Supreme Court Rules Tax Perjury and Aiding & Assisting Are Deportable Aggravated Felonies (2/21/12)

The Supreme Court today decided Kawashima v. Holder, ___ U.S. ___, _132 S. Ct. 1166 (2012), here.

The bottom line is that tax perjury (Section 7206(1)) and aiding and assisting (Section 7206(2)) involving tax loss exceeding $10,000 are aggravated felonies.  I will write more on the decision, probably tomorrow after I have worked through it and the dissents.  Just FYI, the majority opinion is by Justice Thomas.  The minority opinion is by Justice Ginsburg with Justices Breyer and Kagan concurring.

Justice Thomas' majority opinion is straight-forward in its critical holding.  The aggravated felony provision applies if the crime involves "fraud or deceit."  8 U. S. C. §1101(a)(43)(M)(i).  Tax perjury (Section 7206(1)) and aiding and assisting (Section 7206(2)) require deceit as a necessary element of the crimes.  Therefore, this is an aggravated felony.  This is straight-forward application of the statutory text, without any consideration of subtlety or nuance.

Justice Thomas then rejects the arguments the petitioners made to avoid a straight-forward application of the statutes.  He reasons that, although neither of the tax crimes' text uses the term fraud or deceit, they necessarily include deceitful conduct.  (This was the point he made initially, but he essentially elaborates on it.)

Justice Thomas then turns to the petitioners' argument that created the conflict in the circuits.  And this requires some subtlety to resolve either way.  The petitioners' argument is that Congress' inclusion in subjection (ii) of tax evasion as an aggravated felony is meaningless if tax evasion were already covered in (i) by the term "fraud or deceit."  And, if it is not meaningless, petitioners argued, then it can be inferred that, as among tax crimes, Congress intended deportable aggravated felonies to include only tax evasion and not the other lesser tax crimes.

Justice Thomas reasons that, in effect, fraud or deceit is not necessarily required for tax evasion. Therefore, he concludes, (ii) is not redundant (surplusage), and does not  permit an inference that, by including (ii), Congress meant to exclude other lesser crimes.  To reach this conclusion, Justice Thomas speculates that Congress may have been concerned by an old Supreme Court case, United States v. Scharton, 285 U. S. 518 (1932), which he reads as holding that tax evasion did not necessarily involve fraud.  I won't  go into the swamp necessarily to critique that holding (but will say that I think Justice Ginsburg in the dissent has the better reasoning that tax evasion necessarily involves fraud).   Justice Thomas is perhaps on better ground in concluding that there are some instances of evasion of payment in which tax evasion might exist without any element of deceit.

Justice Thomas also rejects the Kawashimas' argument based on the Sentencing Guidelines.  I think that was a thin reed for the Kawashimas and direct readers to the opinion for further consideration.

Justice Thomas finally summarily rejects the application of the rule of lenity, stating simply that "the application of the present statute clear enough that resort to the rule of lenity is not warranted."

Justice Ginsburg's minority opinion seems to me to have the better part of the subtle arguments that Justice Thomas deals with rather summarily.

Finally, just an editorial comment on the role of the Supreme Court.  The issue was necessarily a close one.  I don't think there is any "right" answer.  I personally prefer Justice Ginsburg's answer, but that does not mean it is the right one.  The arguments are good both ways -- Justice Thomas' based on a straight-forward interpretation of the text (except, I think for his foray into tax evasion) and Justice Ginsburg's more nuanced approach.  In many -- perhaps most -- of the cases resolved by the Court, there are two or more good answers, without any of them being necessarily the best.  The Supreme Court's function is to pick among those arguments and reach a definitive result with a reasoned approach.  Both the majority and dissenting opinions present reasoned approaches and the majority opinion reaches the definitive result for the lower courts to apply.

For my blog on acceptance of cert, see Supreme Court to Decide Whether Tax Crimes Other Than Tax Evasion Are Aggravated Felonies Under Immigration Law (5/24/11), here.

Addendum 2/28/12:

I focus readers' attention to the final two paragraphs of Justice Ginsburge's dissent where she discusses some anomalous results of the holding.

First, she expresses concern that the majority sees to be transforming all tax offenses into "aggravated felonies," where they are felonies or not.  Some federal, state and local tax crimes are misdemeanors.  As she notes in foot 2:

One might also ask what reason Congress would have for making a tax misdemeanor a deportable offense, while more serious crimes do not jeopardize an alien's residency in the United States. See, e.g., Leocal v. Ashcroft, 543 U. S. 1, 11-12, 125 S. Ct. 377, 160 L. Ed. 2d 271 (2004) (driving while drunk, causing serious bodily injury to others is not an aggravated felony). 

Second, she notes that the holding will have an unintended consequence on the criminal tax enforcement system by taking away an important plea bargaining incentive for immigrants.  She says (I omit most case citations for easier reading):

Finally, the Court's decision has adverse consequences for the efficient handling of tax prosecutions. It is often easier for the Government to obtain a conviction under §7206 (false statements) than under §7201 (tax evasion). For this reason, the Government has allowed taxpayers to plead guilty to a §7206 charge in lieu of going to trial under §7201 on an evasion charge. Deportation consequences are important to aliens facing criminal charges. See Padilla v. Kentucky, 559 U. S. __, __, 130 S. Ct. 1473, 176 L. Ed. 2d 284, 295 (2010) ) ("[P]reserving the client's right to remain in the United States may be more important to the client than any potential jail sentence."). If a §7206 charge carries the same prospect of deportation as a §7201 charge, then an alien's incentive to plead guilty to any tax offense is significantly reduced. 

It is true that the Government will often permit a plea to tax perjury (a 3 year felony) rather than tax evasion (a 5 year felony).  So, one would expect that immigrant defendants in tax cases will not plead but will put the Government to its proof of tax evasion in the hopes that it cannot make the proof.  So the prosecutors' ability to squeeze out plea agreements will be constrained and this may put a burden on systemic resources (prosecutors, Probation Office, and courts). This factor would not justify an interpretation of 8 U. S. C. §1101(a)(43)(M)(i) that the text would not permit, but at least in the eyes of the dissenter and the Third Circuit, there are two permissible interpretations and considering this factor could enter the mix in determining between those permissible interpretations.

Perhaps, though, the Government in its exercise of discretion will throttle back on these cases against immigrants because of this added deportation "punishment."  Maybe DOJ Tax will approve some clearly misdemeanor charges although that is not its want.  Maybe the quality of justice may not be strained if this were the unintended consequence.

OK, I have to add this from Shakespeare's The Merchant of Venice (I am including it full bore and just hope readers can consider the context and the 20th century imagination of the theme):

Portia:
The quality of mercy is not strained.
It droppeth as the gentle rain from heaven
Upon the place beneath.  It is twice blest:
It blesseth him that gives, and him that takes.
'Tis mightiest in the mightiest.  It becomes
The throned monarch better than his crown.
His sceptre shows the force of temporal power,
The attribute to awe and majesty,
Wherein doth sit the dread and fear of kings;
But mercy is above this sceptred sway.
It is enthroned in the hearts of kings;
It is an attribute to God himself,
And earthly power doth then show likest God's
When mercy seasons justice.  Therefore, Jew,
Though justice be thy plea, consider this:
That in the course of justice none of us
Should see salvation.  We do pray for mercy,
And that same prayer doth teach us all to render
The deeds of mercy.  I have spoke thus much
To mitigate the justice of thy plea,
Which if thou follow, this strict court of Venice
Must need give sentence 'gainst the merchant there.