Opinion ID: 2827835
Heading Depth: 2
Heading Rank: 3

Heading: Black Failed to Meet His Burden to Establish He

Text: Was Entitled to a Tax Loss Reduction Due to Audit Errors and Available Deductions. Black also argues that the tax loss calculation was erroneous because it was derived from the 2000 Audit which contained an overstatement of Black’s income and failed to credit Black for legitimate deductions. He further argues that it was the government’s burden to prove the loss amount. The district court determined that Black failed to follow the appropriate procedures to appeal the IRS’s audit determination and thus waived his right to assert unclaimed deductions, relying on Chavin, 316 F.3d at 677–78. It also determined that: (1) the deductions were unrelated to the tax offenses of which the jury found Black guilty, and (2) Black’s failure to cooperate with the IRS during the audit process made it so that the accuracy of the deductions was not reasonably ascertainable at the time of Black’s sentencing. 12 No. 13-3908 In Chavin, we held that district courts should not consider unclaimed, legitimate deductions when calculating tax loss under § 2T1.1. 316 F.3d at 677–79. The U.S. Sentencing Commission disagreed and issued an amendment to §2T1.1 to “reflect the Commission’s view that consideration of legitimate unclaimed credits, deductions, or objections, subject to certain limitations and exclusions,” is proper. U.S.S.G. Manual app. C, amend. 774 at 41–42. The amendment states: [T]he court should account for any unclaimed credit, deduction, or exemption that is needed to ensure a reasonable estimate of tax loss, but only to the extent that (A) the credit, deduction, or exemption was related to the tax offense and could have been claimed at the time the tax offense was committed; (B) the credit, deduction, or exemption is reasonably and practicably ascertainable; and (C) the defendant presents information to support the credit, deduction, or exemption sufficiently in advance of sentence to provide an adequate opportunity to evaluate whether it has sufficient indicia of reliability to support its probable accuracy. … The burden is on the defendant to establish any such credit, deduction, or exemption by the preponderance of the evidence. Id. at § 2T1.1 cmt. n.3. As a result, Chavin no longer controls the issue of whether the district court should consider unclaimed deductions. If the circumstances of the case meet the criteria outlined above, district courts should consider unclaimed deductions. Here, the district court correctly determined that it should not have considered unclaimed deductions and other alleged errors in the 2000 Audit. Once the government established the tax loss amount, Black had the burden to show No. 13-3908 13 that he was entitled to credits or deductions. Id. There is insufficient evidence on the record to establish that at the time of Black’s criminal conduct, he could have challenged the audit and reduced his tax liability. Therefore, Black did not meet his burden. So, there was no error by the district court with respect to this issue. In sum, the district court misapplied § 2T1.1 to Black’s sentence. Specifically, it erred by finding that the tax loss was more than $7 million but less than $20 million, when the tax loss, before any deductions for penalties and interest, was approximately $5.3 million. Because of the district court’s errors in calculating the tax loss, it selected the wrong base offense level and improperly calculated the sentencing range.