Section 7206 fraud - filing false statements

It is very important to seek the immediate attention of a tax attorney when a return preparer is being investigated by the IRS Criminal Tax Division. The very best time to defend actions taken is before the IRS. It is far more difficult to fashion a defense at the time the case is being considered by the Department of Justice.


Section 7206 fraud by return preparers apply when the preparer willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; or willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document.

There was a conviction in the case just published. The tax preparer was sentenced following his conviction for aiding in the preparation and filing of false tax returns. In determining the base offense level under the sentencing guidelines, the tax loss was properly calculated based on the aggregate amount of underpaid income tax determined by an IRS examination of each fraudulent return.

The district court was not required to reduce the government's tax loss from the fraud by any unclaimed worthless investment capital loss deductions to which the preparer's taxpayer clients were legitimately entitled. The investors' offsetting capital losses were unrelated to the tax fraud committed by the preparer, and the losses that he had his clients fraudulently claim were ordinary business losses that were neither related to nor in lieu of the worthless investment losses. Additionally, the unclaimed capital losses were tax benefits available to the investor-taxpayers, not to the tax preparer. Consequently, the tax preparer's fraud did not result in any offsetting tax benefit to the government.
Affirming an unreported DC Mo. decision.



United States of America, Plaintiff-Appellee v. Leon Travis Blevins, Defendant-Appellant.

U.S. Court of Appeals, 8th Circuit; 07-3298, September 16, 2008.Affirming an unreported DC Mo. decision.

[ Code Sec. 7206]

Tax crimes: Aiding in preparation and filing of false returns: Conviction and sentence: Sentencing Guidelines: Tax loss calculation. --


LOKEN, Chief Judge: Tax preparer Leon Travis Blevins prepared and filed twenty federal income tax returns for seven taxpayers that falsely claimed Schedule C business losses, Schedule E rental losses, and Form 4797 losses from the sale of business property for the 1999-2002 tax years. At least six of the taxpayers were investors in a foundering business run by Blevins that bought and sold home mortgages and engaged in other real estate activities. Some returns falsely claimed the business's ordinary losses as if they were incurred by the investor-taxpayers. Other claimed losses were wholly fictitious. Blevins pleaded guilty to twenty counts of aiding in the preparation and filing of false tax returns in violation of 26 U.S.C. § 7206(2). He appeals his twenty-one month sentence, arguing that the district court 1 erred in determining tax loss under U.S.S.G. § 2T1.1 because the court failed to take into account the tax effect of investment losses to which his taxpayer clients were entitled. The court released Blevins on his personal recognizance pending resolution of the appeal. Reviewing the district court's interpretation of the Sentencing Guidelines de novo, we affirm. See United States v. Vickers, 528 F.3d 1116, 1120 (8th Cir. 2008) (standard of review).

For sentencing purposes, the Guidelines provide that the base offense level for the offense of filing fraudulent tax returns is the tax loss level from § 2T4.1, or six if there is no tax loss. U.S.S.G. § 2T1.1(a). Tax loss is "the total amount of loss that was the object of the offense ( i.e., the loss that would have resulted had the offense been successfully completed)." § 2T1.1(c)(1). Notes (A)-(C) to § 2T1.1(c)(1) provide that tax loss equals 28% of the underreported income and improperly claimed deductions (34% if the taxpayer is a corporation), plus 100% of any falsely claimed tax credits, "unless a more accurate determination of the tax loss can be made."

At sentencing, the government argued that the tax loss attributable to Blevins's offense conduct was $100,029, the aggregate amount of underpaid income tax determined by an IRS examination of each fraudulent return. 2 This level of loss produced a base offense level of sixteen, see U.S.S.G. § 2T4.1(F), and an advisory guidelines range of 21-27 months in prison. Blevins countered with a letter report from his tax and business valuation expert. Using investment data from the fraud investigation, the expert opined that each taxpayer's investment in Blevins's failed business was "a total loss" and that these losses "appear to be capital losses." Based on the assumption that each investor would use these losses to offset $3,000 of ordinary income each year until the losses were exhausted, the expert calculated that the investors were entitled to capital loss deductions totaling $32,177, "resulting in a net tax loss to the government of $68,074." 3 This lower level of tax loss would produce a base offense level of fourteen, see § 2T4.1(E), resulting in an advisory guidelines sentencing range of 15-21 months in prison.

