Almost Anyone Can Be a Felon: The Troubling Scope of Tax Obstruction, Part II

tax obstructionPart I of this Post, found here, discussed the background and holdings of United States v. Marinello, 839 F.3d 209 (2d Cir. 2016), cert. granted, No. 16-1144, 85 U.S.L.W. 3602, 2017 U.S. LEXIS 4267 (Jun. 27, 2017). This post focuses on the implications of the Second Circuit’s construction of the omnibus clause of section 7212(a) of the Internal Revenue Code and on the potential ways in which the Supreme Court might narrow that construction.

To recap, Marinello was charged and convicted with a felony, known as “tax obstruction” under section 7212(a) (corruptly obstructing or impeding the due administration of title 26).… Read More

Almost Anyone Can Be a Felon: The Troubling Scope of Tax Obstruction, Part I

tax obstructionCarlo Marinello ran a small business in upstate New York. He also ran into tax trouble.

Marinello was charged and convicted for the willful failure to file personal tax returns and corporate tax returns for his business over a series of years, which are misdemeanor charges under the Internal Revenue Code. See I.R.C. § 7203. The government also charged Marinello with a felony, known as “tax obstruction.” Under section 7212(a) of the Code, tax obstruction occurs in two situations:

  • Under the first clause of the statute, someone commits a felony if he “corruptly or by force or threats of force (including any threatening letter or communication) endeavors to intimidate or impede any officer or employee of the United States acting in an official capacity under this title.” I.R.C.
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Tax Crimes: Employment Taxes, Section 7202, and the Statute of Limitations

employment taxesEmployers are required to withhold FICA and income tax from employees’ pay checks and make periodic deposits of the amounts withheld. If the taxes are not withheld and paid over to the IRS, the employer is subject to monetary penalties and individuals affiliated with the employer may face personal liability for the trust fund recovery penalty. See I.R.C. §§ 6656 (employer penalty); 6672 (trust fund recovery penalty).

The failure “to collect, account for, and pay over” these taxes is also a felony. I.R.C. § 7202. While payroll tax violations were rarely prosecuted historically, times have changed, and the Tax Division has made employment tax prosecutions a priority.… Read More