Source: https://federaltaxcrimes.blogspot.com/2011/04/
Timestamp: 2019-04-24 20:26:13+00:00

Document:
The Tax Court recently decided Estate of Saunders v. Commissioner, 136 T.C. No. 18 (2011) which establishes important precedent for valuing contingent claims against the estate for purposes of calculating the estate tax. That holding is not relevant to the subject of this blog, but the nature of the claim being valued is relevant.
obtained numerous previously classified documents from the Internal Revenue Service (IRS), Federal Bureau of Investigation, State Department, and Department of Justice. Among the documents Heggestad received during the FOIA litigation was an April 27, 1960, memorandum by IRS agent James H. Griffin (the Griffin memo). The Griffin memo suggested that Saunders had acted as a secret IRS informer against the interest of his client, Stonehill.
In Imbler v. Pachtman, 424 U.S. 409, 430 (1976), the Court held that prosecutors retain common-law immunity from suit for all actions "intimately associated with the judicial phase of the criminal process." This appeal raises the issue of whether that absolute immunity extends to a prosecutor's post-trial transfer of private federal tax records to a state ethics commission. Concluding that it does not, we affirm the denial of a motion to dismiss.
I will update the spreadsheet tomorrow.
1. Williams earlier pled guilty to a Klein conspiracy and one count of tax evasion for the years 1993 through 2000. The conviction related to income rolling through his foreign financial accounts.
2. In the income tax phase of this saga (involving the years 1993-2000), the Tax Court earlier held that he was collaterally estopped by his conviction by plea for tax evasion for those years, so that the statute of limitations was open and he was subject to the fraud penalty. Williams v. Commissioner, T.C. Memo. 2009-81. I previously blogged on this Collateral Estoppel after Tax Evasion Conviction (4/17/09).
3. The United States then sued Williams to obtain judgment on an FBAR penalty assessment, but Williams then pulled off a stunning victory because, the district court found, the IRS had not proved willfulness. United States v. Williams, 2010 U.S. Dist. LEXIS 90794 (ED VA 2010). See my prior blog Government Fails to Prove Willfulness in FBAR Civil Case (9/2/10).
4. Yesterday, the Tax Court decided the next phase of the Mr. Williams saga -- the income tax phase. Williams v. Commissioner, T.C. Memo. 2011-89.
I write to review yesterday's decision.
1. In the setting addressed in the article (promoters prosecuted with guilty or innocent taxpayers), the conduct required to make the promoter defendants principals in the crime of tax evasion is the same conduct that would make them derivatively liable as accomplices and causers and perhaps, depending on the facts, as Pinkerton conspirators as well. Stated alternatively, the conduct required to make them principals directly in the commission of the crime is the same conduct that would make them derivatively liable, and vice-versa. If they are not direct principals in the commission of the crime, they are not liable under any derivative theory, and vice-versa.
2. If the first thesis is valid, then instructing the jury as to the derivative theories of criminal liability for the crime of tax evasion is not helpful.
3. Indeed, instructing the jury on these alternative theories -- particularly if they are presented as something different from principal liability -- risks jury confusion and erosion of confidence in the system.
Before sending the article out for consideration of publication, I would greatly appreciate the critique of any reader having the time and interest to read the article. For a copy of the draft article, readers can email me at jack@tjtaxlaw.com.
In United States v. Buckler, 2011 U.S. Dist. LEXIS 39839 (WD KY 2011), the court made two holdings relevant for this blog in a criminal tax prosecution of husband and wife.
First, the Court held that the criminal statute of limitations for a return filed before the normal due date of the return (April 15 for individuals) commences on the normal due date (April 15), thus making the indictment timely. The Court cited for this proposition Section 6513(a) and United States v. Habig, 390 U.S. 222, 225 (1968). Section 6513(a) provides that "For purposes of section 6511," which deals with claiming refunds, (i) the statute of limitations commences on the due date rather than an earlier filed date and (ii) the due date "shall be determined without regard to any extension of time granted the taxpayer and without regard to any election to pay the tax in installments." Section 6531, dealing with criminal statutes of limitation, provides that "for the purpose of determining [such] periods of limitation . . . the rules of section 6513 shall be applicable." In Habig, the defendant sought to interpret the bold faced provision of Section 6513(a) to mean that it applied to returns filed after the due date, so that returns filed during the extension period required a due date commencement of the civil and criminal statute of limitations. The Habig Court rejected that argument, holding that returns filed after the due date have their statutes of limitation commence on the date of filing rather than the earlier due date of the return. In Buckler, the return was filed before the normal due date and hence fell squarely within the rule that the return is deemed filed on the normal due date of the return.
