Federal Tax Sentencings Are Unlike Other Sentencings

Federal tax cases are peculiar in that they tend to mean different things to different judges – unlike the rank and file federal criminal charges: wire and mail fraud, money laundering, RICO, extortion, narcotics offenses, child pornography charges, perjury, etc. – in all such cases judges are universally offended by the crimes and sentence accordingly.  Tax cases are a different animal and how your lawyer handles your particular judge will go a long way in determining whether you will receive a sentence which includes incarceration.  

Some Defenses to Tax Fraud

First, this entry is not focused on advice for fighting a tax charge at trial; that being said, federal tax cases can and should be fought in certain circumstances.  The government must prove willfulness in order to gain a conviction pursuant to the charges contained within 26 U.S.C. § 7201 et seq.; therefore, to defeat the willfulness component defendants can argue that they acted in good faith in following the law when in fact they had not – regardless of whether such state of mind was objectively reasonable.  Cheek v. United States, 498 U.S. 192, 201 (1991).  Defendants can also claim an “advice of counsel” defense – reliance on an accountant, attorney or even the IRS itself – as a defense to criminal tax charges, as long as the defendant can “show that he made complete disclosure to counsel, sought advice as to the legality of his conduct, received advice that his conduct was legal, and relied on that advice in good faith.”  Markowski v. SEC, 34 F.3d 99, 104-105 (2d Cir. 1994).

Know Your Judge

But a discussion about fighting a tax case or attempting to work out a favorable plea bargain on such cases is for another day.  When preparing for a sentencing for federal tax fraud, understand that judges view tax-related cases such as tax evasion, failure to file and tax fraud cases very inconsistently.  The best New York criminal tax attorneys understand that it is crucial to know your judge, to know what his position on tax fraud cases is.  I have been before a very lenient Manhattan federal judge who downwardly departed to a probationary sentence on a child pornography case just prior to my sentencing – but fought me over my request for a probationary sentence for my tax evading, ultrasound technician client who was facing 18 months in prison.  When I pressed the judge as to how he could treat an individual who had downloaded child pornography better than a low-level tax evader, the judge remarked, “I consider tax fraud to be one of the worst crimes in existence.  If people stop paying taxes, anarchy ensues.” Nevertheless, the client received a downward departure – at a time when the sentencing guidelines were mandatory – from 18 months to 6 months in prison. Because of the judge’s known affinity for social justice and aid to those less fortunate, my sentencing memorandum focused on just that: the client’s aid to the poor.

Similarly, I recently represented a restaurant owner in an Eastern District of New York tax fraud case: the client was facing 24 months in prison for Willful Failure to Collect or Pay Over Taxes, in violation of 26 U.S.C. § 7202, as well as Unlawful Employment of Aliens, in violation of 8 U.S.C. 1324a (a).  Despite the judge being known as a very tough sentencer, and after a torturous sentencing hearing in which the defendant initially received a sentence of 12 months in prison, the judge relented and changed the sentence to probation.  In order to overcome this judge’s well-known aversion to probationary sentences for white collar fraud and tax evasion, we took a different position: we focused on the client’s extraordinary acceptance of responsibility which included meeting with the prosecutor immediately after a search of his business premises and explaining all the tax records seized – before a plea agreement was even discussed.  Ultimately, the judge turned to the prosecutor and asked him to confirm this; when the prosecutor was forced to admit that the defendant’s assistance was both incriminating and extraordinary, the judge relented and changed his sentence to probation.

Finally, my client Fat Joe, the legendary rap musician, was facing in federal court in New Jersey a sentencing guidelines range of 24-30 months in prison for failure to file tax returns.  At sentencing, the judge – a former well-regarded defense lawyer – brought up the need to make an example of the defendant due to his fame and notoriety.  After I complained that Mr. Cartagena had used his fame and notoriety to help people for decades, not hurt them, the judge reduced the sentence to four months in prison.  Our sentencing submission can charitably be described as the size of the New York City White Pages, an effort to impress the former defense attorney-turned judge.  Ultimately, Fat Joe received a downward variance to four months in prison: a large reduction from what the sentencing guidelines called for but still more than the probationary sentence we were hoping for that day.

Call a Top New York Criminal Tax Lawyer Today

In sum, if you want to avoid prison on a tax fraud conviction, do not have your lawyer treat the case like a traditional criminal case.  Hire the best federal New York criminal tax lawyer you can and one that has a history of great success in federal cases.  Call the Law Offices of Jeffrey Lichtman to discuss your case today.