Does Tax Perjury, § 7206(1), Require Some Act of "Filing" Beyond Receipt By The IRS? (1/28/23)

In United States v. Abramson, (N.D. Ill Case: 1:18-cr-00681 Doc 119 Memo Opinion and Order 1/20/23), TN here and CL here, Abramson was indicted for various counts of tax perjury, § 7206(1), for original personal income tax returns and original and amended corporate tax returns. Abramson moved to dismiss the counts related to amended corporate tax returns received by the IRS but, he alleges, not "filed" because not accepted by the IRS.

The key facts alleged by Abramson for purposes of the motion are:

Abramson states that in August 2014 he sent the Forms 1120X along with a letter on behalf of LES "requesting a determination that LES and its subsidiaries be allowed an extension of time to file an election under § 1.1502-75 of the Income Tax Regulations which would allow the affiliated group to file amended consolidated returns for the years 2006-2012." (Dkt. 80 at 3). He later received a letter dated March 16, 2015, from the IRS's Office of Associate Chief Counsel (Corporate) that, in Abramson's words, indicated the IRS had "expressly rejected the request to file them." (Id. at 1).

The Court denied the motion on the following bases:

1. the indictment counts alleging that Abramson had filed the amended corporate income tax returns were legally sufficient on their face to state a violation of § 7206(1).

2. Abramson's defense requires consideration of facts outside the indictment, which the Court held was legally sufficient (see par. 1). Accordingly, on the motion as framed, the Court could not consider the evidence outside the indictment. The evidence Abramson submitted had markings that might indicate that, although the IRS received the amended corporate income tax returns, it had not "filed" the amended corporate income tax returns. The Court said (Slip Op. 7):

            Abramson's defense requires considering and weighing evidence to make factual determinations regarding these documents' meanings. It is not self-evident that the March 2015 letter "rejected" Abramson's returns; there are other possible interpretations of this letter, including that the IRS simply decided not to issue a private letter ruling based on inadequate information. It is even less clear what "D" means on the proffered forms. The government offers an alternative explanation. (Dkt. 91 at 4 n.2). The Court cannot resolve factual disputes about such evidentiary issues on a Rule 12(b) motion. Sampson, 898 F.3d at 281; United States v. Schafer, 625 F.3d 629, 635 (9th Cir. 2010) ("[I]f the pretrial motion raises factual questions associated with the validity of the defense, the district court cannot make those determinations.").

3. Even if Abramson's evidence were considered, the Court held that (Slip Op. 12):

An amended return is filed for purposes of a § 7206(1) charge when it has been delivered to and received by the IRS. The IRS's subsequent discretionary acceptance or rejection of the information contained therein for purposes of calculating tax liability does not affect the determination of whether the return was filed.

It appears that, although finding the counts on the amended corporate income tax returns alleging filing sufficient at this stage, the third holding would appear conclusive for the balance of the case unless Abramson proffers evidence other than submitted here.

JAT Comments:

1. Focusing on holding 3, additional authority for the proposition that receipt by the IRS is filing not cited by the Court is (copy and pasted from my Federal Tax Procedure Book 139 n. 39 (2022 Practitioner Edition):

Hotel Equities Corp. v. Commissioner, 65 T.C. 528, 531 (1975), aff'd, 546 F.2d 725 (7th Cir. 1976) (noting "the longstanding definition of the word 'filed' as used in Federal statutes is 'delivered'"); Miller v. United States, 784 F.2d 728, 729-30 (6th Cir. 1986) (referring to the "physical delivery rule"); Phinney v. Bank of the Southwest National Assn., Houston, 335 F.2d 266, 268 (5th Cir. 1964); see also United States v. Lombardo, 241 U.S. 73, 76 (U.S. 1916), a nontax case, but applying a straight-forward etymological interpretation of the concept of filing, concluding that "Filing * * * is not complete until the document is delivered and received.").

2. Consider also § 7502, the timely-mailing, timely-filing rule which provides that a return is deemed filed on the date mailed if timely and the document is thereafter delivered to the IRS out of time.  The IRS may thereafter "accept" the return for its purposes (e.g., assessment of tax). For example, say the document were a Form 1120X making a refund claim which the IRS did not accept for some reason?  Surely, the receipt by the IRS (assuming proper office) would be sufficient to support timely filing.  Section 7502 does not focus on what happens subsequent to delivery to the IRS.

3. Of course, the filing argument only went to the counts on the amended returns.  There were 3-year felony 7 § 7206(1) counts for original personal and corporate returns not involving the issue of whether they had been filed.  Under the Sentencing Guidelines, the sentence on those counts can be more than sufficient impose appropriate punishment, even if the amended returns receipt were not considered relevant conduct for purposes of calculating the sentencing level.