Fifth Circuit Joins Majority Decisions that § 7212(a) Requires No Pending Investigation (5/28/17)

In United States v. Westbrooks, ___ F.3d ___, 2017 U.S. App. LEXIS 9073 (5th Cir. 2017), here, the Fifth Circuit held that (1) § 7212(a), here, tax obstruction, requires no pending investigation and (2) restitution for a tax crime based solely as a condition of supervised release cannot require restitution prior to the supervised release.

All the commotion was created by the Sixth Circuit's holding in See United States v. Kassouf, 144 F.3d 952, 955-58 (6th Cir. 1998), subsequently reaffirmed in United States v. Miner, 774 F.3d 336, 345 (6th Cir. 2014).  But, since Kassouf, every court other than the Sixth Circuit that has addressed the issue has disagreed with Kassouf.

There is nothing particularly newsworthy in the holding other than the Fifth Circuit joining the majority of courts which it lists as follows (bold face supplied by JAT):

United States v. Floyd, 740 F.3d 22, 32, 32 n.4 (1st Cir. 2014) ("A conviction for violation of section 7212(a) does not require proof of either a tax deficiency . . . or an ongoing audit," so "the filing of false tax documents" or "concealment of income or other assets from the IRS can form the basis for a violation of the statute"); United States v. Marinello, 839 F.3d 209, 222 (2d Cir. 2016) ("[S]ection 7212(a)'s omnibus clause criminalizes corrupt interference with an official effort to administer the tax code, and not merely a known IRS investigation."); United States v. Massey, 419 F.3d 1008, 1010 (9th Cir. 2005) ("[T]he government need not prove that the defendant was aware of an ongoing tax investigation to obtain a conviction under § 7212(a); it is sufficient that the defendant hoped 'to benefit financially' from [his] conduct."); United States v. Sorensen, 801 F.3d 1217, 1232 (10th Cir. 2015), cert. denied, 136 S. Ct. 1163, 194 L. Ed. 2d 176 (2016) ("7212(a) does not require an ongoing proceeding . . . .'").

The Court also rejected the argument that the holding rendered § 7212(a) unconstitutionally vague.  That was a concern that contributed to the Kassouf holding.  The Fifth Circuit rejected it, reasoning in part:

Westbrooks rightly argues that, after Johnson v. United States, 135 S. Ct. 2551, 192 L. Ed. 2d 569 (2015), section 7212(a) is not saved by the fact that some conduct clearly falls within a statute's prohibition. Id. at 2561. But as several circuits have held, Johnson did not change the rule that a defendant whose conduct is clearly prohibited cannot be the one making that challenge. See United States v. Bramer, 832 F.3d 908, 909 (8th Cir. 2016) ("Though Bramer need not prove that § 922(g)(3) is vague in all its applications, our case law still requires him to show that the statute is vague as applied to his particular conduct."); Arrigoni Enters., LLC v. Town of Durham, 629 F. App'x 23, 26 (2d Cir. 2015); Maages Auditorium v. Prince George's Cty., 2017 U.S. App. LEXIS 4532, 2017 WL 1019060, at *6 (4th Cir. Mar. 15, 2017); United States v. Huff, 630 F. App'x 471, 487 (6th Cir. 2015); United States v. Zagorovskaya, 628 F. App'x 503, 504 (9th Cir. 2015); Miranda v. U.S. Att'y Gen., 632 F. App'x 997, 1000 (11th Cir. 2015); Flytenow, Inc. v. FAA, 808 F.3d 882, 895 (D.C. Cir. 2015).

Finally, as to the restitution issue, the Court held that Title 26 tax crimes do not permit restitution unless agreed to in a plea agreement or as a condition for supervised release.  The sentencing court had ordered restitution as a condition of supervised release after incarceration but ordered restitution to commence while incarcerated.  The Fifth Circuit said that was not consistent with the condition.