Relying on the expert's calculations and on the Second Circuit's decision in United States v. Gordon, 291 F.3d 181, 187 (2d Cir. 2002), cert. denied, 537 U.S. 1114 (2003), Blevins argued to the district court, as he does on appeal, that the determination of tax loss under § 2T1.1(c)(1) must take into account the legitimate, unclaimed capital loss deductions to which his taxpayer clients are entitled on account of their worthless investments. The government disagreed, urging the court instead to follow decisions in other circuits concluding that the definition of tax loss in § 2T1.1(c)(1) --"total amount of loss that was the object of the offense" --does not allow a sentencing court to take into account "other unrelated mistakes on the return such as unclaimed deductions." United States v. Chavin, 316 F.3d 666, 677 (7th Cir. 2002); accord United States v. Delfino, 510 F.3d 468, 472-73 (4th Cir. 2007), petition for cert. filed, 76 U.S.L.W. 3569 (Apr. 7, 2008); United States v. Phelps, 478 F.3d 680, 681-82 (5th Cir. 2007), cert. denied, 128 S. Ct. 436 (2007); United States v. Spencer, 178 F.3d 1365, 1368-69 (10th Cir. 1999). The district court agreed with the government.

On appeal, the parties again frame the issue as turning on a conflict between other circuits on the broad question of whether a taxpayer's "unclaimed" deductions or losses may ever be taken into account in determining tax loss for purposes of § 2T1.1(c)(1). The apparent conflict developed after § 2T1.1 was amended in 1993. The prior version defined "tax loss" as "the greater of (1) the total amount of tax that the taxpayer evaded or attempted to evade or (2) 28% of the amount by which the greater of gross income and taxable income was understated;" a comment explained that alternative (2) "should make irrelevant the issue of whether the taxpayer was entitled to offsetting adjustments that he failed to claim." U.S.S.G. § 2T1.1 & cmt. n.4 (1992). The 1993 amendment deleted this comment, leading the Second Circuit to suggest in dicta that § 2T1.1 no longer precluded using legitimate unclaimed deductions to offset a tax loss. United States v. Martinez-Rios, 143 F.3d 662, 670-71 (2d Cir. 1998). The Seventh Circuit disagreed, concluding that the comment was deleted "because the new tax-loss definition specifically excludes consideration of unclaimed deductions on its face by defining tax loss as the 'object of the offense.'" Chavin, 316 F.3d at 678. Three other circuits have agreed with the Seventh.

In Gordon, defendant was convicted of tax evasion for failing to report income he received from a company he controlled. On appeal, he argued that the district court erred in refusing to reduce the tax loss resulting from this unreported income by the tax benefit the company would have received if it had treated the payments as a deductible salary expense. Adopting the reasoning of Martinez-Rios, the Second Circuit agreed in principle but concluded that the error was harmless because Gordon failed to prove that the company would have treated the income he received as a salary expense, as opposed to non-deductible dividends. 291 F.3d at 187.

The theory argued but not proved in Gordon presents the strongest case for allowing unclaimed tax benefits to reduce the government's tax loss because the unclaimed deduction in that case was a tax consequence of the fraud. Taking this type of offsetting tax benefit into account at least arguably comports with the plain language of § 2T1.1(c)(1) --"the loss that would have resulted had the offense been successfully completed." On the other hand, the defendant's failure to claim the offsetting tax benefit in Gordon by taking a corporate salary expense deduction for payments he intended not to report as income helped conceal the fraud. No doubt reflecting this aspect of the issue, the four circuits that have rejected the Second Circuit's reasoning explicitly refuse to interpret § 2T1.1(c)(1) "as giving taxpayers a second opportunity to claim deductions after having been convicted of tax fraud." Spencer, 178 F.3d at 1368, quoted in Chavin, 316 F.3d at 679, in Phelps, 478 F.3d at 682, and in Delfino, 510 F.3d at 473.

In this case, we need not decide whether an unclaimed tax benefit may ever offset tax loss determined by aggregating the offense conduct of underreported income, improper deductions, and false tax credits. First, Gordon is clearly distinguishable. Here, the investors' offsetting capital losses that Blevins is claiming are unrelated to the tax fraud he committed. The Schedule C and Schedule E losses that Blevins had his clients fraudulently claim were ordinary business losses. Such losses presuppose an on-going business, however distressed, not a failed business that has become a worthless investment. Thus, the fraudulently claimed losses were neither related to nor in lieu of worthless investment losses. Indeed, the worthless investment losses were tax benefits that the investors could claim whether or not the fraud was perpetrated. Taking into account unclaimed tax benefits wholly unrelated to the offense of conviction is contrary to the plain meaning of the definition of tax loss in § 2T1.1(c)(1), "the total amount of loss that was the object of the offense ( i.e., the loss that would have resulted had the offense been successfully completed)."

