3. Unclaimed Credits, Deductions, and Exemptions.—In determining the tax loss, the court should account for the standard deduction and personal and dependent exemptions to which the defendant was entitled. In addition, the court should account for any unclaimed credit, deduction, or exemption that is needed to ensure a reasonable estimate of the tax loss, but only to the extent that (A) the credit, deduction, or exemption was related to the tax offense and could have been claimed at the time the tax offense was committed; (B) the credit, deduction, or exemption is reasonably and practicably ascertainable; and (C) the defendant presents information to support the credit, deduction, or exemption sufficiently in advance of sentencing to provide an adequate opportunity to evaluate whether it has sufficient indicia of reliability to support its probable accuracy (see §6A1.3 (Resolution of Disputed Factors) (Policy Statement)).
However, the court shall not account for payments to third parties made in a manner that encouraged or facilitated a separate violation of law (e.g., "under the table" payments to employees or expenses incurred to obstruct justice).
The burden is on the defendant to establish any such credit, deduction, or exemption by a preponderance of the evidence. See §6A1.3, comment.Joseph Rillotta, here, has a new article: New Sentencing Guidelines Provisions May Signiﬁcantly Impact Criminal Tax Cases, J. Tax Prac. & Proc. 31 (October-November 2013), here, which provides excellent background and practice tips, including the following guides:
First, the defendant must prove up an unclaimed deduction by a preponderance of the evidence.
Second, the defendant must claim the deduction “suffi ciently in advance of sentencing” to allow for meaningful scrutiny of the claim.
Third, defense counsel should be prepared to explain how the previously unclaimed deduction is “related to the tax offense.”
Fourth, defense counsel should be prepared to argue that the deductions are not based on payments that encouraged or facilitated third parties’ violation of the law.He fleshes each one of these guides with suggestions as to how to meet the burdens imposed on the defendant in these provisions.