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IRS Announces Six New Campaigns

Yesterday, the Large Business and International Division (“LB&I”) of the IRS announced six new compliance campaigns. Faced with continued budget cuts, LB&I reprioritized its compliance work into designated “campaigns,” wherein it directs resources across taxpayers and industries on specific issues that face high risk of noncompliance. It announced the first 13 campaigns on January 31, 2017, added 11 more on November 3, 2017 and five more on March 13, 2018. The new campaigns focus on disparate foreign and domestic issues. They are:

(1) Interest Capitalization for Self-Constructed Assets
(2) F3520/3520-A Non-Compliance and Campus Assessed Penalties
(3) Forms 1042/1042-S Compliance
(4) Nonresident Alien Tax Treaty Exemptions
(5) Nonresident Alien Schedule A and Other Deductions
(6) Nonresident Alien Individual Tax Credits

In its announcement, the IRS describes each campaign in detail and how it may approach ensuring compliance with the campaign issue.

If a taxpayer has an item related to a campaign, it makes it that much more likely that her return will be selected for examination. Thus, it is important that taxpayers continue to keep up to date on the latest campaigns and make sure their files are audit-ready if a campaign may related to them.

Did Congress Unexpectedly Deny Healthcare Providers a Deduction for Billions in Medicare Overpayments? Maybe.

Before tax reform, under 162(f), a payment to the government for a violation of the law was deductible unless it was a fine or penalty. 162(f) only came into play when a fine or penalty was involved and excluded any routine payments made to the government.

Thanks to tax reform, it applies to so much more now. Now, 162(f) denies a deduction for a payment made to the government for a violation of the law unless such payment is restitution or made to come into compliance with the law and it is identified as such in a settlement agreement or court order. This means, for example, that the billions of dollars that flow back to Medicare for overpayments may now fall within section 162(f)’s ambit. These overpayments are most often made because of billing or other administrative errors that naturally occur in a complex system and health care providers are doing nothing more than returning the money back to the government. Yet, they will be treated the  same as if they paid a criminal penalty. Refunding a Medicare overpayment is just one of countless examples of whether section 162(f) may now come into play.

Luckily, a few weeks ago the IRS issued Notice 2018-23 requesting comment on the new section 162(f) and indicated it would be issuing proposed regulations later. Today, we, along with members of our Health Care & Life Sciences group, filed a comment alerting the IRS to this issue and requesting it issue proposed regulations that clarify and narrow the scope of 162(f). In the meantime, taxpayers would be advised, whenever they are making a payment to the government to consider whether section 162(f) applies and plan accordingly.

The comment we filed may be found here.

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IRS to end Offshore Voluntary Disclosure Program in September

The IRS has announced that it will begin winding down its Offshore Voluntary Disclosure Program (OVDP) on September 28, 2018. Under the OVDP, a taxpayer with undisclosed foreign assets or income could come forward to pay tax, interest and reduced penalties in exchange for immunity from criminal prosecution. The IRS will continue its separate Streamlined OVDP, which is only available to certain taxpayers unaware of their international reporting obligations.

The IRS made the announcement now in order to give taxpayers who may still want to come forward time to do so. “Taxpayers have had several years to come into compliance with U.S. tax laws under this program,” said Acting IRS Commissioner David Kautter in a statement. “All along, we have been clear that we would close the program at the appropriate time, and we have reached that point. Those who still wish to come forward have time to do so.”

The program has been very successful, collecting more than US$11 billion in tax, interest and penalties from more than 50,000 taxpayers. With advances in international reporting and information-sharing regimes, the IRS has also aggressive pursued taxpayers who have tried to hide assets abroad. Since 2009, it has indicted 1,545 taxpayers for criminal violations related to international activities with 671 indicted specifically on international criminal tax violations.

Even with the OVDP ending, the IRS will not stop vigorously pursuing international tax evaders. Any US taxpayer who may have unreported assets or income abroad should come forward now and take advantage of the OVDP while it is still available. Otherwise, come September, such taxpayers could face huge penalties and potentially even prison.

About Denton’s Tax Controversy

Dentons’ Tax Controversy team has successfully represented over 100 clients in various OVPD and streamlined OVPD proceedings, addressing a wide variety of tax compliance issues from taxpayers all across the globe. In addition, Dentons is one of few firms that has experience litigating Report of Foreign Bank and Financial Accounts (FBAR) penalties under the Bank Secrecy Act, which are almost always at issue in OVDP proceedings.