Second, the unclaimed capital losses in this case are tax benefits available to the investor-taxpayers, not to Blevins. So far as this record reveals, those capital losses have not been claimed and remain potentially available to the taxpayers in the future (if they have not already been claimed). Thus, Blevins's fraud did not result in any offsetting tax benefit to the government. Indeed, should the investors properly claim and be entitled to worthless investment capital losses on future returns (or amended past returns), the government will incur a loss of tax revenue in addition to the loss that was the object of Blevins's offense. In these circumstances, the district court properly declined to reduce the government's tax loss from the fraud by the taxpayers' allegedly unclaimed capital loss deductions.

The judgment of the district court is affirmed.

1 The HONORABLE RICHARD E. DORR, United States District Judge for the Western District of Missouri.

2 Application of the 28% default rule in the notes to § 2T1.1(c)(1) would have produced a tax loss of $164,326. However, the IRS calculated its losses based on the investor-taxpayers' marginal tax rates, which were less than 28%. The government proposed the lower figure as reflecting a "more accurate determination," as the notes to § 2T1.1(c)(1) envision.

3 The expert's letter report relied on assumptions not supported by the record. First, the expert opined that capital loss treatment of the taxpayers' worthless investments "is consistent with IRC Section 165." But the record contains no evidence that the investments would qualify as "worthless securities" as defined in 26 U.S.C. § 165(g)(2). Then, having assumed the investments are worthless and qualify for capital loss deductions, she assumed that each investor-taxpayer would offset his or her loss against $3,000 of ordinary income in each tax year to which any unused portion of the losses could be carried forward under 26 U.S.C. § 1212(b). But an investor must apply such losses to any capital gains before offsetting up to $3,000 in ordinary income. See 26 U.S.C. § 1211(b). Nothing in the record supports the expert's assumption that the investors would have no capital gains in the tax years in question. Like the district court, we need not consider these failures of proof.

United States of America, Appellant v. Talmus R. Taylor, Defendant-Appellee.

U.S. Court of Appeals, 1st Circuit; 06-2216, July 9, 2008.

On remand from the SCt, 2008-2 USTC ¶50,432, Remanding an unreported DC Mass. decision..

[ Code Sec. 7206]


A sentence of probation and time in a halfway house imposed on an individual for aiding and assisting in the preparation of false tax returns was remanded for reconsideration. The sentencing court was directed to provide justifications for its sentence in light of the scope and extent of the sentencing court's discretion under the federal sentencing guidelines.


Michael J. Sullivan, United States Attorney, John A. Capin, Paul G. Levenson, Assistant United States Attorneys, for appellant. Bruce T. Macdonald, for defendant-appellee.

Before: Lynch, Chief Judge, and Newman and Torruella, Circuit Judges.

Before Lynch, Chief Judge, Newman and Torruella, Circuit Judges. *


ON REMAND FROM THE SUPREME COURT OF THE UNITED STATES


TORRUELLA, Circuit Judge: Talmus Taylor was sentenced to one year in a halfway house, five years of probation, and a $10,000 fine, for aiding and assisting in the preparation of false tax returns, in violation of 26 U.S.C. §7206(2). Following an appeal by the Government, we vacated the sentence as substantively unreasonable and remanded to the district court. See United States v. Taylor [ 2007-2 USTC ¶50,653], 499 F.3d 94 (1st Cir. 2007), vacated, 128 S.Ct. 878 (2008). The case returns to us on remand from the Supreme Court for further consideration in light of Gall v. United States, 128 S.Ct. 586 (2007).

