In a recent appeal before the Sixth Circuit, the justices refused to overturn a conviction based on errors with the jury instructions. This case cannot be used as precedent in other cases, but the error, in this case, is certainly troubling for Tax Attorneys and defendants potentially facing trial for tax evasion.
In this case, the question of whether the defendant committed tax evasion was at the center of the trial. However, many of the instances of tax evasion being discussed were older than the statute of limitations would allow prosecution for. Juries typically cannot convict when the events being charged happened outside of the statute of limitations period, but the jury instructions in this case were upheld despite potential issues and a lack of clarity.
If you are facing potential audits and criminal tax prosecution, turn to the Dual Licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing. Call us today at (800) 681-1295.
United States v. Pieron Sixth Circuit Facts
According to the slip opinion issued by the Sixth Circuit in 2018, William Pieron was indicted for tax evasion for alleged events occurring in 2008 and 2009. He paid the full amount of back taxes and penalties to cover these liabilities, but the government continued bringing the case. This is typically permitted since the crime was already completed, but many prosecutors can be dissuaded from continuing with charges after all liabilities and penalties have been taken care of.
Ultimately, the government succeeded in proving that Pieron had taken steps to evade taxes back while his taxes were still unpaid (i.e., before 2018). However, the question of whether the acts fell within the statute of limitations was not addressed in the jury instructions.
Issues with the Statute of Limitations
The statute of limitations is the law that sets how far back the government can look to charge a crime. In Pieron’s case, the statute of limitations would have only allowed prosecution for tax evasion that occurred after 1/9/2012, since anything before that would have been time-barred. Note that this doesn’t prevent the IRS from civilly going after outstanding taxes from before that date once fraud has been proven – they did, and Pieron successfully settled his debt to the IRS. However, the criminal acts of tax evasion could not be charged if they occurred before 2012.
Comment: If the last affirmative act of the tax evasion took place within an open statute of limitations, such as lying to civil or criminal tax investigators, the criminal tax behavior can still be prosecuted but that is not what is at issue in this case.
Ultimately, three of the acts of tax evasion that the government proved were indeed within the limitations period: one in January 2012, one in August 2012, and one in 2014. So at the end of the day, the facts of the case do show that at least some tax evasion acts that were charged did occur within the statute of limitations. However, much of the rest of his pattern of evasion did occur before 2012.
However, the jury instructions given in that case did not necessarily account for this potential issue. Namely, the jury instructions did not break down the question into whether any of the acts happened after the statute of limitations or not. This means that we do not know whether the jury found beyond a reasonable doubt that the acts after 1/9/2012 did occur or whether they only found beyond a reasonable doubt for the acts before 1/9/2012.
The defendant argued that this was an error that could have affected the outcome of his case if the jury did not know that one of the acts needed to happen after 1/9/2012 to make the charges valid. Ultimately, the Sixth Circuit held that the jury instruction did not change the outcome of the case. Specifically, there was “no reason to think” the jury would have simply ignored the 2012 and 2014 acts and focused solely on the time-barred acts of evasion when determining Pieron’s guilt.
How This Affects Your Potential Case
Many tax issues that our Dual Licensed Tax Attorneys and CPAs deal with involve old events that are only being charged years after the fact. Because of this, statute of limitations questions come into play in many of the civil and criminal tax cases we handle. This Sixth Circuit case is an unpublished opinion and is not necessarily binding. However, an issue for tax attorneys is that the Fifth Circuit essentially ruled the exact opposite way in a case they heard just this year called United States v. Pursley.
Pieron’s attorneys cited the Pursley case in their brief to the Sixth Circuit, but the justices seemed to have ignored that case entirely when coming to their conclusion. This makes it difficult for tax attorneys to understand how these cases are legally distinguishable and which method of analysis the courts are going to use. California, where most of our client reside, is also in the 9th Circuit.
Essentially, this could throw into question convictions in cases where jury instructions did not include details about how to treat time-barred and non-time-barred acts that are part of the same evasion scheme. Ultimately, our criminal tax defense attorneys may be able to use a Pursley-style argument to have your conviction overturned, or the court might rule, like in Pieron, that it did not affect the outcome. Ultimately, getting the correct instructions in your case will be an important thing for tax defense attorneys to consider.
