Justice Ginsburg’s dissent was joined by Breyer and Kagan.This case involved two LPRs, Akio Kawashima and Fusako Kawashima. Mr. Kawashima was convicted of willfully making and subscribing a false tax return, 26 U.S.C. § 7206(1), and Mrs. Kawashima was convicted of aiding and abetting in the preparation of a false tax return, 26 U.S.C. § 7206(2). The majority determined that both are crimes involving fraud or deceit and, because the “loss to the victim” exceeded $10,000, constitute aggravated felonies under INA § 101(a)(43)(M)(i).The fraud or deceit category of aggravated felony provides: “(M) an 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” is an aggravated felony.

While IRC 6501(c)(8) may apply to extend the limitations period for assessment on the related tax return, there is a reasonable cause exception.Other PenaltiesCriminal penalties may apply to U.S. and foreign taxpayers who willfully fail to file a return (IRC 7203) or file a false or fraudulent return (IRC 7206 and IRC 7207).IRC 6662(e), Substantial Valuation Misstatement Under Chapter 1, and IRC 6662(h), Increase in Penalty in Case of Gross Valuation Misstatements, may be applicable in the international reporting context.In addition, the following reporting and filing requirements are subject to failure to deposit penalties and are applicable to Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.StatuteSubjectIRC 1441Withholding of Tax on Nonresident AliensIRC 1442Withholding of Tax on Foreign CorporationsIRC 1446Withholding Tax on Foreign Partners’ Share of Effectively Connected Income31 U.S.C. 5321—Report of Foreign Bank and Financial Accounts (FBAR), FinCEN Form 114 (as of September 30, 2013)Generally, a U.S. person having one or more foreign accounts with aggregate amounts in the accounts of over $10,000 any time during the calendar year is required to maintain records and submit FinCEN Form 114 by the due date in the following year.Penalties for a failur

Yesterday the Ninth Circuit addressed the question of whether an individual can be convicted of filing false tax returns pursuant to 26 U.S.C. 7206(1) where the tax returns in question were tendered to an IRS agent during an audit, and were not filed with an IRS Service Center in the normal course. See United States v. Boitano, No. 14-10139 (slip opinion available here).

The Supreme Court today granted cert on a case in which the Ninth Circuit held that filing, and aiding and abetting in filing, a false statement on a corporate tax return in violation of 26 U.S.C. §§ 7206(1) and (2) were fraud or deceit aggravated felonies, INA § 101(a)(43)(M)(i). The question presented in Kawashima v. Holder, No. 10-577, the case the Court will hear next term, is:“Whether, in direct conflict with the Third Circuit, the Ninth Circuit erred in holding that Petitioners’ convictions of filing, and aiding and abetting in filing, a false statement on a corporate tax return in violation of 26 U.S.C. §§ 7206(1) and (2) were aggravated felonies involving fraud and deceit under 8 U.S.C. § 1101(a)(43)(M)(i), and Petitioners were therefore removable.”

to hold an FCC license. Arm & Rage countered that Mr. Armstrong’s felony conviction was a singular transgression that should not serve to disqualify it from holding a license.Both parties structured their arguments around eight “mitigating factors” specified in the Commission’s character qualifications policy, namely: willfulness, frequency, currentness, seriousness, participation of station management, record of FCC compliance, efforts made to remedy the wrong, and rehabilitation. Considering those arguments, Judge Halprin found that the Enforcement Bureau had not satisfied its burden to prove that Mr. Armstrong’s felony conviction rendered him, and by extension Arm & Rage, unfit to be a Commission licensee. Judge Halprin found that, while Mr. Armstrong’s conduct was willful, it wasn’t probative of his qualifications to hold a broadcast license, including because it occurred a long time ago and was just a single transgression. As Judge Halprin explained:The federal crime of violating section 7206(1) of the Internal Revenue Code, … , is a serious felony of the type that could be considered indicative of an individual’s propensity to deal with the Commission in a less than forthright manner. The evidence and arguments presented in this case, however, [demonstrate] that Mr. Armstrong’s crime, while willful, was an isolated occurrence that does not suggest a likelihood of future violations. Although the crime is not so old as to be disregarded, enough time has elapsed to show that Mr. Armstrong has remediated his wrong by completely satisfying his criminal sentence and by employing a new tax preparer. It also appears that Mr. Armstrong has been rehabilitated in light of his significant support from the Knoxville community and the lack of additional adjudicated criminal behavior since his conviction. Finally, although the licensee has committed [certain FCC record keeping violations], the station has an overall positive record of public service and the evidence suggests a sincere commitment to its listeners. As a