The Court's decision in Gall, combined with its decisions in Kimbrough v. United States, 128 S.Ct. 558 (2007), and Rita v. United States, 127 S.Ct. 2456 (2007), makes clear that in the post- Booker world, district judges are empowered with considerable discretion in sentencing, as long as the sentence is generally reasonable and the court has followed the proper procedures. In accordance with these decisions, our recent opinions have elaborated on the broad scope of this discretion. See, e.g., United States v. Martin, 520 F.3d 87 (1st Cir. 2008); see also United States v. Rodríguez, 527 F.3d 221 (1st Cir. 2008); United States v. Politano, 522 F.3d 69 (1st Cir. 2008). Recently, in another sentencing case vacated by Gall, we noted this expanded discretion and concluded that the fairest course of action was to provide the district court the opportunity to reconsider its sentence in view of the Supreme Court's elucidation of sentencing procedures, as well as some of the concerns we had expressed in the prior opinion. See United States v. Tom, No. 07-1074, 2008 WL 1886608 (1st Cir. Apr. 30, 2008) (unpublished). We think that course appropriate under the circumstances here as well.

In so doing, we first reiterate some of the important sentencing principles underscored in all of these recent decisions. As clearly outlined in Gall, we review a district court's sentence under a deferential abuse of discretion standard, which involves both a procedural and a substantive inquiry. See Gall, 128 S.Ct. at 597; see also Politano, 522 F.3d at 72. This deference arises from the advantages inherent in the district court's position: "a superior coign of vantage, greater familiarity with the individual case, the opportunity to see and hear the principals and the testimony at first hand, and the cumulative experience garnered through the sheer number of district court sentencing proceedings that take place day by day." Martin, 520 F.3d at 92. Indeed, once the district court has followed the proper procedures, our review of substantive reasonableness is highly discretionary. See id. ("[R]eversal will result if - and only if - the sentencing court's ultimate determination falls outside the expansive boundaries of that universe [of reasonableness].").

Yet, along with this increased discretion to fashion an appropriate sentence goes an accompanying "need for an increased degree of justification commensurate with an increased degree of variance." Martin, 520 F.3d at 91. To be clear, there is no strict formula for determining the bounds of an appropriate sentence, but there is "a certain `sliding scale' effect [that] lurks in the penumbra of modern federal sentencing law; the guidelines are the starting point for the fashioning of an individualized sentence, so a major deviation from them must `be supported by a more significant justification than a minor one.' " Id. (quoting Gall, 128 S.Ct. at 597).

In our prior review of the sentence in this case, we expressed concern that the district court had failed to take all of the 18 U.S.C. §3553(a) factors into account in fashioning the defendant's entirely non-jail sentence for such a serious crime. Our conclusion was not based on any requirement that the justification be "proportional" to the deviation or that the result comply with a mathematic formula defining the outer bounds of reasonableness. Rather, it was that in our view, the court's explanations had failed to justify the overall result.

As in Tom, a ruling on the sentence based on the present record would not fully actualize Gall's effect in "shed[ding] considerable light on the scope and extent of a district court's discretion under the now-advisory federal sentencing guidelines." Martin, 520 F.3d at 88. Given the intervening cases which have further elucidated the district court's discretion in sentencing (as well as underscored the importance of the district court's justifications for that sentence), we think it best to remand to the district court for reconsideration with the benefit of all of these developments, as well as the concerns we expressed in our prior opinion.

So ordered.

* Of the Federal Circuit, sitting by designation.
Sentence. --Fraud and False Statements: Sentence

The Court upheld the taxpayer's conviction for wilfully and knowingly subscribing to joint returns which he did not believe to be true and correct as to every material matter. The taxpayer was not deprived of his constitutional rights by the District Court's denial of his motion to reduce the sentence to merely a fine and not a jail sentence. The sentence was within the maximum penalties provided for violations of Code Sec. 7206(1).

J. Brown, CA-7, 70-2 USTC ¶9521, 428 F2d 1191. Cert. denied, 400 US 941.

There was no error in the refusal of the district court to disclose the contents of a pre-sentence report to the taxpayer's attorney, where there was no constitutional necessity for disclosure and the report contained no adverse information.

J.C. Knupp, CA-4, 71-2 USTC ¶9637, 448 F2d 412.

The trial judge did not abuse his discretion in sentencing the taxpayer to jail for one year for aiding in the preparation of a false return merely because others convicted of similar offenses in the same district were not incarcerated.

W.M. Metcalf, CA-4, 76-1 USTC ¶9192.

The court held that the sentencing judge improperly conditioned taxpayer's probation for willfully and knowingly filing a false income tax return on the condition that he resign as a member of the bar. The court held that this special condition denied him due process by depriving him of his license to practice law without notice or an appropriate hearing.

V.M. Pastore, CA-2, 76-2 USTC ¶9513, 537 F2d 675.

