More on Tax Crimes as Aggravated Felonies for Immigration Purposes

The Ninth Circuit issued yet a third published opinion in The Kawashima cases. The first was Kawashima v. Gonzales, 503 F.3d 997 (9th Cir. 2007), withdrawn 503 F.3d 1111 (9th Cir. 2008). The second was Kawashima v. Mukasey, 530 F.3d 1111 (9th Cir. 2008), withdrawn sub nom. Kwashima v. Holder, 593 F.3d 979 (9th Cir. 2010). The third now is Kawashima v. Holder, 615 F.3d 1043 (9th Cir. 2010) here, decided 8/4/10.  I have written on Kawashima before here, so now update those comments.

The big brouhaha in the case has been over the issue of whether tax perjury (Section 7206(1)) and aiding and assisting (Section 7206(2)) are deportable aggravated felonies under 8 U.S.C. § 1101(a)(43)(M). That section is short, defining aggravated felonies to include:

(M) an offense that—

(i) involves fraud or deceit in which the loss to the victim or victims exceeds $10,000; or
(ii) is described in section 7201 of title 26 (relating to tax evasion) in which the revenue loss to the Government exceeds $10,000;

The language sets up a nice issue of statutory interpretation. Are tax offenses included in (i) or not? If tax offenses are included in (i), then (ii) is superfluous because the capstone tax offense in (ii), tax evasion, is a crime of "fraud or deceit" covered by (i). Principally for this reason, the Third Circuit held that (i) does not cover tax offenses. Ki Se Lee v. Ashcroft, 368 F.3d 218 (3d Cir. 2004). But Ki Se Lee had a prominent dissenter -- Judge (now Justice) Alito -- who said that tax perjury fell within the plain meaning of an offense involving "fraud or deceit." I think this is an interesting issue of statutory interpretation inviting pet theories of statutory construction such as plain meaning and various canons to be marshaled in support of a desired result.

Ki Se Lee is the lone wolf holding that tax offenses other than tax evasion are not aggravated felonies under (i). The Ninth Circuit has now reiterated its prior holding that tax offenses other than tax evasion can be aggravated felonies if they involve fraud or deceit, as tax perjury and aiding and assisting do.

The majority holding on this newest opinion is a straight-forward plain meaning holding for the statute.

Three of the Ninth Circuit Judges dissented from the petition for rehearing en banc, with Judge Graber writing a dissent for the three judges. These judges, like the majority in Ki Se Lee were convinced that the majority had not properly considered that the majority's reading rendered (ii) superfluous. It is not likely, the dissenters argued, that Congress was doing a meaningless act in inserting and enacting (ii). I provide here the guts of the dissents reasoning because, quite frankly, I am persuaded even if the majority was not:

The panel's interpretation renders subsection (ii) superfluous. Subsection (i) encompasses convictions that "involve fraud or deceit" and that involve a loss exceeding $ 10,000. Subsection (ii) encompasses tax evasion convictions where the tax revenue loss exceeds $ 10,000. Importantly, because all tax evasion convictions necessarily involve fraud or deceit, Spies v. United States, 317 U.S. 492, 499, 63 S. Ct. 364, 87 L. Ed. 418, 1943 C.B. 1038 (1943), subsection (i) necessarily encompasses all convictions encompassed by subsection (ii). The panel's interpretation thus renders subsection (ii) meaningless.

At the same time, it is easy to interpret the statute to give meaning to both subsection (i) and subsection (ii). Hoffman, 101 U.S. at 115. It is an entirely reasonable interpretation that Congress intended subsection (ii), and not subsection (i), to govern tax crimes. n2 Because it is "possible" to give "significance and effect" to all parts of the statutory text, we must do so. Hoffman, 101 U.S. at 115. "We are not at liberty to construe any statute so as to deny effect to any part of its language." Id.
FOOTNOTE
n2 As the Third Circuit explained, Congress reasonably may have concluded that no tax crimes other than the most severe tax crime -- tax evasion -- should qualify as an aggravated felony, even if the less severe tax crimes happen to involve fraud or deceit. Ki Se Lee v. Ashcroft, 368 F.3d 218, 224 (3d Cir. 2004).
END OF FOOTNOTE