Call Our Dual Licensed Criminal Tax Attorneys and CPAs Today
If you need help with potential tax evasion charges, eggshell audits or other tax-related legal issues, contact the Dual Licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing. Contact us today by calling (800) 681-1295.
More Commonly Asked Tax Audit Questions
• How should Tax Audits be Handled by Criminal Tax Counsel?
• How to survive audit when I cheated on return being audited
• What is an eggshell audit?
• What is a reverse egg shell audit?
• Why is a reverse egg shell audit dangerous for a taxpayer?
• Warning signs of a criminal referral from an IRS audit
• Effective tax defense counsels goals in an egg shell audit?
• How are the 4 goals and outcomes 1 and 2 best obtained?
• What are the possible outcomes of an egg shell audit?
• Is it my right to know why I was selected for examination?
• What can I do to prepare for an audit?
• What is an IRS civil examination?
• How IRS decides which tax returns are audited
• What are my appeal options if I disagree with IRS?
• What are my basic taxpayer rights if the IRS audits me?
• Options if I am unable to pay at the conclusion of audit
• What a 30 or 90-Day Letter from the IRS means
• What is involved with appealing disagreements?
• Rights to disagree with IRStaxauditor’sss findings
• Can I stop the IRS from repeatedly auditing me?
• Can I have the examination transferred to another area?
• Can I record my IRS interview and is it a good idea?
• How many years of returns are at risk during an audit?
• Common reasons for the IRS to conduct a tax audit
• How to avoid negative consequences from an IRS interview
• Have to agree to interview by taxing authority directly?
• Are all audits the same?
• What should I do if the IRS is investigating me?
• What ifIdon’ttt respond to a taxing authority audit notice
• Your rights during an IRS tax audit
• Risks of attending an IRS audit without a tax lawyer
• Most common audit technique used by taxing authorities
• Don’t go into an IRS audit without representation
• Why hire an attorney to represent me in an audit?
• Why hire David W. Klasing to represent me in an audit
California Sales Tax Questions and Answers
• Common issues encountered during sales tax audit
• What is a sales tax audit?
• Disagreeing with business audit conclusions
• Timeline to file Petition for Redetermination?
• What should Petition for Redetermination contain?
• Is the appeals conference formal or informal?
• Appeals Division’s Decision and Recommendation
• Are a mark-up percentage and a profit margin the same?
• Problems with the mark up audit
• Can State Board of Equalization ignore my business records
• What is a sales tax deficiency determination?
• Business being audited for sales tax. Should I be worried?
• Audit determined fraud to avoid sales and use tax
• Definition of “sale” for California Sales Tax
• What do California sellers need to know about sales tax?
• How do I apply for a sellers permit?
• What are my obligations as a permit holder?
• What is sales tax?
• What is tangible personal property?
• What is a sale?
• What are total gross receipts?
• What is use tax?
• Who is responsible for paying the use tax?
• Who is a retailer engaged in business in California?
• Who is a qualified purchaser?
• Do I need a Certificate of Registration Use tax?
• Do I need a Use Tax Direct Payment Permit?
• What types of sales are exempt from sales tax?
• How are Internet Transactions Taxed?
• How is California sales or use tax determined?
• What is the statewide sales and use tax rate?
• Are there other local and district sales and use taxes?
• Total sales and use tax rate calculation
• How to protect against successor liability in California
• Recourse when issued California sales tax liability notice
• CA Sales Tax liability extend to purchasers/successors?
• Waiting Until Audited to Take Action on Tax Matters
• Sales tax records needed in California
• What are California’s sales and use taxes?
• Why does the State of California audit businesses to ensure compliance with sales and use
• taxes? How does the State determine whether to audit my business?
• The BOE reviews the purchase invoices of my business
Questions and Answers for Criminal Tax Representation
• When tax defense counsel parallels tax crime investigation
• Guilty of tax obstruction by backdating documents?
• To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
• Help! The Document I Gave the IRS Had False Information
• Tax crime aiding or assisting false return IRC §7206(2)
• What is the crime known as tax obstruction § 7212?
• What is the difference between tax perjury and tax evasion?
• What is the tax crime commonly known as tax perjury?
• What is a Klein Conspiracy?