An accountant's conviction for violating Code Sec. 7206(2), which prohibits willfully aiding or assisting in the preparation of a false or fraudulent tax return, constituted a conviction of a criminal offense under the revenue laws of the United States for which he was validly disbarred from practice before the IRS.

P.C. Washburn, DC, 76-1 USTC ¶9323, 409 FSupp 3.

The defendants were not sentenced unduly severely because of their failure to cooperate with the government. The trial judge did not state that leniency would be conditioned upon cooperation, nor was the trial judge required to explain each sentence imposed.

R.S. Bacheler, CA-3, 79-2 USTC ¶9695, 611 F2d 443.

Because 18 U.S.C. §3651 limits to six months the permissible period of actual confinement when a part of a sentence is suspended upon probation, a suspended sentence that involved thirteen months of incarceration was invalid.

M.H. Cohen, CA-4, 80-1 USTC ¶9288, 617 F2d 56.

The sentence of a taxpayer who was convicted of tax fraud was vacated and remanded for resentencing because no record was available to show why his sentence was increased at a second trial.

F.F. Solomon, Jr., CA-9, 87-2 USTC ¶9482, 825 F2d 1292.

The trial court did not abuse its discretion by considering all of the evidence for sentencing purposes, including conduct of which the taxpayers had been acquitted at trial.

C.W. Lawrence, Jr., CA-7, 91-2 USTC ¶50,522.

A federal district court properly determined the sentence of an individual who was convicted of preparing fraudulent tax returns. The trial record supported enhancement of the base offense level under the U.S. Sentencing Guidelines due to the amount of the tax loss, and no evidentiary hearing was necessary.

M.G. Marshall, CA-8, 96-2 USTC ¶50,678, 92 F3d 758.

A tax protestor convicted of various tax crimes under Code Secs. 7206 and 7212 was appropriately sentenced under the United States Sentencing Guidelines. Instead of the usual tax protestor tactic of ignoring tax administration, the defendant filed income tax forms seeking a refund, setting forth huge and obviously fictitious sums of money as his earnings. Although the IRS never considered making the claimed refunds, and the returns harassed and impeded IRS employees, there was no tax evasion, tax loss or false tax credits involved. Thus, the government did not suffer the actual loss required to impose a longer sentence.

M. Krause, DC N.Y., 92-1 USTC ¶50,193, 786 FSupp 1151.

A defendant's conviction for conspiracy to defraud the IRS was upheld because there was no reversible error. The government was permitted to seek enhancement of the defendant's sentence because it proved his intent to accomplish illegal transactions that would cause a tax loss to the government, even though the tax loss would not occur in the year of the transactions.

R.M. Hirschfeld, CA-4, 93-1 USTC ¶50,098.

An individual's conviction and sentence for filing false tax returns were upheld based on sufficient evidence of underreported income. A transaction in which amounts were loaned from a business account of the individual's S corporation to his friend, the loan repayment was deposited into the individual's personal account, and the loan was deducted as a business expense, along with the resulting tax loss to the government, were properly treated as relevant conduct in sentencing the individual under the U.S. Sentencing Guidelines.

T.G. Georges, CA-8, 98-1 USTC ¶50,477.

An individual convicted of aiding and abetting a tax fraud was properly denied a withdrawal of his guilty plea and a continuance to seek assistance of a lawyer at his sentencing. Furthermore, he was correctly adjudged to serve an enhanced sentence in light of the evidence and given his behavior during the proceedings.

R.J. Jagim, CA-8, 93-1 USTC ¶50,093, 978 F2d 1032.

An office manager's conviction for filing a fraudulent return was upheld. However, the trial court erred in imposing a sentence of three years' supervised release because a conviction under Code Sec. 7206(1) is a Class E offense, not a Class D felony. Therefore, a sentence of a one year's supervised release was imposed.

E.A. Pratt Stokes, CA-5, 93-2 USTC ¶50,545, 998 F2d 279.

An unlicensed professional sports agent, who was convicted of aiding in the preparation of false income tax returns and sentenced to a prison term, several years of supervision, and a fine, unsuccessfully appealed his prison sentence, but prevailed in obtaining a reduced period of supervised release. The trial court properly followed the sentencing guidelines for organized tax fraud from which one derives a substantial part of one's income and the guidelines applicable to those in the business of preparing or assisting in the preparation of false returns. However, the trial court improperly classified the nature of the agent's felony.

