By Nathan J. Richman
The government’s brief in a Supreme Court case concerning the elements of tax obstruction charges under the omnibus clause of section 7212(a) does not defend the broad interpretation of the charge attacked by the petitioner and the amici, instead applying a different specific intent requirement than they advocate.
When the Supreme Court hears oral arguments December 6 on whether a defendant can obstruct only a known, existing IRS investigation, it will face two different versions of the rest of the elements. On the one hand, the petitioner and the four amici assert that without the known investigation element, the obstruction charge could reach any conduct that could happen to make the IRS’s job harder as long as the defendant intended to obtain a benefit that happens to be unlawful. On the other hand, the government asserts that the required state of mind for tax obstruction requires that conduct be intended to impede the IRS’s administration of the tax code and that the defendant know that the intended benefit is illegal.
Jeremy H. Temkin of Morvillo Abramowitz Grand Iason & Anello PC is one of the authors of the amicus brief filed by the New York Council of Defense Lawyers. He told Tax Analysts that the government’s position on intent likely arises out of the Supreme Court’s requirement that the government establish a higher level of scienter for tax crimes. “So they tried to present the requirement of an intent to obtain an unlawful benefit as meeting the heightened scienter standards,” he said.
Temkin said that he is curious to see how Justice Neil Gorsuch approaches the case during the oral argument. In April, Gorsuch was confirmed to the seat vacated by the death of Justice Antonin Scalia. “Scalia wrote or joined the majority in many white-collar, defense-friendly cases,” Temkin said, adding that it will be interesting to see if Gorsuch carries on Scalia’s skepticism of the government and preference for narrow construction of white-collar crimes. Paula M. Junghans of Zuckerman Spaeder LLP said that the flaw in the petitioner’s argument for a knowledge of a pending administrative proceeding requirement under section 7212(a) arises from the similarity between the tax obstruction charge and the conspiracy to defraud the government charge under 18 U.S.C. section 371.
The same conduct is often charged under either statute, and the conspiracy charges are regularly upheld despite not having a pending proceeding requirement, she said. The Supreme Court granted certiorari to the appeal from the Second Circuit’s decision in United States v. Marinello, 839 F.3d 209 (2d Cir. 2016), on the question of whether one of the elements of a charge under section 7212(a)’s omnibus clause is knowledge of an existing IRS investigation. The omnibus clause of section 7212(a) makes it a felony punishable by up to three years in prison for a person to, among other things, “corruptly” obstruct or impede “the due administration of” title 26.
The Second Circuit declined to hold that “the due administration of this title” language requires the IRS to have begun some sort of investigation or proceeding with regard to the defendant and the defendant to know about it. The Supreme Court took up the case to resolve the circuit split between the Sixth Circuit, which requires an existing investigation and the defendant’s knowledge of it, and the Second, First, Fifth, Ninth, and Tenth Circuits, which have rejected that requirement.