In summer 1962, Justice Felix Frankfurter, age 79 and disabled by a stroke, retired from the Supreme Court of the United States after 23 years of service.
In United States v. Sideman & Bancroft, LLP (ND CA 4/8/11 - No. 3:11-cv-00736), the court enforced a summons issued to the taxpayer-target's criminal defense attorneys, Sideman & Bancroft LLP ("Sideman"). The facts were: The taxpayer had delivered the documents in question to her return preparer, an enrolled agent. Then, while the return preparer held the documents, the IRS obtained a search warrant for the taxpayer's residence and business premises. The documents were within the description contained on the search warrant, but, of course, the IRS did not find the seize the documents because they were at the return preparer's office. But the agent did find documents referring to the return preparer. During the execution of the search warrant, the taxpayer talked with the return preparer and then went to the return preparer's office to sign one of the returns. After the taxpayer left, the return preparer realized that she had documents within the scope of the search warrant. She called the taxpayer's attorney, a Richard Guadagni to advise and have them delivered to the IRS. Guadagni took possession of the documents later that day but delivered them to the taxpayer's new attorney, Jay Weill with Sideman. The return preparer said that she would not have given the documents to Guadagni if she had known he would not deliver them to the IRS. Apparenltly, the return preparer advised the IRS of the description of the documents and, using the description, the IRS summonsed from Sideman.
Q: Why did you decide to leave for private practice?
A: After nine years as a federal prosecutor, I figured if there ever was a time to give defense a shot, this was it. I am grateful for the experience and the relationships that I developed while working for the government, but personally I was ready for a new challenge.
An anonymous poster alerted me to Lynnley Browning's article, Overseas Banks Could Face Novel Penalty From U.S. (New York Times 4/12/11). The poster suggested that I do a blog on the topic of the article -- whether the U.S. could assert the FBAR penalties against the foreign financial institutions ("FFI") in addition to or in lieu, perhaps, of the U.S. taxpayer having foreign financial accounts. I address that issue today, but caution readers that my answer is based on only limited research -- the statute and some additional research in the types of criminal liability that enablers can draw in the context of tax evasion. I plan to have an article on the latter issue in the near future, but that research informs the discussion I present here.
(5) Foreign financial agency transaction violation.
(A) Penalty authorized. The Secretary of the Treasury may impose a civil money penalty on any person who violates, or causes any violation of, any provision of section 5314 [31 USCS § 5314].
I previously report on United States v. Simon involving convictions for four tax perjury counts (§ 7206(1)), three FBAR counts (31 U.S.C. §§ 5314, 5322), eight mail fraud counts (§ 1341), and four financial aid fraud counts (20 U.S.C. § 1097). (For my blogs on Simon, see here.) Because of the facts and the other counts of conviction, Simon is outside the mainstream of the criminal cases being brought in the Government's current civil and criminal juggernaut against offshore account holders.
I had not previously reported the actual sentence in Simon. The sentence is 6 years. I picked up the sentence from a recent decision denying bail pending appeal. United States v. Simon, 2011 U.S. Dist. LEXIS 37001 (N.D. IN 2011), here. This decision did not report the various sentencing factors, hence my spreadsheet (downloadable to the right) is incomplete.
I review here the decision on bail.
The IRS has issued a "John Doe" Summons with the U.S. District Court in SF, according to a DOJ news release here. Readers will remember that this was an opening salvo in the spat with UBS that led to a deferred prosecution agreement, $780 million payment to the U.S., and the turn over of a bunch -- 4,500 -- names. It is uglier and likely to get uglier for HSBC. And how about the other banks?
Just curious because I was thinking about it today. Why doesn't DOJ just get a John Doe grand jury subpoena and cut to the quick?

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