Charges of obstructing justice and conspiring to evade taxes are among the weapons that the Internal Revenue Service uses to insure integrity among tax professionals. However, many lawyers do not realize just how careful they must be to protect themselves from Internal Revenue Code § 7212(a).The “omnibus clause” of 26 U.S.C. § 7212(a) provides, in pertinent part:Whoever corruptly or by force or threats of force (including any threatening letter or communication) endeavors to intimidate or impede any officer or employee of the United States acting in an official capacity under this title, or in any other way corruptly or by force or threats of force (including any threatening letter or communication) obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title, shall [be guilty of a crime]….Section 7212(a) addresses two different kinds of offenses.

In the October 2017 term, the Supreme Court will take up its first criminal tax case in almost a decade, Marinello v. United States. At issue is a longstanding circuit split about a mainstay of the federal government’s arsenal in financial crime cases, the tax obstruction statute, which makes a felon of anyone who “corruptly … obstructs or impedes, or endeavors to obstruct or impede, the due administration” of the Internal Revenue Code. 26 U.S.C. § 7212(a). Marinello will decide whether this law only prohibits efforts to obstruct a pending IRS audit or collection proceeding, or instead whether (as the DOJ argues and most circuits agree) it also reaches any other conduct affecting federal taxes.

In Marinello v. United States, an opinion released yesterday, the Supreme Court adopted a narrowing interpretation of the tax code’s broadest criminal provision, the “tax obstruction” statute 26 U.S.C. § 7212(a). The Court’s opinion is good news for taxpayers, their advisors, and the sound administration of the law.Marinello concerned whether the crime of “corruptly … endeavor[ing] to obstruct the due administration” of the tax laws (i) prohibits obstruction only of pending IRS audits and collection efforts, or (ii) instead applies more broadly.

A good faith misunderstanding of the law or a good faith belief that one is not violating the law negates willfulness, whether or not that claimed belief or misunderstanding is objectively reasonable.United Staes v. Miner, 774 F.3d 336 (6th Cir. 2014)In order to convict a defendant of obstructing or impeding the due administration of federal tax laws (26 U.S.C. § 7212), the government must prove that the defendant was aware of and tried to thwart a pending IRS action and not simply routine administrative porcedures such as those required to accept and process tax filings in the ordinary course. The court noted that § 7212’s language is identical to 18 U.S.C. § 1503, and the construction of secetion 1503 in United States v. Aguilar, 515 U.S. 593 (1995), requires an awareness of the proceeding that the defendant is alledgedly endeavoring to obstruct.

Last week, the Supreme Court in Marinello v. United States[i]significantly limited the government's ability to prosecute taxpayers for allegedly obstructive conduct related to potential tax violations. Prior to Marinello, the government routinely prosecuted taxpayers under the so-called "Omnibus Clause" of 26 U.S.C. § 7212(a) for conduct the government deemed as interfering with its "due administration" of the Internal Revenue Code, even when the taxpayer was not aware of the existence of a particular audit, investigation or other tax proceeding. Now, however, the Supreme Court has put an end to that overly-broad interpretation of the Omnibus Clause.

Today, the Supreme Court delivered a welcome decision narrowing the obstruction “Omnibus Clause” within the Internal Revenue Code, 26 U.S.C. § 7212(a). The Court held in Marinello v. United States that in order to sustain a tax obstruction conviction, there must be a nexus between the defendant’s conduct and a particular administrative proceeding.

Marinello was unable to do so: He had destroyed or failed to keep the documents." The taxpayer was charged with "corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws, in violation of 26 U.S.C. § 7212(a) (Count One), and willfully failing to file individual and corporate tax returns for calendar years 2005 through 2008, in violation of 26 U.S.C. § 7203 (Counts Two through Nine). Count One alleged that Marinello had violated section 7212(a) by, "among other thing[s]": (1) failing to maintain corporate books and records for [Express Courier] of which the defendant was an employee, officer, owner and operator; (2) failing to provide the defendant's accountant with complete and accurate information related to the defendant's personal income and the income of Express Courier; (3) destroying, shredding and discarding business records of Express Courier; (4) cashing business checks received by Express Courier for services rendered; (5) hiding income earned by Express Courier in personal and other nonbusiness bank accounts; (6) transferring assets to a nominee; (7) paying employees of Express Courier with cash; and (8) using business receipts and money from business ac

The d. ct. could properly conclude the defendant was not entitled to the affirmative abating-a-nusiance defense because, although there was evidence the dog's owner had not previously addressed the dog's repeated misbehavior, the owner had agreed to address the problem after the defendant's son was bitten and there was no evidence the owner had previously agreed to address the problem and didn't do as he agreed.U.S. v. Wood, 2010 WL 2530732 (6/24/10) (Ut.) (unpub'd) - The 10th disagrees with the 6th Circuit and holds that a defendant may endeavor to obstruct or impede "the broad and continuously operating" tax code in violation of 26 U.S.C. § 7212(a), whether or not he or she was aware of any pending IRS action or investigation. The defendant presented a plausible argument that the d. ct. erred when its instructions indicated a failure to file a tax return is enough to violate § 7212(a).

In Yates v. United States, 135 S. Ct. 1074 (2015), the Supreme Court rejected the Department of Justice’s effort to apply 18 U.S.C. §1519 to the destruction of physical evidence when its wording indicated that Congress only intended for the statute to reach the destruction of documents. Then in Marinello v. United States, 138 S. Ct. 1101 (2018), the Supreme Court narrowed the reach of the “omnibus” clause of 26 U.S.C. §7212(a), in order to prevent the statute from reaching conduct with no relationship to a specific proceeding. In both instances, the Supreme Court prevented expansive applications of the obstruction statutes urged by prosecutors.

United States v. Schlosser (January 30, 2019), No. 17-2872http://www2.ca3.uscourts.gov/opinarch/172872np.pdf The Third Circuit upheld Defendant’s tax evasion convictions but vacated Defendant’s conviction for impeding the administration of tax law under 26 U.S.C. § 7212(a). Marinello v. United States (U.S. 2018), which was decided after Defendant’s conviction, required the jury to find additional elements for the latter offense.