If you would like to discuss the above further, please contact any of the members of the Dentons Tax Controversy team.

Eleventh Circuit Holds that Taxpayer’s Affidavit Can Defeat Summary Judgment

In litigation, the IRS will often seek to short circuit a proceeding by filing an early, pre-discovery motion for summary judgment. Taxpayers, in turn, often resist those motions by submitting documentary evidence and affidavits to raise genuine issues of material fact or to highlight the need for further discovery.  Inevitably, the IRS argues in rebuttal that such affidavits should be disregarded because they are “self-serving” and (often) uncorroborated with independent evidence.  However, the IRS’s historically safe argument just became a whole lot harder to make due to a recent unanimous decision by the full U.S. Court of Appeals for the Eleventh Circuit.

In United States v. Stein, the government filed a pre-discovery motion for summary judgment to collect on outstanding tax assessments along with interest and penalties..  In opposition, the taxpayer proffered an affidavit attesting to the fact that she had already paid the taxes the government claimed she owed.  The district court granted the government’s motion and rejected the taxpayer’s affidavit.  The district court found the affidavit to be uncorroborated and not relevant.  A panel of the Eleventh Circuit agreed, holding that her “general and self-serving assertions . . . failed to rebut the presumption [of correctness] established by. . . the assessments.”  The panel’s holding was based on the court’s prior decision in Mays v. United States, 763 F.2d 1295 (11th Cir. 1985), which suggested that self-serving and uncorroborated statements in a taxpayer’s affidavit cannot defeat a summary judgment motion.

It was on this point that the full Eleventh Circuit disagreed and overruled Mays.  In doing so, the court held that under Federal Rule of Civil Procedure 56, an affidavit that is both self-serving and uncorroborated can raise a genuine issue of material fact and defeat an otherwise proper motion for summary judgment.  The text of the rule does not forbid such affidavits or require corroboration.  Because Tax Court Rule 121 closely mirrors Federal Rule of Civil Procedure 56, the court’s rationale will apply with equal force regardless of fora.

This is significant because experience has shown that the IRS will often rely on publically available statements (particularly financial statements) to file and win pre-discovery motions for summary judgment. Now, a taxpayer has strong authority with which to counter the IRS and force the litigation to move into discovery, thus, giving taxpayers the opportunity to more fully develop the record.  It is a significant victory for taxpayers.

Who Qualifies as a Partner under the New BBA Regulations

This is the first of a series of deeper dives into the newly finalized partnership audit regulations that cover who can elect out of the new centralized partnership audit regime. We have previously blogged about the regulations here.

In order for a partnership to elect out of the new centralized partnership audit regime (the “BBA regime”), there are several hurdles to overcome. The first of which is that the partnership wishing to elect out must be able to satisfy a two part test:  It must have 100 or fewer partners and those partners must be eligible partners

First, the partnership must have 100 or fewer partners. Treasury Regulation 301.6221(b)-1(b)(1)(i) states that a partnership has 100 or fewer partners if, under section 6031(b), it is required to issue 100 or fewer statements.

Who gets a statement?

While these rules seem straight forward, they could become problematic for partnerships with S corporations as partners.   Under new section 6221(b)(2)(A)(ii), the statements required to be furnished by an S Corp under section 6037(b) for its taxable year ending with or within the partnership’s taxable year will count towards the 100 or fewer partner threshold.  This is in addition to the statement that the S Corp partner received from the partnership.  The partnership must also provide the names and taxpayer identification numbers of each person to whom the S Corppartner was required to issue a statement under section 6037(b).  Thus, an S Corp partner and its shareholders will all count towards the 100 or fewer requirement.

A quick example:

A partnership has 50 partners, which are as follows:

  • 49 unmarried individuals
  • 1 S Corp which has 51 shareholders

At first blush, it would seem that this partnership qualifies. It has only 50 partners after all.  However, under the new rules,  the total number of partners for the 100-partner rule is 101 (49 individuals + 1 S Corp + 51 S Corp shareholders) and the partnership cannot elect out of the BBA regime.

So, while you may think you are under the 100 or fewer limit, you will want to make sure you tally and include the number of shareholders your S Corp partner has if you are attempting to elect out of the BBA regime. The presence of a single S Corp partner may defeat the election.

Who is an eligible partner?

Second, each of those partners must be an eligible partner.   Treasury Regulation 301.6221(b)-1(b)(3) describes the types of partners that are “eligible partners” as individuals, C corporations, foreign entities that would be a C corporation if domestic, S Corp, and estates of deceased partners. Partnerships, trusts, disregarded entities, nominees or other similar persons that hold an interest on behalf of another person, and estates other than the estate of a deceased partner are not considered eligible partners under the rules.   Drawing the rules so narrowly promotes the IRS’s goal of pushing as many partnerships as possible into the new regime.

To recap, when weighing the decision to elect out, be careful to ensure that your partnership has 100 or fewer partners (being mindful of the S Corp trap mentioned above), and that each of the partners are eligible partners under the regulations.

Lurking in the wings, however, is the potential for the IRS to use judicial doctrines to recognize constructive or de facto partners or partnerships.  We will discuss this other pitfall in greater detail next week.

IRS Issues Final Regulations on BBA Partnership Audit Regime

The IRS has issued final regulations regarding the new centralized partnership audit regime, referred to as the BBA regime. The regulations are effective as of yesterday, January 2, 2018.. We have blogged about the new rules here and here.

These regulations implement the rules for electing out of the new audit rules. Here, we address how the regulations were updated from the proposed regulations issued over the summer.  While it acknowledged that “the new rules are a significant change in the way partnerships have been traditionally audited,” the IRS rejected most of the suggestions made during the notice and comment period. It noted its inexperience in the operation of these new rules as the reason behind its rejecting most of the suggestions, but consistently left the door open for further rulemaking.  Unfortunately, this does not provide certainty for taxpayers and means in the near future taxpayers must carefully review the rules to ensure they are compliant.

This is especially true for taxpayers who may wish elect out of the BBA regime. A taxpayer wishing to elect out of the BBA regime may do so if 1) it has 100 or fewer partners, and 2) all partners are eligible partners.

The 100-or-fewer partner rule

Under section 6221, a partnership is eligible to elect out of the BBA rules if it has 100 or fewer partners. Under now-final Treas. Reg. 301.6221(b)-1(b)(1)(i), a partnership has 100 or fewer partners if it is required to furnish 100 or fewer statements under section 6031(b), which generally requires a partnership to furnish a statement to each person that is a partner in the partnership during the partnership’s taxable year. This is a key issue because a partnership that fails to elect out of the regime or a partnership that attempts to elect out of it but cannot will find itself unexpectedly bound by these new rules.

Notice Requirement

Several commentators had suggested that the IRS exclude pass-through entities or disregarded entities in determining whether a partnership meets the 100-partnership threshold. The IRS rejected those suggestions, noting that under section 6031, notice must be provided to each partner, regardless of whether the partner is a disregarded entity or a pass-through.

The IRS also rejected suggestions that it establish a pre-filing procedure to address qualification issues. It did, however, leave open the door to further regulations on this issue, noting that it “may reconsider whether a pre-filing procedure would be helpful after gaining experience with the election out procedures.” It also left open the door for further regulations on the issue of how a partnership may elect out of the regime if it is found to be a constructive partnership or a de facto partnership. Under the regulations, if such a partnership exists and it does not file an election on a timely filed return for that taxable year, it will be bound by the new BBA rules.

Eligible Partner Requirement

Treasury Regulation 301.6221(b)-1(b)(3) describes the types of partners that are “eligible partners” for the 100-or-fewer rule. Partnerships, trusts, disregarded entities, nominees or other similar persons that hold an interest on behalf of another person, and estates other than the estate of a deceased partner are not considered eligible partners under the rules.

Commentators had requested that the IRS expand the definition of eligible partners to include partnerships, disregarded entities, trusts, individual retirement accounts, nominees , qualified pension plans, profit sharing plans , and stock bonus plans. The IRS rejected these suggestions and did not expand the definition of eligible partners because in its view “the interests of efficient tax administration outweigh” any additional administrative burdens created by a narrower definition. It appears the IRS was concerned about allowing more partnerships to elect out of the new regime, because it would require deficiency proceedings for each of the partners in such partnerships and result in substantially more audits.

Making the election

The IRS also addressed comments it had received regarding the timing for making the election and how it may be revoked. It left unchanged, for example, a partnership would be required to obtain the consent of the IRS to revoke an election out. It also did not address whether the election may be timely made on amended returns, stating that other areas of the code address this issue.