• Increased possibility of civil action in IRS investigation
• Am I Guilty of Tax Evasion if the Law is Vague?
• What happens if the IRS thinks I committed tax crimes?
• What are ways to defend against a tax evasion charge?
• Difference between criminal tax evasion and civil tax fraud
• What accounting method does the IRS use for tax fraud
• Can I Change Accounting Method to the Accrual Method
• What is the willfulness requirement for tax evasion?
• I didn’t know I committed tax fraud. Can I get off?
• Concealed assets from IRS. Can I avoid tax evasion charges
• How government proves I willfully engaged in tax evasion
• What is the venue or court where a tax crime case is heard?
• Must the IRS prove tax crimes beyond a reasonable doubt?
• Is it a crime to make false statements to the IRS?
• Will the IRS overlook my tax evasion if it’s minor?
• Failed to tell IRS about my nominee account
• Audit risk with cash based business transactions
• How to defend a client charged with tax evasion
• Is it tax evasion if I didn’t file income tax return?
• Government says I attempted to evade my taxes. Now what?
• I forgot to pay my taxes or estimated tax. Is this a crime?
• Government proof I “willfully” failed to pay taxes
• 5 Ways to Respond to Tax Evasion Charges
• Being audited after using a tax professional
• Rules for what an IRS agent can do while investigating me
• How tax preparers, attorneys and accountants are punished
• How the IRS selects tax crime lead for investigation
• How does the IRS prosecute suspected tax crimes?
• Does IRS reward informant leads for suspected tax crimes?
• How the government proves deficiency in a tax evasion case
• Do prior tax crimes factor into new IRS tax convictions?
• Requesting conference before investigative report is done
• Requesting conference after IRS Special Agent Report
• What are my rights during an IRS criminal investigation?
• Avoid prosecution for tax crime with voluntary disclosure?
• Defense tactics that make it hard for to prove willfulness
• How a tax attorney can stop your criminal tax case?
• What can you generally tell me about tax crimes?
• Continuing filing requirement with investigation pending
• Federal criminal code crimes that apply to tax issues
• Penalty for making, subscribing, and filing a false return
• CID special agent’s report for criminal prosecution
• What is the discovery process in a criminal tax case?
• What the IRS includes in indictment for tax case
• What is the hardest element of a tax crime to prove?
• IRS methods of gathering evidence to prove tax crime
• What does a grand jury do in IRS tax crime prosecution?
• Failure to keep records or supply information
• Failure to make a return, supply information, or pay tax
• What is attempting to evade payment of taxes?
• What is income tax evasion and how is it punished?
• What is attempted income tax evasion?
• What is the crime of failure to pay tax? What is punishment
• Crime of making or subscribing false return or document
• Criminal Investigation Division investigation tactics
• Tax crimes related to employment tax forms and trust funds
• Tactics to defend or mitigate IRS criminal tax charges
• How the IRS generates leads about suspected tax crimes
• What is the crime ”evasion of assessment” of tax?
• Specific examples of “attempting” to evade tax assessment
• What is the so-called Spies evasion doctrine?
• Does overstating deductions constitute tax evasion?
• Is it tax evasion if my W-4 contains false statements?
• IRC §7201 attempt to evade vs. common-law crime of attempt
• What are the penalties for Spies tax evasion?
• How government proves a taxpayer attempted tax fraud
• What is a tax that was “due and owing.”
• What is evasion of assessment for tax liability?
• Is evasion of assessment different from evasion of payment
• Does the IRS have a dollar threshold for tax fraud?
• What is the IRS burden of proof for tax fraud convictions?
• Are Tax Laws Constitutional?
• What is the source of law that defines tax evasion?
• Does section 7201 create two distinct criminal offenses?
• Does tax evasion definition include partnership LLC
• What if I helped someone else evade taxes?
• Is it illegal to overstate deductions on my tax return?
• Is it illegal to conceal bank accounts from the IRS?
• Do later losses justify prior deductions?
• Common reasons the IRS and DOJ start investigations
• What is the Mens Rea component of tax crimes?
• What is a proffer agreement and what are the risks?
• Why to have an attorney to review a proffer agreement
• Why enter into a proffer agreement?
• Limited use immunity from proffer agreements
• Difference between civil and criminal fraud allegation
