Monday, February 27, 2012

Tax Cheats To Get The Boot

And I don't mean a beer boot. Two Japanese immigrants, Akio and Fukado Kawashima, owners of a small chain of Japanese restaurants in southern California cheated the government out of hundreds of thousands of dollars.  Interestingly enough they never naturalized which would have saved them from the boot.  Stupid is a stupid does.  But the good news is that the Supreme Court has ruled that tax cheats are aggravated felons and will be deported.

SCOTUS Blog February 22, 2012 by Kevin Russell


Yesterday, the Court issued its decision in Kawashima v. Holder, holding that filing a false tax return is grounds for deportation.

Background

The petitioners in the case, Mr. and Mrs. Kawashima, had been lawful permanent residents of the United States since 1984.  In 1997, Mr. Kawashima was convicted of filing, and his wife was convicted of helping him to file, a false corporate tax return that understated their income and therefore deprived the government of owed tax revenue – violations of Section 7206 of the tax code.

A provision of immigration law allows the government to deport anyone who is convicted of an “aggravated felony.”  Originally, the term was defined narrowly to include crimes like murder and drug trafficking.  But over time, Congress has expanded the definition, so that it now includes any offense that “(i) involves fraud or deceit in which the loss to the victim or victims exceeds $10,000; or (ii) is described in section 7201 of title 26 (relating to tax evasion) in which the revenue loss to the government exceeds $10,000.”

Because the Kawashimas were convicted of filing a false return (a violation of Section 7206 of the tax code), rather than tax evasion (a violation of Section 7201), they were not subject to deportation under the second part of the definition quoted above.  Nonetheless, the government initiated deportation proceedings against them on the theory that filing a false tax return is a form of “fraud or deceit” within the meaning of the first part of the definition.

Interestingly enough even the Ninth Circus Court of Schlemiels agreed:

The Board of Immigration Appeals held, and the Ninth Circuit agreed, that the couple had committed a deportable offense.

The Court’s opinion

The Court granted the Kawashimas’ petition for certiorari, and yesterday the Court — in an opinion by Justice Thomas – affirmed.   The Court first held that filing a false tax return is a crime involving “fraud or deceit” because even though neither fraud nor deceit is an express element of the tax offense, to prove the tax offense the government must show that the defendant made a materially false statement on his return, knew that the statement was false, and had a specific intent to violate the law.  Those elements, the Court held, add up to deceitful conduct within the meaning of the deportation provision.

The Court also rejected the Kawashimas’ claim that by specifically mentioning one form of tax offense (tax evasion) as a ground for deportation, Congress implicitly excluded other kinds of tax offenses, even if they involved fraud or deceit.  Instead, the Court concluded that Congress was probably concerned that courts might think that tax evasion does not involve fraud or deceit, particularly in light of an older Supreme Court decision in which the Court had held that tax evasion is not subject to the extended statute of limitations that applies to offenses “involving the defrauding or attempting to defraud the United States.”  And, the Court noted, it is sometimes possible (although not common) to commit tax evasion without actually making any affirmative false statement to the government.

Bamm!  You just got served...not with an order of O-toro, but with an order of deportation .  Don't do the crime if you can't do the time.  Unfortunately the most likely solution for immigrants will be to get their citizenship as soon as possible so they can then lead a life of crime and tax evasion.

No comments: