Wednesday, May 6, 2015

Amendments to Sentencing Guidelines That May Affect Tax Crimes Sentencings (5/6/15)

I previously discussed a proposed amendment to the Guidelines that will will take affect in November 2015, unless Congress fails to act.  Pinkerton and Sentencing for Jointly Undertaken Activity; Proposed Sentencing Guidelines Amendment (Federal Tax Crimes Blog 4/17/15), here.  I discuss here another proposed amendment wherein the Sentencing Commission proposes to adjust financial levels and thresholds for inflation.  This will affect most prominently for federal tax crimes, the Tax Loss Table in S.G. 2T4.1, the current  version of which is here.

The proposal is presented in the USSC's Amendments to the Sentencing Guidelines (4/30/15), here.  The inflationary adjustments proposals are discussed beginning on p. 12 of the document.  The effect of the inflationary adjustment will be to lower the punishment for a given level of loss.  The revised levels for the tax loss are provided at p. 20 of the document .  For example, the amendment will move the threshold amount for Offense Level 18 from $200,000 to $250,000.  In effect, for defendants with a tax loss between $200,000 and $250,000, this is the equivalent of a reduction of 2 levels.

Over time, the effect of inflation is to increase the seriousness of a given level of financial crime.  The Commission explains in the proposal:
Congress has generally mandated that agencies in the executive branch adjust the civil monetary penalties they impose to account for inflation using the CPI. See 28 U.S.C. § 2461 note (Federal Civil Penalties Inflationary Adjustment Act of 1990). Although the Commission’s work does not involve civil monetary penalties, it does establish appropriate criminal sentences for categories of offenses and offenders, including appropriate amounts for criminal fines. While some of the monetary values in the Chapter Two guidelines have been revised since they were originally established in 1987, none of the tables has been specifically revised to account for inflation.  
Due to inflationary changes, there has been a gradual decrease in the value of the dollar over time. As a result, monetary losses in current offenses reflect, to some degree, a lower degree of harm and culpability than did equivalent amounts when the monetary tables were established or last substantively amended. Similarly, the fine levels recommended by the guidelines are lower in value than when they were last adjusted, and therefore, do not have the same sentencing impact as a similar fine in the past. Based on its analysis and widespread support for inflationary adjustments expressed in public comment, the Commission concluded that aligning the above monetary tables with modern dollar values is an appropriate step at this time.

* * * * 
Adjusting from the last substantive amendment year appropriately accounts for the Commission’s previous work in revising these tables at various times. Although not specifically focused on inflationary issues, previous Commissions engaged in careful examination (and at times, a wholesale rewriting) of the monetary tables and ultimately included monetary and enhancement levels that it considered appropriate at that time. The Commission estimates that this amendment would result in the Bureau of Prisons having approximately 224 additional prison beds available at the end of the first year after implementation, and approximately 956 additional prison beds available at the end of its fifth year of implementation.  
Readers should note, however, that the benefits of adjustments for inflation are not all defendant friendly.  Thus, they increase the fine levels in order to calibrate the effect of inflation.  With regard to the fine level increase,   The Commission explained:
Finally, the amendment adds a special instruction to both §§5E1.2 and 8C2.4 providing that, for offenses committed prior to November 1, 2015, the court shall use the fine provisions that were in effect on November 1, 2014, rather than the fine provisions as amended for inflation. This addition responds to concerns expressed in public comment that changes to the fine tables might create ex post facto problems. It ensures that an offender whose offense level is calculated under the current Guidelines Manual is not subject to the inflated fine provisions if his or her offense was committed prior to November 1, 2015.

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