Thursday, August 23, 2018

Scholarly Writing – Selig & Associates – Tax Problems Solved

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The district court’s conclusion that Count I was not barred by the six-year statute of limitations is a legal conclusion that we review de novo.  See United States v. Gunera, 479 F.3d 373, 376 (5th Cir. 2007); United States v. Wilson, 322 F.3d 353, 359 (5th Cir. 2003) Although we addressed the application of the statute of limitations to a section 7201 violation in United States v. Williams, we expressly declined to take a position on the last affirmative act of evasion as it was not implicated by that case.  928 F.2d 145, 149 (5th Cir. 1991) (“We express no opinion relative to the effect of affirmative acts occurring subsequent to the [tax return] filing date.”). Williams held only that “the limitations period for a prosecution under section 7201 in which no tax return was filed begins to accrue on the day the [tax] return is due.”  Id.  Because Irby last failed to file his taxes in 2001, Count I is time barred unless the statute of limitations period begins to accrue following his last affirmative act of tax evasion.

Section 6531(2) states:No person shall be prosecuted, tried, or punished for any of the various offenses arising under the internal revenue laws unless the indictment is found or the information instituted within 3 years next after the commission of the offense, except that the period of limitation shall be 6 years - (2) for the offense of willfully attempting in any manner to evade or defeat any tax or the payment thereof

26 U.S.C. § 6531(2). Count I thus is not time barred as long as Irby was indicted within six years of when the crime of “willfully attempting in any manner to evade or defeat any tax or the payment thereof” was completed. See 26 U.S.C. § 7201; see also United States v. Dandy, 998 F.2d 1344, 1355-56 (6th Cir. 1993)(discussing the application of the Supreme Court decision in United States v. Habig 

The other circuits that have expressly considered the issue have concluded
that the statute of limitations for section 7201 offenses runs from the later date of either: when the tax return was due or the defendant’s last affirmative act of tax evasion.  See, e.g., United States v. Anderson, 319 F.3d 1218, 1219-20 (10th Cir. 2003) (“Section 7201 criminalizes not just the failure to file a return or the filing of a false return, but the willful attempt to evade taxes in any manner.”); United States v. Carlson, 235 F.3d 466, 470 (9th Cir. 2000); United States v. Wilson, 118 F.3d 228, 236 (4th Cir. 1997); United States v. Dandy, 998 F.2d 1344, 1355-56 (6th Cir. 1993) (“To hold that the statute of limitations for income tax evasion . . . began to run on the date the returns were filed would reward defendant for successfully evading discovery of his tax fraud for a period of six years subsequent to the date the returns were filed.”); United States v. Winfield, 960 F.2d 970, 973-74 (11th Cir. 1992) (per curiam); United States v. DiPetto, 936 F.2d 96, 98 (2d Cir. 1991); United States v. Ferris, 807 F.2d 269, 271 (1st Cir. 1986); United States v. Trownsell, 367 F.2d 815 (7th Cir. 1966) (per curiam).  In Dandy, the Sixth Circuit addressed facts similar to those at issue here, where the defendant did not file tax returns for 1982 and 1983, but the last act of evasion did not occur until 1985.  Dandy, 998 F.2d at 1355-56.  The Dandy court found that the statute of limitation runs from the last evasive act “because it is these evasive acts . . . which form the basis of the crimes alleged in . . . [the] indictment.”  Id. at 1356. In Ferris, the First Circuit supported the rule by pointedly stating, “[t]he defendant, however, by deceitful statements continued his tax evasion through [date of last act of evasion].” Ferris, 807 F.2d at 271 (noting that Habig supports this result because, “[t]he [Supreme Court] held that it made no sense to assert that ‘Congress intended the limitations period to begin to run before appellees committed the acts upon which the crimes were based’” (quoting Habig, 390 U.S. at 224-25)).  No circuit has rejected the last affirmative act of tax evasion rule.

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