A.Q. Welch, CA-5, 94-2 USTC ¶50,358.

An individual's sentence following conviction for filing false tax returns was upheld where there was no clear error in the trial court's determination.

J. Swanson, III, CA-4 (unpublished opinion), 97-1 USTC ¶50,398, aff'g, per curiam, an unreported District Court decision.

The trial court erred in failing to determine whether state (California) law prohibited payments for unsolicited client referrals in calculating the base offense level for a former attorney's tax fraud conviction based on his deduction of referral payments. The trial court erroneously used the entire amount that the taxpayer deducted to compute the tax loss for sentencing purposes without considering whether it constituted illegal payments for which deductions were disallowed under Code Sec. 162(c)(2). Since state law did not prohibit payments for unsolicited referrals, the taxpayer was entitled to deduct such payments as business expenses. As a result, payments for unsolicited referrals should not have been included for purposes of computing the tax loss.

R.M. Standard, CA-9, 2000-1 USTC ¶50,319.

The sentence imposed on a taxpayer who was convicted of filing a false return was properly enhanced by the trial court in light of his use of sophisticated means to conceal his offense, his abuse of a position of trust, and his actions in obstructing or impeding the administration of justice during his case.

J.D. Tindall, CA-8 (unpublished opinion), 2000-2 USTC ¶50,585, aff'g an unreported District Court decision.

An individual's conviction for aiding another to file a fraudulent tax return and subsequent sentencing were upheld. The sentence requested by the government was reasonable under the sentencing guidelines given the number of violations and the amount of tax involved. The court was also within its discretion to enhance the sentence because of taxpayer's attempts to intimidate government witnesses before trial.

C. Bruno, CA-2 (unpublished opinion), 2001-1 USTC ¶50,112, aff'g an unreported District Court decision.

A taxpayer who pled guilty to 12 counts of aiding and assisting in the preparation of false tax returns was properly sentenced to a period of 41 months of imprisonment, which was longer than the three-year maximum sentence authorized by statute for each count. The district court had the discretion to run consecutively the sentences for separate counts. However, the court could not sentence him to 41 months for each of his 12 convictions because 41 months exceeded the statutory maximum for any single count.

J. Darden, CA-9 (unpublished opinion), 2002-1 USTC ¶50,291, vac'g and rem'g an unreported District Court decision.

Sentencing guidelines imposed with respect to an individual convicted of tax evasion permitted the inclusion of conditions that the taxpayer refrain from consuming alcohol and participate in community service activities. Those conditions were reasonably related to the goals of probation and rehabilitation. Further, amounts previously remitted by the taxpayer were not deducted from the current taxes owing because those funds were paid in connection with a fraudulent offer-in-compromise that was entered into after the crimes were committed.

F.F. Paul, CA-6 (unpublished opinion), 2003-1 USTC ¶50,222, aff'g, per curiam, an unreported District Court decision.

Sentences imposed were upheld.

K.P. Kontny, CA-7, 2001-1 USTC ¶50,197. Cert. denied, 5/14/2001.

K.L. Utecht, CA-7, 2001-1 USTC ¶50,311.

M. Wick, CA-9 (unpublished opinion), 2002-1 USTC ¶50,456, aff'g an unreported District Court decision.

W.N. Jackson, CA-2 (unpublished opinion), 2003-1 USTC ¶50,478, 65 FedAppx 754, aff'g an unreported District Court decision.

The sentence imposed on an individual convicted of aiding and assisting in the preparation of false federal income tax returns was affirmed. The individual failed to demonstrate that the court's consideration of the relevant sentencing factors was deficient or that the sentence imposed was unreasonable.

A. Jones, CA-6 (unpublished opinion), 2007-1 USTC ¶50,340, 218 FedAppx 488, aff'g an unreported DC Mich. decision.

A federal district court erred in imposing four consecutive one-year terms of supervised release on an individual who pleaded guilty to tax fraud and agreed to make restitution to the IRS. The federal sentencing guidelines require multiple terms of supervised release to run concurrently.

M.J. Spangler, CA-11 (unpublished opinion), 2007-1USTC ¶50,400, 224 FedAppx 890, aff'g in part, vac'g and rem'g in part an unreported DC Fla. decision.

A federal district court did not miscalculate the tax loss when sentencing an individual convicted for filing a false income tax return and assisting others in the preparation of false returns. The calculation was based on the fraudulent tax returns and the testimony of two IRS agents and the taxpayers for whom the individual had prepared false returns.