Observations

In addressing these comments, the IRS has sent a strong signal that it favors the new BBA regime and may take an aggressive stance against those partnerships that attempt to elect out of it. It also broadcasts to the tax community that it cannot at this stage address all the issues that may arise under the new regime through regulations because it lacks experience with how these rules will work in the real world. This leave taxpayers in a bind because the IRS is uncertain how these rules will work in practice but is likely to favor one particular outcome.

It is important that partnerships plan carefully and particularly if you are thinking of opting out of the BBA regime to ensure you are ready if the IRS decides to challenge that decision.

If you have any questions about this post or how you can prepare for these rule changes, please contact Jeff Erney at (202) 496-7511 or jeffry.erney@dentons.com

Update on Tax Reform

The more-or-less final version of the tax reform bill is here and Congress is expected to vote on it this week.

Dentons has done an extensive write-up of the provisions of the bill, which can be found here.

 

 

Tax Reform is Here

Dentons is covering all of the latest news on the various tax reform plans that the United States Congress is currently considering.

The latest about the Senate’s plan can be found here.

Check back for more updates.

Substantial Changes to Partnership Tax Audit Procedures will Severely Impact Partner Liability and Rights Before the IRS

Does your client own an interest in a partnership or an entity treated as a partnership for US tax purposes?  If so, you better take notice because the new partnership tax audit rules are making drastic changes as of January 1, 2018.  The new rules, known as “BBA,” will administer a tax deficiency at  the partnership level, unless certain elections are made.  These rules are a significant departure from the old rules, known as “TEFRA”, which administered a tax deficiency at the individual partner level.  All partnerships will need to amend their respective partnership agreements to take the BBA changes into consideration.  What should a partnership or its partners be concerned about?

Below is a non-exhaustive list of some of the major concerns of these new procedures:

Have you chosen a Partnership Representative (“PR”) under the BBA rules? If so, have you set forth the limitations and obligations of the PR?

  • Once the BBA Rules are effective, all authority over the partnership tax audit lies with the PR
  • The BBA procedures give the PR statutory authority to bind all partners with respect to all actions taken by the partnership in the BBA administrative proceeding and in any judicial proceeding
  • Since the PR is the exclusive party to act on behalf of the partnership, the PR may also, in effect, bind all partners to extensions of the statute of limitations, settlements and available elections

Does your existing partnership agreement require the partnership or the PR to provide notice to all partners of a IRS audit?

  • The BBA procedures abolish all partner-level notices of IRS actions that existed under TEFRA
  • Unlike the TEFRA rules, under BBA there is no affirmative obligation for the Internal Revenue Service, the partnership or the PR to send a notice of an IRS audit to each partner
  • Without revising the partnership agreement, a partnership audit could occur and be resolved without the partners’ knowledge

Does your existing partnership agreement contemplate who will be responsible for tax deficiencies?

  • Under the BBA procedures, unless the PR takes certain actions, tax deficiencies are assessed against the partnership in the year the controversy is resolved (known as the adjustment year) and not in the year which generated the tax deficiency (known as the reviewed year)
  • In effect, the economic burden of a tax deficiency could be borne by partners who had no interest in the partnership when the income/deduction was generated

Does your existing partnership agreement provide for opting-out of the BBA procedures?  If so, does the PR have an affirmative obligation to opt-out?

  • The BBA procedures allow smaller partnerships (with fewer than 100 partners) to elect to opt-out of the BBA rules and have the audit be administered at the partner rather than partnership level
  • Do you desire to have the audit administered at the partner level?  Are you concerned about the IRS expanding the audit to other parts of your business?
  • Are you willing to continue to be responsible for tax deficiencies for the years in which you held an interest in a partnership, even if you later sell such interest.

Does your existing partnership agreement provide for pushing-out tax deficiencies to the reviewed year partners?

  • The push-out election allows the partnership to pass on an adjustment to a former partner without providing them an opportunity to comment, contest, or even receive notice of the adjustment
  • If you exit a partnership are you willing to leave this decision up to the current PR?
  • As a former partner would you desire some control over these decision for which you are ultimately responsible?

The above items address some of the questions partnerships and partners should be thinking about before the BBA procedures go into effect on January 1, 2018.  It is recommended that all partnerships work with their tax counsel to perform a thoughtful and thorough review of their partnership agreements.  The only way to control the results of these new procedures is to be pro-active now before the rules go into effect.

