In a prior post, we highlighted the question of how broad the term “obstruction of justice” could be construed in the context of bringing criminal charges for continuing failures to file federal tax returns. We noted that the owner of a freight service company was indicted on nine counts of tax related offenses, including a violation of Section 7212(a) of the Tax Code, which calls for criminal sanctions upon anyone who “corruptly…obstructs or impedes or endeavors to obstruct or impede the due administration of the Internal Revenue Code.”
According to comments in a recent accountingtoday.com report, the section is affectionately termed a “one-man conspiracy statute.” Of course, anyone versed in the basics of criminal law will understand that a conspiracy takes two or more persons, but with the Tax Code, apparently that is not the case. As such, it has been a potent weapon for prosecutors to bring charges in cases such as the one involving the freight service company owner.
The U.S. Supreme Court recently heard the case to resolve disagreements among appellate courts( particularly the Sixth Circuit and Second Circuit) as to whether Section 7217(a) requires a defendant to knowingly interfere with a pending investigation. Now the speculation begins on how the court will rule.
Many who are reading the tea leaves believe that the Court will reverse and remand the case back to the Second Circuit with a new standard of review given the reaction of the justices during oral argument. Many of them were concerned about just how broad the IRS could interpret the statute to criminalize almost any action.
Nevertheless the story is a prime example of why it is critical to have an experienced tax law attorney when facing criminal charges.