Supreme Court limits reach of tax crime statute

Immigration Law

The Supreme Court ruled Wednesday to make it harder for the federal government to use a section of tax law to convict someone of obstruction.

The government had interpreted a section of the tax code to give it a broad ability to charge someone with obstructing or impeding the work of the Internal Revenue Service. It argued that someone could violate the statute by doing something intended to obstruct the IRS' work, like shredding records, even if the person wasn't under investigation at the time or was under investigation but didn't know it.

But the Supreme Court ruled 7 to 2 to limit the application of the statue. The justices said that to convict someone, the government must show a connection between the obstructive action the person takes and a particular investigation or audit that was pending, or at least reasonably foreseeable.

The court's majority opinion pointed out problems with reading the law broadly. "Interpreted broadly, the provision could apply to a person who pays a babysitter $41 per week in cash without withholding taxes, leaves a large cash tip in a restaurant, fails to keep donation receipts from every charity to which he or she contributes, or fails to provide every record to an accountant.

Such an individual may sometimes believe that, in doing so, he is running the risk of having violated an IRS rule, but we sincerely doubt he would believe he is facing a potential felony prosecution for tax obstruction," Justice Stephen Breyer wrote for court.

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