Please contact Jeff Erney at jeffry.erney@dentons.com or Sunny Dhaliwal at sunny.dhaliwal@dentons.com

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IRS To Revise Guidance for In-Person Appeals Conferences

According to Andrew Keyso, Acting Deputy Director of Appeals, the IRS will be issuing new guidance “within the next few weeks” regarding when it will hold an in-person appeals conferences.

Recently, the IRS made waves when it revised the Internal Revenue Manual to limit when a taxpayer was entitled to an in-person appeals conference. The guidance gave Appeals the discretion regarding when to hold an in-person. In making the decision, Appeals was to consider a limited set of facts and circumstances, such as whether a taxpayer had special needs or whether Appeals would have to consider the credibility of a witness. A taxpayer could request one but the decision rested with the Appeals.  The guidance was meant to dramatically limit the number of in-person conferences Appeals would hold.

According to Mr. Keyso, after receiving substantial feedback from the tax community, the IRS will issue new guidance expanding the scope of when in-person meetings will be held.

This is good news for the taxpayer.

Once the new guidance is issued, we will blog about it.  Please check back for updates.

Tax Court Disallows a $33 Million Charitable Donation Deduction Because Taxpayer Did Not Sufficiently Fill Out Form

Serving as a vivid reminder that it is vital that a taxpayer comply strictly and completely with the charitable deduction regulations, the Tax Court recently denied a $33 million charitable deduction in its entirety and imposed a gross valuation misstatement penalty because the taxpayer did not properly fill out Form 8283.

In Reri Holdings I, LLC v. Commissioner, 149 T.C. 1 (2017), a partnership donated an interest in a piece of property to the University of Michigan.  The donor retained an appraiser who assigned a fair market value of $33 million to the donation.  The taxpayer prepared a Form 8283 appraisal summary and included the form with its return.  The form indicated that the donor had acquired the donated interest through a purchase but did not include an amount for the donor’s “cost or other adjusted basis.”  Importantly, the Court does not state whether the taxpayer also attached the appraisal report prepared by the appraiser.

The Tax Court denied the entire deduction solely because the Form 8283 did not list the donor’s cost basis. According to the court, Congress prescribed strict substantiation requirements when claiming a charitable deduction over certain amounts in order “to alert the Commissioner to potential overvaluations of contributed property and thus deter taxpayers from claiming excessive deductions.”  A failure to comply with these requirements will result in a denial of the deduction, even if the amount of the deduction is correct.

A taxpayer can sometimes avoid this draconian result if it substantially complies with the regulations. Critically, a taxpayer does not do so if it fails to provide sufficient information to alert the IRS to a potential overvaluation.

That is precisely what the court determined happen here. By failing to list the adjusted cost basis of the property, as required by Treas. Reg. § 170A-13(c)(4)(ii)(E), the taxpayer did not comply with the regulations.  Omitting the cost basis “prevented the appraisal summary from achieving its intended purpose,” as “[t]he significant disparity between the claimed fair market value and the price [the taxpayer] paid to acquire [the property] just 17 months before it assigned [the property] to the University, had it been disclosed, would have alerted [the IRS] to a potential overvaluation of [the property].”  As such, the taxpayer did not substantially comply with the regulations and justified denying the entire deduction ab initio.

The Tax Court also imposed a 40% gross overvaluation penalty on the taxpayer. After finding the fair market value of the donation was only approximately $3 million, subjecting the taxpayer to the penalty, the court rejected the taxpayer’s reasonable cause defense.  Even though it had an appraisal, the court held that “a taxpayer must do more than simply accept the result of a qualified appraisal” and rejected, as immaterial, the taxpayer’s evidence of a second earlier appraisal that appeared to conform to the one prepared for the return.

Though not the subject of this litigation, it is important to note that there may be consequences to the appraiser, as well. With a judicial determination that the value claimed was grossly overstated, the appraiser may be subject to, among other things, a penalty pursuant to I.R.C. § 6695A.  If the IRS imposes a penalty on the appraiser, the IRS’s Office of Professional Responsibility (OPR) may also take action, see Circular 230 § 10.60, and can reprimand or even disqualify the appraiser.

If you have any questions about this post or about how to ensure that you comply with the substantiation requirements before donating property, please contact Jeff Erney at Jeffry.Erney@dentons.com or Peter Anthony at peter.anthony@dentons.com

Supreme Court Agrees to Review Sweeping Tax Obstruction of Justice Decision

In a decision that could have far reaching consequences in both the civil and criminal tax realms, on June 27th, the U.S. Supreme Court agreed to review the conviction of Carlo Marinello, who was found guilty of obstructing justice by failing to maintain proper books and records and failing to file tax returns.