The panel declines to apply this mandatory analysis solely because of its speculation that Congress might have intended to enact a superfluous statutory provision. The panel's reasoning misunderstands the rule against superfluities specifically and the task of statutory interpretation more generally. It is true that no method of statutory interpretation is absolute. Indeed, even when the text is indisputably plain, we sometimes hold that Congress intended something very different (for instance, when the drafters made a typographical mistake). See, e.g., Herrera v. U.S. Citizenship & Immigration Servs., 571 F.3d 881, 886 n.5 (9th Cir. 2009). Here, Congress indeed may have intended to enact a superfluous provision. But there must be some reason to believe that this is the case. We are not at liberty to wave away an indicator of congressional intent simply because it is conceivable that Congress intended the opposite. It is always conceivable that Congress did not mean what it said, or intended to enact a superfluous provision, or intended to raise serious questions of constitutionality, and so on. The panel's observation that, here, that possibility is not beyond the conceivable does not advance the analysis.

On this point, it is extremely important that all indicators of congressional intent point in the same direction: Congress intended tax crimes to be governed only by subsection (ii), not subsection (i). The panel points to absolutely nothing that suggests that Congress did not so intend, other than the alleged "plain meaning" of subsection (i) when read alone. Is there any legislative history supporting the panel's view? No. Is there any statutory history supporting the panel's view? No. Is there a statutory purpose that supports the panel's view, such as a rule that the definition should be construed against the alien? No; in fact, the opposite presumption applies, as the panel acknowledges. Amended Op. at 11199 n.6; Kawashima, 593 F.3d at 984 n.7. Are there other canons of construction that support the panel's view? No; in fact, applicable canons of construction support the opposite view, such as the rule that the "specific governs the general." See Ki Se Lee, 368 F.3d at 223-24 (explaining the application of this canon of construction). In sum, the panel's unassailable observation that the rule against superfluities is not foolproof gets the panel nowhere; there must be some indicator that, in these particular circumstances, Congress actually intended to enact a superfluous provision. Beyond its speculation, the panel points to none.

In this regard, it is notable that the panel makes a point of reminding the reader no less than four times that it is following then-Judge, now-Justice, Alito's dissenting view in Ki Se Lee. The panel subscribes to, and applies, then-Judge Alito's view that the superfluities rule can be cast aside on the unsupported speculation that Congress may have intended to enact a superfluous provision. Just last year, now-Justice Alito advanced that same general view in Corley, 129 S. Ct. 1558, 173 L. Ed. 2d 443. Unable to convince a majority of his colleagues, Justice Alito expressed his views in dissent. Id. at 1572-73 (Alito, J., dissenting). The Supreme Court majority, however, roundly rejected this proposed mode of interpretation: "[T]he dissent's point that subsection (a) seems clear when read in isolation proves nothing, for 'the meaning--or ambiguity--of certain words or phrases may only become evident when placed in context.' When subsection (a) is read in context, there is no avoiding the question, 'What could Congress have been [*38] getting at with both (a) and (c)?' " Id. at 1566 n.5 (citation and alteration omitted).

Whatever validity the panel's method of interpretation may have had in the past, the Supreme Court clearly rejected it just last year. The panel does not explain how its opinion is consistent with Corley.

I also note that I am persuaded, at least at the margins, by the fact that the majority opinion in Ki Se Lee was written by Judge Louis Oberdoerfer was a specialist in the tax law and had headed DOJ Tax as AAG. I think this gave him unique insight, which he articulated well in his opinion and got it right. I am less enamored by then-Judge Alito's reasoning, the fall back to plain meaning that I personally find less satisfying, but understand how Court of Appeals judges may feel that it would carry the day in this Supreme Court.

UPDATE ON 8/24/10:  Miller & Chevalier's Tax Appellate Blog has a good discussion of Kawashima here.