Wednesday, July 1, 2020

New CTM discussion on § 7212(a) re Marinello (7/1/20; 7/12/20)

I was just notified the DOJ Criminal Tax Manual, here, often referred to as the "CTM," has updated the chapter on tax obstruction, § 7212(a), to reflect changes principally driven by Marinello v. United States, ___ U.S. ___. 138 S. Ct. 1101 (2018).   The new discussion is here.  I have posted several entries on Marinello.  See here.  I have not yet had time to review the new discussion and likely will not for a week or so, but those having Marinello based issues will certainly want to review this new CTM discussion.

Added 7/12/20 12:15pm:

I have now had time to read the revised CTM.  The changes that seem to have been driven by Marinello should be predictable to readers who paid attention to Marinello when it was released, including contemporaneous commentary, including commentary on this blog.  I will offer here some comments and short excerpts (excerpts are cleaned up for readability).

1.  Section 17.02, titled Generally, has a good succinct discussion of § 7212(a) and the Marinello holding.

2. Section 17.04, titled Elements of the Omnibus Clause as Construed in Marinello, has a lengthier analysis of the nexus interpretation in Marinello.

3.  Section 17.04[1], titled Corruptly, discusses the corruptly element and relates it to the willfulness element for most tax crimes which may be parallel in effect.  It says that Marinello did not alter the definition, but did state: "the Court simply opined that, “practically speaking,” a taxpayer who “willfully” violates the tax code would also intend to obtain an unlawful advantage [an element of the Omnibus Clause]."

4.  Section 17.04[3], titled Omissions as Endeavors, says that conceptually omissions, at least some omissions, might be within the scope of the Omnibus Clause and that Marinello did not address that possibility.  The Section then concludes:  "Against this legal backdrop, it remains the policy of the Tax Division that a § 7212(a) Omnibus Clause prosecution should not be based upon an omission, including a failure to file a tax return, without the express authorization of the Tax Division."

5. Section 17.04[6], titled “Nexus” Between Conduct and a Particular Administrative Proceeding, states that
Marinello did not specifically address how to prove a nexus where the tax-related proceeding involves multiple tax years or periods. Nor did not it require proof of a nexus between a corrupt endeavor and the IRS’s administrative proceedings with regards to a specific tax year or period. Instead, it required proof only of a “‘nexus’ between the defendant's conduct and a particular administrative proceeding,” and identified “investigation[s]” and “audit[s]” simplicter [sic], not audits or investigations of particular tax periods, as examples of such proceedings. In the analogous situation of obstructing a grand jury, the government is not required to prove the defendant specifically intended to be obstructive as to the subject of the grand jury’s inquiry, only that the defendant intended to obstruct the grand jury generally. 
6. Section 17.04[7], titled Pleading Violations of the Omnibus Clause under Marinello, says that the Tax Division position is that Marinello nexus is a proof issue rather than a pleading issue, so that failure to allege in the indictment should not be fatal.  But, even so, "indictments brought after Marinello should, in order to avoid litigation over the sufficiency of an Omnibus Clause indictment, expressly allege the nexus-to-a-pending-or-foreseeable-proceeding requirement."  Further, "post-Marinello indictments should at least allege facts showing that the nexus-to-a-pending-or-foreseeable-proceeding requirement is satisfied in order to avoid this issue."  And to even further underline the point:  "Note: The model indictment form appended to this Manual reflects the Tax Division’s recommendation that the indictment expressly allege a nexus to a pending or foreseeable proceeding."

7. Section 17.04[8], titled Jury Instructions after Marinello, "Marinello’s requirement of a nexus-to-a-pending-or-reasonably-foreseeable proceeding, of course, must be found by a jury, and thus must be reflected in the instructions given the jury."

8.  Section 17.04[8][a], titled Specific Unanimity of Corrupt Endeavors, says "It is generally well-settled that the requirement that a verdict be “unanimous” requires jurors to unanimously agree that each element of an offense has been proven, but does not require unanimity with regards to the particular means by which an offense is committed."

9.  Section 17.04[9], titled Unit of Prosecution, says Marinello did not address or affect pre-Marinello interpretation that approved (i) "multiple corrupt acts in a single count under the Omnibus Clause are not duplicitous so long as those acts constitute a continuing course of conduct;" (ii) indictments charging the Omnibus Clause when there are other charges in the indictment that are based on some of the same facts as an alleged corrupt act; (iii) the "general principle that an indictment may charge in one count that a defendant committed an offense by one or more specified means;" and (iv) an Omnibus count "not impermissibly duplicitous provided that the acts alleged constitute a single continuous scheme or course of conduct."

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