought to avoid reporting or paying. ICE, the government agency charged with administering the immigration laws, takes the position that § 7206(1) may constitute an aggravated felony as defined in the first subpart. There is currently a split in the circuits as to whether tax felonies other than evasion (such as § 7206(1) ) can constitute an aggravated felony.
Finally, a note of caution for practitioners. The attorney should advise or obtain another qualified attorney to advise the defendant of the collateral consequences, including the immigration consequences, of the charges and a plea to the charges if the defendant considers making a plea (as will usually be the case). Certainly, at least as to this immigration collateral consequence, courts have noted that the attorney has a professional duty to make sure the client is advised. So there will be a malpractice issue involved where the attorney fails to do so. In terms of a defendant’s attack on a conviction based in ineffective assistance of counsel, the courts have historically made a distinction between the attorney who failed to advise on immigration consequences and an attorney who gives erroneous advice on the immigration consequences. Failure to advise alone is not ineffective assistance of counsel, but erroneous advice is ineffective assistance of counsel. However, courts have at least suggested that they may be willing to reconsider this historical distinction because, in view of the attorney’s duty to the client, it makes no sense; if the courts do reconsider, I predict that they will hold that failure to advise is ineffective assistance of counsel also. Cover this point with your clients.
I should note that the conflict among the circuits is an interesting conflict for criminal tax practitioners. The court of appeals' decision that held that § 7206(1) is not an aggravated felony is a Third Circuit decision in Lee v. Ashcroft, 368 F.3d 218 (3d Cir. 2004). The majority decision in Lee was written by Judge Lou Oberdorfer, a D.C. District Judge, sitting by designation. Judge Oberdorfer was formerly AAG in charge of the Tax Division, and thus has considerable background in interpreting and applying the tax laws upon which the immigration issue turned. The dissent in Lee was written by Judge, now Supreme Court Justice, Alito. Maybe Justice Alito at least will have some interest in this issue and could influence the decision as to whether to accept certiorari. I have a lot of respect for Judge Oberdorfer and think he has the better position, but we will see.
The second issue is also one worthy of the practitioners' attention. The issue is whether the tax loss amount found by the sentencing judge (sometimes by inference if the defendant fails to object to that part of the Probation Office's PSR) is preclusive in the immigration proceeding. The Government must prove the amount in the immigration proceeding by clear and convincing proof, rather than just a preponderance. By contrast, in the sentencing phase the proof the tax loss is generally thought to be by a preponderance, although there may be some dispute about that generally or specifically if the tax loss dramatically increases the sentence. At any rate, it seems to me that the petitioner has the better part of this issue. I have asserted in a publication that the findings in the sentencing proceedings should be preclusive in the civil tax case following criminal conviction (John A. Townsend, Collateral Estoppel in Civil Cases Following Criminal Convictions, 2005 TNT 4-28) but in both of those proceedings (the criminal sentencing and the civil tax case) the findings are by a preponderance of the evidence with the outcome affected by the burden of proof only where the finder is in equipoise which is rare enough to be negligible. But, in the immigration proceeding, the required finding is by clear and convincing evidence. I am troubled that the use of the PSR in that context where the sentencing judge makes no explicit findings, and certainly would not have in any case required clear and convincing evidence on the state of the law now.
Subscribe to:
Posts (Atom)
