tag:blogger.com,1999:blog-1519969502186924526.post8897944817346899854..comments2023-10-24T08:00:53.865-05:00Comments on Federal Tax Crimes: Sentencing Guidelines - The Tax Loss from Timing IssuesJack Townsendhttp://www.blogger.com/profile/14469823736335455874noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1519969502186924526.post-65849416919729840862009-05-26T10:55:20.985-05:002009-05-26T10:55:20.985-05:00Anonymous / John:
Thanks for your post. Your ana...Anonymous / John:<br /><br />Thanks for your post. Your analysis is an excellent one. The argument I would make for Taxpayer #2 is that, given the fact that he is entitled to a future deduction that he foregoes by claiming it early, the intended loss to the Government really is the time value of money interest factor. By contrast, Taxpayer #1 really did intend in filing the original return to cheat the Government out of the entire amount. His contrition later, evidenced by filing an amended return, does not change his original intent.<br /><br />Of course, as you know, the likelihood of the Government prosecuting Taxpayer #1 is not great unless there are some really bad facts other than presented in the example. But, if the Government were to prosecute, the Sentencing Guidelines potential discrepancy exists (although I don't think it is a discrepancy for the reasons noted).<br /><br />Finally, keep in mind that, even if Taxpayer #1 were prosecuted and the entire amount included in his or her tax loss number for the Guidelines calculation, the district court could view the voluntary act of contrition by filing an amended return as a factor to consider in making a variance. If I were Taxpayer #1's lawyer, I would urge that and, again depending upon the facts, I think a court might be receptive and even a good prosecutor might signal to the court that a variance might be appropriate (I know that they are not supposed to do that.)<br /><br />Thanks again. I appreciate your comments about he blog and the book very much.Jack Townsendhttps://www.blogger.com/profile/14469823736335455874noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-44157771480585346502009-05-26T10:01:53.042-05:002009-05-26T10:01:53.042-05:00Jack,
I was at the ABA Conference in Washington D...Jack,<br /><br />I was at the ABA Conference in Washington DC and enjoyed hearing about this case. However, I do not agree with the disposition of the case because taxpayers in similarly situated cases are not treated equally. Consider Taxpayer #1 and Taxpayer #2 below.<br /><br />Taxpayer #1: Files fraudulent return. Later feels remorse and files amended return paying tax, interest and penalties. Later is investigated, indicted and convicted for the originally fraudulent return. Government's position is that a later amended return does not cure the original fraud. Loss to government is zero but is sentenced to prison for originally intended tax loss of $100.<br /><br />Taxpayer #2: Files fraudulent return in Year 1 taking a full deduction for a depreciable item. Does not take any deduction in Year 2. Tax loss to government is zero. He intended the $100 tax savings in Year 1. Government decides that tax loss is only the AFR Interest of $10. Gets probation.<br /><br />Conclusion: In both cases tax loss is zero but Taxpayer #1 gets prison and Taxpayer #2 gets lower sentence because tax loss is treated as an interest calculation at a lower rate than say a 28% rate or top tax rate of 35%.<br /><br />Jack, I have read your entire book word for word and it is with the help of your book that I can more clearly think about these things.<br /><br />Thanks<br /><br />JohnAnonymousnoreply@blogger.com