The Supreme Court will likely settle a dispute that emerged among the lower courts about the proper scope of the obstruction statute under the Internal Revenue Code. The Supreme Court’s decision will have obvious consequences in the criminal tax world.  That is plain.  What is less apparent, is the power the decision could have in a civil audit.  Depending on how the Supreme Court rules, it could provide the IRS a substantial criminal hammer to wield against taxpayers who dispose of, or fail to maintain, business records, even if they have no knowledge that a criminal investigation has begun.

The Supreme Court will likely hear argument on this case in the fall and issue a decision sometime after that. We will keep you updated on the case, so be sure to check back.

Background

The below facts come from the opinion of the U.S. Court of Appeals for the Second Circuit.

In 1990, Carlos Marinello founded a freight service company that couriered packages between the United States and Canada. He kept little documentation of his income and expenses, and shredded or threw away any documentation that he may have had.  From 1992 onward, Mr. Marinello did not file personal or corporate tax returns.

In 2004, the IRS received an anonymous tip and opened a criminal investigation into Mr. Marinello and his company. That criminal investigation was closed the next year because the IRS could not determine if the unreported income was significant.  Mr. Marinello had no knowledge of that investigation.  Around that same time, he consulted with an attorney and an accountant who advised him he must file returns and maintain proper business records.  Despite that advice, Mr. Marinello did not do so.

The IRS was not done with Mr. Marinello yet. In 2009, the IRS re-opened the investigation and interviewed him. Mr. Marinello admitted to not filing returns and to shredding most of his business records.

The United States charged Mr. Marinello with nine counts of tax-related offenses. The conduct alleged in the indictment occurred prior to Mr. Marinello’s interview with the IRS in 2009.  One of the offenses charged was for obstruction of justice under 26 U.S.C. § 7212(a).  Section 7212(a) makes it a crime to “obstruct or impede . . . the due administration of this title.”  The government alleged that Mr. Marinello violated this section by, among other things, “failing to maintain corporate books and records for [his company]” and “destroying, shredding and discarding business records of [his company].” Mr. Marienllo was found guilty of the offense.

Decisions Below

Before the trial court, Mr. Marinello argued that to commit obstruction of justice under section 7212, one must have knowledge of a pending IRS investigation. The trial court rejected such an argument, holding that all that was necessary was for the jury to find that Mr. Marinello intended to obstruct the due administration of the Internal Revenue laws.  He appealed to the U.S. Court of Appeals in New York City.

Before the Appeals Court, Mr. Marinello again argued that the obstruction statute requires knowledge of a pending investigation. A panel of the Second Circuit disagreed, holding that the statute “criminalizes corrupt interference with an official effort to administer the tax code, and not merely a known IRS investigation.”  In doing so, the Second Circuit aligned itself with 3 other appeals courts.  It also reinforced a circuit split, as the Sixth Circuit in Cincinnati, Ohio had reached a different conclusion on the same question.

Mr. Marinello sought review before the full Second Circuit. While the court declined to review the decision of the panel, two judges dissented from the denial of review and warned of the consequences of the court’s decision.  Judge Jacobs wrote ominously that if this decision was allowed to remain the law of the land, “nobody is safe: the jury charge allowed individual jurors to convict on the grounds, variously, that Marinello did not keep adequate records; that, having kept them, he destroyed them; or that, having kept them and preserved them from destruction, he failed to give them to his accountant.”  The decision affords, he wrote, “oppressive opportunity for prosecutorial abuse.”

Potential Consequences

As Judge Jacobs warned, should the Supreme Court uphold the decision, a taxpayer should be weary about engaging in any of the conduct, such as disposing of business records, that landed Mr. Marinello in jail. As Judge Jacobs so succinctly put it, “How easy it is under the panel’s opinion for an overzealous or partisan prosecutor to investigate, to threaten, to force into pleading, or perhaps (with luck) to convict anybody” (emphasis in the original).  Now, more than ever, it is important that taxpayers in civil cases are represented by competent counsel aware of the potential criminal pitfalls an otherwise cautious taxpayer may find themselves in.

Contact Jeff Erney for questions about this post.  Jeffry.Erney@dentons.com