erate some concern for individuals and entities who transact with government agencies and federally funded organizations. Its interpretation of a bribe disregards the payment’s recipient and leaves the focus on whether the payment was “corrupt.” For example, in a hypothetical bidding process to provide the IT services for a city, if a company induces a municipal procurement officer to purchase its services by offering to give the city an extra $6,000 worth of cloud storage, that might ostensibly fall within 18 U.S.C.§666—if it was done “corruptly.” Companies may find it difficult to screen for such potential bribes, since it is easier to ascertain a transaction’s counterparty than a transaction’s motivation. We will monitor these developments, including whether other circuits adopt the First Circuit’s broad interpretation of §666 and whether federal authorities elect to pursue cases involving similar types of potential bribes.[1] Wilson’s conviction for filing a false tax return under 26 U.S.C. § 7206(1) was affirmed.[2]United States v. Abdelaziz, — F.4th —, 2023 WL 3335870, at *2–9 (1st Cir. May 10, 2023).[3]United States v. Skilling, 561 U.S. 358 (2010)[4] 18 U.S.C. §666(a)(2), (b).[5]Abdelaziz, — F.4th —, 2023 WL 3335870, at *10–14.[6]Skilling v. United States, 561 U. S. 358, 411 (2010).[7]Abdelaziz, — F.4th —, 2023 WL 3335870, at *16.[8]Id.[9]Id. at *16–17 (stating that no “statutes in effect during the pre-McNally period show that a payment to the purportedly betrayed party would have been considered a ‘bribe’”).[10]Id. at *17 (quoting Black's Law Dictionary(11th ed. 2019) (emphasis in original)).[11]Id. (quoting Skilling, 561 U.S. at 404) (cleaned up).[12]Id. at *18.[13]Id. at *21.[14]Id. at *25.[15]Id.[16]Id. at *28 (quoting Blumenthal v. United States, 332 U.S. 539 (1947)).[17]Id. at *29.[18]Id. at *32 (cleaned up).[19]Id. at *36.[20]Id. at *37.[21]Id. at *39.

he Supreme Court pared back overly-expansive constructions of federal fraud statutes that seek to criminalize mere deception or unethical behavior. In light of Ciminelli, the government can no longer support wire fraud charges based on the mere deprivation of information that could affect the alleged victim’s economic decision-making. And while the government might attempt to replace the now-defunct right-to-control theory with a broad theory of fraudulent inducement, the path to obtaining a wire fraud conviction under this new theory will be subject to vigorous challenges.Similarly, the Varsity Blues reversal sends a clear signal to the government that it should be cautious in bringing cases based on overly broad interpretations of the criminal fraud statutes, and that allegations of fraud must be grounded in a cognizable property interest, not simply a belief that the conduct was deceptive and unsavory. The 1st Circuit affirmed Wilson’s conviction for filing a false tax return under 26 U.S.C. § 7206(1).AttachmentsSupreme Court and 1st Circuit Significantly Curtail Scope of Federal Property Fraud Statutes

