Wednesday, May 30, 2012

Plea for Defendant Charged with Tax Crimes (including FBAR) (5/30/12)

I previously reported on the criminal case involving Charles Alan Pflueger.  See Court Holds FBAR Duty is Clear and Willfulness Is a Trial Issue (4/10/12), here.  The gravamen of the case was a traditional tax crimes case, although an FBAR violation was charged as well.  Mr. Pflueger and others recently pled guilty.  See DOJ Tax Press Release, here.  The pleas were to traditional tax crimes.  Mr. Pflueger, who had the offshore account and was the defendant charged with the FBAR violation, pled to a single tax perjury, Section 7206(1), here, charge for the year 2005.  His plea agreement is here.  This gravamen of this case was not the offshore account charge, so I will not spend much time on it here.

I do point out the following with respect to Mr. Pflueger's plea agreement:

1.  The plea agreement imposes contractual restitution for the tax loss, including relevant conduct as determined by the Court.  Except for the plea agreement, the sentencing court would not be authorized to order restitution for a Title 26 crime of conviction, except perhaps as a condition of some sentencing benefit (such as probation).  The court will be authorized to order restitution pursuant to the plea agreement.  The amount of the restitution will be determined by the time of sentencing.  Once determined at sentencing, the amount of the restitution may be immediately assessed under Section 6201(a)(4), here.   The IRS may use its tax collection authority with respect to the assessments (including the fraud assessment), regardless of any restitution schedule ordered by the sentencing court.

2.  The defendant also consents to the assessment of the fraud penalty for the year of conviction and agrees not  to contest the fraud penalty.  Technically, the fraud penalty would not be restitution and the plea agreement is careful not to call it restitution.  The fraud penalty is a penalty, rather than recompense.  Presumably, this agreement for immediate assessments operates like a Form 870, Waiver of Restrictions on Assessment, although I am surprised that the Government did not require that Pflueger execute that form.

3.  The IRS may use its civil assessment authority to assess tax, penalties (including fraud) and interest in addition to the amounts agreed upon in the agreement.  Thus, the IRS may assess tax in addition to that determined in the restitution order for the year of sentencing and for other years, such as the relevant conduct years and may impose other penalties, civil fraud or accuracy related with respect to such additional assessments.

4.  The parties agree that the tax loss, yet to be determined but including year of conviction and years of relevant conduct, is at least $200,000 (Base Offense Level of 18) but less than $1,000,000 (BOL 20) and that the Government may urge a tax loss (including relevant conduct) of not more than $1,000,000.

5.  The Government will recommend a sentence at the low end of the sentencing range.

6.  The Government will advocate for up to a 3 point decrease for acceptance of responsibility, the maximum allowed for acceptance.

Otherwise, the agreement seems unexceptional to me.

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