Friday, May 1, 2009

Townsend Publication on Tax Obstruction

The Tax Prof Blog here reports that an appendix to my article, John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough? (article to be published later by the Houston Business and Tax Journal), has been put online here. The article addresses the Government's expansive claim as to the two principal tax obstruction crimes -- 26 U.S.C. (IRC) § 7212(a) and the Klein / defraud conspiracy under 18 U.S.C. § 371. The Government claim is that even legal actions undertaken to impair or impede the IRS may be prosecuted under these provisions. Sometimes, although often not in outcome determinative context, courts rotely say that also. In the article (to be published), I address the Government's claim in the context of audit avoidance, a common feature of tax practice. The article argues that something more than mere legal action to impair or impede or influence an audit is required for the obstruction crimes. There must be a false component of the action in order to sustain a prosecution. The Supreme Court so held in the defraud conspiracy context in Hammerschmidt v. United States, 265 U.S. 182 (1924), but the Government continues to attempt to end-run that holding. It is that end-run that is the focus of the article. As noted, the article is not yet published (indeed, I am making my final changes after receiving back the edited draft as we speak). I will post here later when the article is published.


  1. Does this mean that so-called egg shell audits can be criminalized as obstruction?

  2. Perhaps a picky point, the audits cannot be criminalized. The taxpayers' and practictioners' actions in audits can be criminalized by their intentional obstructive behavior to impair or impede the audits. Now, the thesis of my article to which this publication relates is that otherwise legal action even with an intent to impair or impede alone is not sufficient to make the action criminal. There must be some other element, captured best in the concept of the lie -- a lie told to the agent, a false document, etc.


Please make sure that your comment is relevant to the blog entry. For those regular commenters on the blog who otherwise do not want to identify by name, readers would find it helpful if you would choose a unique anonymous indentifier other than just Anonymous. This will help readers identify other comments from a trusted source, so to speak.