pillover argument was supported by an amicus brief from eleven former U.S. Attorneys.20Additionally, this decision, in conjunction with the Supreme Court’s recent reversals of the convictions of Joseph Percoco, a former aid to former Governor Andrew Cuomo, convicted of conspiracy to commit honest services fraud for taking illicit payments,21 and Louis Ciminelli, the owner of a Buffalo construction firm, convicted of wire fraud and conspiracy to commit the same in a bid-rigging scheme,22 indicates a healthy skepticism and judicial movement to limit the reach of the mail and wire fraud statutes. Notable as well is that, like Abdelaziz and Wilson’s convictions, Ciminelli’s conviction was also overturned based on the lower court’s overbroad definition of “property.”23FootnotesUnited States v. Abdelaziz, 578 F. Supp. 3d 110, 113 (D. Mass. 2021).United States v. Abdelaziz, No. 22-1138, 2023 WL 3335870 (1st Cir. May 10, 2023). Defendant Wilson’s conviction for filing a false tax return under 26 U.S.C. § 7206(1) was affirmed. Id. at *44–53.Id. 1:19-20; 15:1-2..Id. at *14–19.Id. at *16 (citing Skilling v. United States, 561 U.S. at 404, 407).Id. at *14–19.Id. at *19.Id. at *10–14.Id. at *20–25.Id. at *22–23.Id. at *20.Id. at *20–25.Id. at *21.Id. at *25–43.Id. at *25.Id.Id. at *26.Id. at *27–36.Id. at *37.Id. at *38; see also id. at *2.Id. at 25 n. 23.Percoco v. United States, 598 U.S. ----, No. 21-1158, 2023 WL 3356527 (May 11, 2023).Ciminelli v. United States, 598 U.S. ----, No. 21-1170, 2023 WL 3356526 (May 11, 2023).Id. at *2 (holding that “potentially valuable economic information” “necessary to make discretionary economic decisions” is not a traditional property interest, and therefore “the right-to-control theory is not a valid basis for liability under § 1343”).

at would be extremely lucrative to use for personal gain. To keep this from happening, states and the federal government have crafted a wide array of laws and regulations, such as the Anti-money laundering (AML) laws, that prohibit financial crime and are designed to detect it, should it ever happen. Many of these laws even put legal obligations on companies, particularly financial institutions, to take appropriate steps to deter, prevent, or detect financial crimes committed by their customers.Complying with these laws and fulfilling those legal obligations is essential. Breaking a law can lead to civil and criminal penalties while failing to uphold a legal obligation can lead to fines, administrative sanctions, and reputational damage to your company.Just a few of the financial crimes that you have to avoid, and sometimes take steps to detect, include:Mail fraud (18 U.S.C. § 1341)Wire fraud (18 U.S.C. § 1343)Bank fraud (18 U.S.C. § 1344)Credit card fraud (15 U.S.C. § 1644)Tax fraud (26 U.S.C. § 7206)Securities and investment fraud (18 U.S.C. § 1348)Insider tradingEmbezzlement or simple theft (18 U.S.C. §§ 641 et seq.)Money laundering (18 U.S.C. § 1956)In many cases, it is not enough to simply not commit the infraction or crime. When it comes to money laundering, for example, financial institutions are expected to take a lot of significant steps to keep their customers from using their bank to launder ill-gotten funds or move them around in ways that facilitate further crimes or even terrorism. They are then expected to turn over any information that appears to indicate money laundering and terrorist financing to law enforcement, pursuant to a host of federal statutes, like the Bank Secrecy Act.The First Step Should Always Be a Risk AssessmentWhile the range of financial crimes is extremely broad, that does not necessarily mean that all of them pertain to you or your company. For example, securities fraud is not something you will have to worry too much about if your company does

Returns that are filed but that are not substantially complete and accurate are considered “un-filed” and may result in penalty assessments. Criminal penalties may apply to U.S. and foreign taxpayers who willfully fail to file a return (IRC 7203) or file a false or fraudulent return (IRC 7206 and IRC 7207).Certain international information returns are also considered un-filed if the taxpayer does not provide required information when requested by the IRS, and penalties may be assessed even if the required return has been submitted.If a taxpayer under-reports on Form 926 and that leads to a tax underpayment, they can receive a 40% penalty. Sometimes a tax penalty may be avoided if the filer can show that the misrepresentation was due to reasonable cause and they acted in good faith – but don’t count on it.IRS: Ignorance of the Requirements is No ExcuseThe IRS maintains that taxpayers who conduct business or transactions offshore or in foreign countries have a responsibility to exercise ordinary business care and prudence in determining their filing obligations and other requirements.