Statistics and Extrapolations on Tax Cheating in the

Brilliant Jack Townsend a God sent inside the complex tax landscapes ....

FBAR Civil Penalty Items 

Items of interest to FBAR fans:

First, FinCEN has updated the inflation adjustment for the FBAR civil penalties stated in $ amounts.   Those adjustments are 

The National Taxpayer Advocate posted the following article on her blog:  Analysis of Tax Settlement Programs as Amnesties - When Should the Government Offer Them and How Should They Be Structured? (Part 1 of 3) (NTA Blog 3/14/18), here.  This first installment addresses the general effect of tax and tax-related amnesties.  The blog indicates: "Next week we will apply what we’ve learned about amnesties to the IRS’s OVDP.."

Penalty	Statute	Amount as Inflation Adjusted
Nonwillful Penalty Maximum (§ 5321(a)(5)(B)(i))	$10,000	$12,921
Willful Penalty Minimum (§ 5321(a)(5)(C)(i)(1)	$100,000	$129,210

What Are the Implications for Marinello on the Defraud / Klein Conspiracy?  

I have recently written on the Supreme Court's opinion in Marinello v. United States, ___ U.S. ___, ___ S.Ct. ___ 2018 U.S. LEXIS 1914  (2018).  See Supreme Court Holds that Omnibus Clause of the Tax Obstruction Crime (§ 7212(a)) Requires Awareness of Pending Tax-Related Proceeding (Federal Tax Crimes Blog 3/21/18; 3/22/18), here.  I write here to raise the question of how Marinello may affect the interpretation and application of the Klein conspiracy, which is a very common charge in criminal tax cases.

Marinello involved § 7212(a)'s Omnibus Clause which defines the crime I call tax obstruction as follows (from the Marinello opinion)

-corruptly * * * endeavors to obstruct or impede the due administration of this title.

The defraud conspiracy (18 USC 371)--commonly referred to as a Klein conspiracy in a tax setting (seeUnited States v. Klein, 247 F.2d 908 (2d Cir. 1957), cert. denied 355 U.S. 924 (1958)--punishes a conspiracy:

-to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy 

Statistics and Extrapolations on Tax Cheating in the US 

This is an interesting article with some data and some extrapolations from the data. A high level overview of who cheats (at least certain segments of the tax cheat category) and why.  Evan Horowitz, Everyone Tries To Dodge The Tax Man, And It Keeps Getting Easier (FiveThirtyEight 3/19/18), here.

The author discusses the data in three subject categories:

Foe No. 1: A weakened IRS
Foe No. 2: Small businesses cheat, and tax reform fosters them
Foe No. 3: Partisanship

I add that, in the mix for accounting for the problem of tax cheating, should be corporations and wealthy taxpayers  and their enablers who have scammed the system with Bullshit Tax Shelters and variants for years.  Many of those Bullshit Tax Shelters and variants work because the IRS does not have the resources to ferret them out and give those taxpayers their due.  And, even when caught, the IRS is reticent to hold the wealthy taxpayers (corporate and individual) liable with civil and criminal penalties, often slapping them at most with the accuracy related penalty when they knew that they were gaming the system.  They may sometimes prosecute the tax professionals who enabled these taxpayers but rarely do they proceed against corporate and wealthy individual taxpayers how played the game and hid behind their professionals.

I have recently discussed in another context my opening session with many clients who may have criminal tax problems.  For clients who I did not have reason to know were straight-shooters, I made and emphasized two key conditions/statements.  First, if the client lies to me, I will fire them.  (Now, I knew when I told them that, that there would be some lies in many cases; I would cross-examine most of what they told me and if I caught them lying repeatedly, I would and did fire them.)  Second, I would tell the clients that, if anyone in the room is going to jail, it would be them and not me.  I am not the fall guy (although, as noted above, in the Bullshit Tax Shelter area, some taxpayer enablers have served as the fall guy for taxpayers who should have and, in many cases, did know better)

I raise this principally because a former student recently reminded me of my telling my Federal Tax Crimes law students of these opening sessions with clients.  He reminded me of this in the context of John Dowd resigning as principal lawyer for the President in the Mueller led investigation.