J.H. Bell, CA-7 (unpublished opinion), 2007-1 USTC ¶50,407, 226 FedAppx 596, aff'g an unreported DC Ill. decision.

A four-level leadership enhancement to the sentence imposed on a tax return preparer who was convicted for aiding and assisting in the preparation of false federal income tax returns was proper. The individual organized a tax fraud scheme that involved a number of taxpayers and caused a large tax loss.

R.E. Reiss, CA-8 (unpublished opinion), 2007-2 USTC ¶50,532, 230 FedAppx, aff'g, per curiam, an unreported DC Minn. decision.

A lawyer and former federal prosecutor's sentence for tax fraud was substantially and procedurally reasonable. Although the individual failed to report as income bribes he received from city vendors while the mayor of Atlanta, the trial court imposed the minimum sentence recommended by the sentencing guidelines. The court followed Booker to calculate the sentence; first establishing the base level of the offense by estimating the government's tax loss and then enhancing the base level for use of sophisticated means of concealment and obstruction of justice. The individual failed to show that his public service was so extraordinary as to justify a downward departure from the sentencing guidelines. The sentence was not excessive because it was less than the maximum allowed by Code Sec. 7206.

W.C. Campbell, CA-11, 2007-2 USTC ¶50,609, 491 F3d 1306.

A federal district court's adoption of the government's tax loss calculation when sentencing an individual convicted for willfully filing false tax returns was reasonable. The court reasonably concluded that, even though he had not reported all of his sales income, the individual had claimed all of his deductible expenses.

V. Roudakov, CA-3 (unpublished opinion), 2007-2 USTC ¶50,700, 239 FedAppx 776, aff'g an unreported DC Pa., decision.

An individual's conviction and sentence for aiding and abetting the filing of fraudulent tax returns was upheld. The trial court properly considered the pre-sentence report, the amount of loss, the severity of the crime, the necessity for deterrence and the defendant's statement, and the sentence imposed was 18 months less than the minimum in the applicable sentencing guidelines range. Therefore, the sentence imposed was reasonable.

C. Contreras, CA-2 (unpublished opinion), 2007-2USTC ¶50,712, 247 FedAppx 293, aff'g an unreported DC N.Y. decision.

The sentence imposed on a certified public accountant for aiding and advising the filing of a false income tax return was reasonable. The trial court properly imposed a sentence of a one year's supervised release, as recommended by the sentencing guidelines, since he was convicted of a Class E felony and also sentenced to more than one year imprisonment. Further, the trial court had a reasoned basis for imposing the sentence.

L.P. Bridges, CA-9 (unpublished opinion), 2007-2 USTC ¶50,779, aff'g, an unreported DC Wash., decision.

A tax return preparer's sentence for aiding in the preparation of a false tax return was upheld. The trial court did not err in calculating the tax loss attributable to his conduct, and the court was entitled to consider uncharged and acquitted conduct in determining the return preparer's sentence when such conduct was proven by a preponderance of the evidence.

A.T. Fokkoun-Ngassa, CA-4 (unpublished opinion), 2007-2 USTC ¶50,794, aff'g, per curiam, an unreported DC Va., decision.

The sentence imposed on an individual for filing false, fictitious and fraudulent income tax returns was reasonable. The district court did not abuse its discretion when it denied a downward departure or variance of the sentence based on exceptional family circumstances because it found that the individual's criminal history and utilization of family members in the commission of his offense constituted as factors weighing against a variance. Moreover, the court considered the properly calculated guidelines range before imposing the sentence and did not treat the sentencing guidelines as mandatory.

V.T. Carter, CA-6, 2008-1 USTC ¶50,124, 510 F3d 593.

The winner of a reality television show failed to establish that he was improperly convicted and sentenced for filing false tax returns. The sentence imposed, which was at the higher end of the sentencing guidelines range, was not unreasonable. The court was entitled to accept the testimony of the government's witness as providing a more accurate determination of the tax loss than would be determined using the sentencing guidelines. A perjury enhancement was also properly applied after the court noted that he lied on the witness stand.

R. Hatch, CA-1, 2008-1 USTC ¶50,166.

Sentence imposed on a tax preparer for willfully preparing false or fraudulent income tax returns was reasonable and within the Sentencing Guidelines range. The court did not err in applying a sentencing enhancement for obstruction of justice or in calculating the tax loss based on IRS interviews with the individual's customers.

