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Sixth Circuit Appeals Court Refuses to Overturn Case on Statute of Limitations Jury Instruction Error

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    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.

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