Marinello Tax Obstruction 7212(a) Oral Argument is Wednesday (12/3/17)

I have previously posted on Marinello v. United States, 839 F.3d 209, 218 (2d Cir. 2016), cert. pending. Supreme Court Grants Certiorari in Marinello Involving Whether § 7212(a)'s Omnibus Clause Requires Knowledge of Pending Investigation (6/27/17), here; and On Conflicts, Certiorari and Marinello (Federal Tax Crimes Blog 7/1/17), here.  The oral argument is scheduled for Wednesday, December 6, 2017.  I thought I would offer some resources for those interested in the oral argument.

• Scotusblog docket entries, here.
• Susan C. Morse, Argument preview: What limits tax law obstruction-of-justice charges? (Scotusblog 11/28/17), here.
• Oral Argument (recorded audio only; when it is available), here. (The Supreme Court website says here that oral argument voice recordings are available by the end of the week of the oral argument.)
• Transcripts of oral argument, here. (Available now.)

Although every attorney practicing in the criminal tax area will find some of the issues particularly interesting, the one I do not find the direct issue in the case -- whether the omnibus clause of § 7212(a) requires a known pending IRS investigation that the person's conduct is intended to obstruct -- particularly interesting.  Rather, I find the supporting issue of the mens rea requirement in § 7212(a) more interesting.  Most crimes in the Internal Revenue Code require that the conduct (the actus reus) be willful.  Section 7212(a)'s omnibus clause does not have a willful element but does have an element requiring that the defendant have acted corruptly.

Marinello argues that there is no limiting principle to the corruptly mens rea requirement, so that it is appropriate to constrict the scope of § 7212(a) to conduct intended to obstruct a pending investigation.  That is a simplified version of the argument as I understand it.  The Government argues in its brief, here, as follows.

From Summary of the Argument:

II.

* * * * 

C. A defendant’s endeavor does not violate Section 7212(a) unless he acts “corruptly” and intends to obstruct the due administration of the tax code. Those mens rea requirements ensure that a defendant is aware that his obstructive acts are directed at the IRS’s administration of the tax code, that he intends to obstruct those functions, and that he does so with the specific intent of obtaining a benefit or advantage that he knows to be illegal. The mens rea elements of Section 7212(a) readily distinguish purposeful tax violators from those who lack a culpable intent to obstruct and ensure that the provision is not a trap for the unwary.  

From the Argument (pp. 18-21):

C. Section 7212(a)’s Mens Rea Requirements Limit The Statute’s Reach 

1. Although Section 7212(a) applies to all phases of the IRS’s administration of the tax laws, absent force or the threat of force, a tax-obstruction offense does not exist unless the defendant acts “corruptly.” 26 U.S.C. 7212(a). Consistent with the “special treatment” generally afforded to mens rea requirements in criminal tax statutes, Cheek v. United States, 498 U.S. 192, 200 (1991), the courts of appeals have uniformly interpreted the “corruptly” element in Section 7212(a) to require proof that the defendant “act[ed] with an intent to procure an unlawful benefit either for [himself] or for some other person.” United States v. Floyd, 740 F.3d 22, 31 (1st Cir.) (citing cases from nine other circuits), cert. denied, 135 S. Ct. 124 (2014); see Trial Tr. 470 (same); 3 Leonard B. Sand et al., Modern Federal Jury Instructions—Criminal ¶ 59-33 (2017) (same).  

The specific intent to obtain an unlawful benefit or advantage subsumes two concepts. First, it requires that the defendant knows that his obstructive conduct is “directed at efforts to bring about a particular advantage such as impeding the collection of one’s taxes, the taxes of another, or the auditing of one’s or another’s tax records.” United States v. Reeves, 752 F.2d 995, 998 (5th Cir.), cert. denied, 474 U.S. 834 (1985). Second, it requires that the defendant be aware that the advantage is contrary to law. See Floyd, 740 F.3d at 31(“unlawful benefit”). 

The meaning of “corruptly” in Section 7212(a) is, in these respects, more specific and demanding than the meaning of that term as applied in other, more general obstruction statutes. For example, Congress has defined the term “corruptly” in 18 U.S.C. 1505 (prohibiting corrupt endeavors to obstruct agency proceedings) to mean “acting with an improper purpose, personally or by influencing another, including making a false or misleading statement, or withholding, concealing, altering, or destroying a document or other information.” 18 U.S.C. 1515(b). This Court has defined the term  “corruptly” in 18 U.S.C. 1512(b) (prohibiting the corrupt persuasion of another person to withhold information from an “official proceeding”) as “wrongful, immoral, depraved, or evil.” Arthur Andersen LLP v. United States, 544 U.S. 696, 705 (2005). And in the context of the general obstruction-of-justice statute, 18 U.S.C. 1503, courts have defined the term “corruptly” to mean “knowingly and dishonestly,” United States, v. Richardson, 676 F.3d 491, 508 (5th Cir. 2012) (citation omitted); “with an improper or evil motive,” United States v. Frank, 354 F.3d 910, 922 (8th Cir. 2004); or, simply, “with the purpose of obstructing justice,”  United States v. Cueto, 151 F.3d 620, 630 (7th Cir. 1998) (citation omitted), cert. denied, 526 U.S. 1016 (1999).

The federal courts’ uniform adoption of a more specific and rigorous definition of “corruptly” in Section 7212(a), accords with this Court’s interpretation of other mens rea requirements in the criminal tax context. In Cheek, for example, the Court held that in the context of tax offenses, “willfully” requires proof “that the law imposed a duty on the defendant, that the defendant knew of this duty, and that he voluntarily and intentionally violated that duty.” 498 U.S. at 201.  That enhanced mental state requirement reflects this Court’s recognition that “the complexity of the tax laws” may make it “difficult for the average citizen to know and comprehend the extent of the[ir] duties and obligations” under those laws, and thus mens rea requirements in criminal tax statutes should be interpreted more stringently than in other contexts. Id. at 199-200. A similar approach informs the interpretation of “corruptly” under Section 7212(a). 

As I understand the Government's argument, it is that, although the words used are different, the mens rea requirement that the defendant act willfully in the other tax crimes (e.g., § 7201) is basically the same as the mens rea requirement that the defendant act corruptly in § 7212(a).  See United States v. Kelly, 147 F.3d 172 (2d Cir. 1998); United States v. Kay, 513 F.3d 461 (5th Cir. 2008), on reh'g from 513 F.3d 432 (5th Cir. 2007); and United States v. Williamson, 746 F.3d 987 (10th Cir. 2014).  Indeed the CTM 17.04 ELEMENTS OF THE OMNIBUS CLAUSE says the following:

Section 7212(a) does not include any language requiring that the defendant acted willfully. The Second Circuit has upheld a district court’s refusal to give a Cheek willfulness instruction, noting that Section 7212(a) does not include that term and opining that the district court's instructions as to “corruptly” and “endeavors” were “as comprehensive and accurate as if the word ‘willfully’ was incorporated in the statute.” United States v. Kelly, 147 F.3d 172, 177 (2d Cir. 1998).

See also John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough, 9 Hous. Bus. & Tax. L.J. 255, 311 (2009), here.

The upshot is that, basically, even if the Cheek-type willfulness instruction is not given, something essentially like it should be given in defining the corruptly element.  And, if that is the case, then the defendant should get a good faith instruction if the facts warrant it.