G.D. Goosby, CA-6, 2008-1 USTC ¶50,331.

An individual who pleaded guilty to two counts of filing false income tax returns was properly sentenced to the statutory maximum of three years imprisonment on each count, to be served concurrently. The court could have imposed the sentences consecutively, its comment comparing the individual's tax offense to drug trafficking crimes was not illegal or improper and the court acted within its discretion by allowing and considering testimony regarding the basis of a pending state charge to address the history and character of the individual.

B. Tockes, CA-7, 2008-2 USTC ¶50,411.

An individual could not appeal the sentence imposed on him following his conviction for conspiracy and aiding and assisting in the preparation of false tax returns. The individual had entered a guilty plea and waived his right to appeal.

D. Shields, CA-9 (unpublished opinion), 2008-2 USTC ¶50,425, aff'g an unreported DC Calif. decision.

The U.S. Supreme Court has summarily vacated and remanded a Court of Appeals ruling that a sentence of probation and time in a halfway house imposed on a part-time income tax preparer for aiding and assisting in the preparation of false tax returns was unreasonable. The Court requested the Appeals court reconsider its ruling in light of Gall v. United States, 128 S. Ct. 586 (2007).

T.R. Taylor, SCt, 2008-2 USTC ¶50,432, vac'g and rem'g, CA-1, 2007-2 USTC ¶50,653.

A sentence of probation and time in a halfway house imposed on an individual for aiding and assisting in the preparation of false tax returns was remanded for reconsideration. The sentencing court was directed to provide justifications for its sentence in light of the scope and extent of the sentencing court's discretion under the federal sentencing guidelines.

T.R. Taylor, CA-1, 2008-2 USTC ¶50,436, on rem'd from SCt, 2008-2 USTC ¶50,432.

The sentence imposed on an individual for tax preparer fraud was vacated and remanded a second time for resentencing because the government did not prove the amount of the tax loss by a preponderance of the evidence and did not consider family circumstances as a mitigating circumstance. The court prejudged the amount of tax loss without giving due consideration to the individual's challenges to the amount of tax loss and whether the individual was responsible for the loss, thereby undermining the fairness of the sentencing hearing. Further, the district court did not consider whether the individual's incarceration would impose an extraordinary hardship on his family, thereby constituting a mitigating factor that would justify imposing a below-guidelines sentence.

J.P. Schroeder, CA-7, 2008-2 USTC ¶50,477.


SEC. 7206. FRAUD AND FALSE STATEMENTS.
Any person who --

7206(1) DECLARATION UNDER PENALTIES OF PERJURY. --Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; or

7206(2) AID OR ASSISTANCE. --Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document; or

7206(3) FRAUDULENT BONDS, PERMITS, AND ENTRIES. --Simulates or falsely or fraudulently executes or signs any bond, permit, entry, or other document required by the provisions of the internal revenue laws, or by any regulation made in pursuance thereof, or procures the same to be falsely or fraudulently executed or advises, aids in, or connives at such execution thereof; or

7206(4) REMOVAL OR CONCEALMENT WITH INTENT TO DEFRAUD. --Removes, deposits, or conceals, or is concerned in removing, depositing, or concealing, any goods or commodities for or in respect whereof any tax is or shall be imposed, or any property upon which levy is authorized by section 6331, with intent to evade or defeat the assessment or collection of any tax imposed by this title; or

7206(5) COMPROMISES AND CLOSING AGREEMENTS. --In connection with any compromise under section 7122, or offer of such compromise, or in connection with any closing agreement under section 7121, or offer to enter into any such agreement, willfully --

7206(5)(A) CONCEALMENT OF PROPERTY. --Conceals from any officer or employee of the United States any property belonging to the estate of a taxpayer or other person liable in respect of the tax, or

7206(5)(B) WITHHOLDING, FALSIFYING, AND DESTROYING RECORDS. --Receives, withholds, destroys, mutilates, or falsifies any book, document, or record, or makes any false statement, relating to the estate or financial condition of the taxpayer or other person liable in respect of the tax;

shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation) or imprisoned not more than 3 years, or both, together with the costs of prosecution.

------------------


For more information about tax return preparer fraud or taxpayer fraud, contact ab@irstaxattorney.com 888 712-7690 ex 106
Labels: section 7206 tax preparer fraud




www.irstaxattorney.com 888-712-7690