The advent of the Sentencing Guidelines in 1987 and the Department's
adoption of policies pursuant thereto necessitated certain minor conforming
changes to the Tax Division's Major Count Policy (USAM 6-4.310).
- Tax Offenses Which Are All Part of the Same Course of
Conduct or Common Scheme or Plan.
Normally, no change in the application of
the Major Count Policy will be required by virtue of the Guidelines and the
Department's plea policy for Guideline cases. In most cases, all of the tax
charges in an indictment are related. Consequently, even if the defendant pleads
to a single count and the remaining counts are dismissed, the tax loss from all
of the years should be taken into account in determining the tax loss for the
offense to which a defendant pleads. Thus, in the usual case, the Tax Division
will continue to designate a single count as the major count according to the
principles previously utilized in designating the major count. See USAM 6-4.310.
Tax Offenses Which Are Not All Part of the Same Course of Conduct or
Common Scheme or Plan. Where all of the tax charges are not part of the same
course of conduct or common scheme or plan, however, the Department's plea policy
for Guideline cases may require the Tax Division either to designate as major
counts one count from each group of unrelated counts or to designate one count
from one of the groups of unrelated counts as the major count and have the
prosecutor obtain a stipulation from the defendant establishing the commission
of the offenses in the other group (See U.S.S.G. Sec. 1B1.2(c)). This
will be the case where the offense level of the group with the highest offense
level must be increased under U.S.S.G. Sec. 3D1.4.
Designating More Than One Count as a Major Count. Designating more
than a single year as a major count may also be required where the computed
guideline sentencing range exceeds the maximum sentence which can be imposed
under a single count.
Tax Charges and Non-Tax Charges. In cases in which there are
both tax counts and non-tax charges, the selection of which tax count to
designate as the major count may not have any effect on the applicable guideline
range because the offense level of the group or groups of non-tax offenses is 9
or more levels higher than the offense level of the group containing the tax
charges (See U.S.S.G. Secs. 3D1.2, 3D1.4). In such cases, the Tax Division will
normally continue to designate the major count by application of the usual rules
for selecting the major count. However, the Tax Division may designate a less
serious tax offense in the group as the major count if it is supplied with
sufficient information establishing that such a selection will not affect the
applicable guideline range and with adequate justification for a deviation from
the Major Count Policy.
Department of Justice policy requires all government attorneys to oppose
the acceptance of nolo contendere pleas. When pleading
"nolo" the defendant may create the impression that the government has
only a technically adequate case which the defendant elects not to contest. A
guilty plea is preferred because it strengthens the government position when the
defendant contests a civil fraud penalty in an ancillary proceeding, as a
nolo plea does not entitle the government to use the doctrine of
collateral estoppel. Federal prosecutors may not consent to a plea of
nolo contendere except in the most unusual circumstances and only
after a recommendation for doing so has been approved by the Assistant Attorney
General, Tax Division. See USAM
9-16.010 and 9-27.500.
The government attorney also will oppose dismissal of any charges to whic
h the defendant does not plead nolo contendere. See USAM 9-27.530.
In North Carolina v. Alford, 400 U.S. 25 (1970), the Supreme Court
upheld the validity of accepting a plea of guilty over the defendant's claims of
innocence. United States Attorneys are instructed not to consent to a so-called
"Alford plea" except in the most unusual circumstances and then only after a
recommendation for so doing has been approved by the Assistant Attorney General,
Tax Division, or a higher departmental official. See USAM 9-16.015 and 9-27.440. Apart from refusing to
enter into Alford plea agreements, however, the degree to which government
attorneys can express their opposition to such pleas is limited. Prosecutors
should discourage Alford pleas by refusing to agree to terminate
prosecutions where such a plea is proffered to fewer than all of the charges
pending. If an Alford plea to fewer than all charges is tendered and ac
cepted over the government's objection, the government attorney will proceed to
trial on all of the remaining counts not barred on double jeopardy grounds unless
the Assistant Attorney General, Tax Division, approves dismissal of the charges.
- Rule 32(a), Federal Rules of Criminal Procedure, permits
government counsel to make a statement to the court at the time of sentencing.
Counsel for the government should make a full statement of facts, including if
applicable, the amount of tax evaded in all of the years for which a defendant
was indicted; the means utilized to perpetrate and conceal any fraud; the past
criminal record of the taxpayer; and all other information that the court may
consider important in imposing an appropriate sentence.
- When recommendations are made to the court on sentencing, the Tax Division
prefers that government counsel request the imposition of a jail sentence in
addition to the fine, together with costs of prosecution. In the usual
situation, the payment of the civil tax liability, plus a fine, costs, and
probation, does not constitute a satisfactory disposition of a criminal tax case.
- Notwithstanding the foregoing, government counsel may agree to a sentence
of probation (preferably with alternative conditions of confinement) when (i) the
defendant pleads guilty, (ii) the sentencing guidelines range is 0-6 months (and
within Criminal History Category I), and (iii) the United States Attorney
personally, by signature, must approve a written memorandum to the case file
setting forth the unusual and exceptional circumstances, warranting such
agreement (for example, the need to secure cooperation against a more culpable
party, or serious post-indictment degradation in the evidence available for trial
such as the death of a witness or the loss or suppression of evidence). A copy
of the United States Attorney's written determination must be supplied to the Tax
Division at the same time the United States Attorney's office is required to
notify the Division that the case has been closed.
The principal substantive criminal tax offenses ( i.e. , 26 U.S.C. Secs.
7201, 7203, 7206(1) and (2)), provide for the imposition of costs of prosecution
upon conviction. The Tax Division strongly recommends that attorneys for the
government seek costs of prosecution in criminal tax cases.
While statutory authority under 26 U.S.C. Sec. 7122(a) does exist for the
Attorney General, after referral of a case to the Department, to enter into
agreements to compromise criminal tax cases without prosecution, as a matter of
longstanding policy, such authority is very rarely exercised. If it is concluded
that there is a reasonable probability of conviction and that prosecution would
advance the administration of the internal revenue laws, any decision to forego
prosecution on the ground that the taxpayer is willing to pay a fixed sum to the
United States, would be susceptible to the attack that the taxpayer was given
preferential treatment because of his ability to pay whatever amount of money the
government demanded.
Consequently, proposed criminal tax cases are reviewed without any
consideration being given to the matter of civil liability or the collection of
taxes, penalties, and interests. In short, proposed criminal tax cases are
examined with the view to determining whether a violation has occurred to the
exclusion of any consideration of civil liability.
Absent extraordinary circumstances, such as permanent loss of tax revenues
unless immediate protective action is taken, settlement of the civil liability
is postponed until after sentence has been imposed in the criminal case, except
when the court chooses to defer sentencing pending the outcome of such
settlement. In this event, the IRS should be notified so that it can begin civil
negotiations with the defendant.
However, the Tax Division strongly encourages, but does not require, that
a plea agreement include certain civil admissions by the defendant, including:
(1) admission of either receipt of enumerated amounts of unreported income or
claimed enumerated amounts of illegal deductions or improper credits for years
set forth in the plea agreement; (2) a stipulation that defendant is liable for
the fraud penalty imposed by the Internal Revenue Code (26 U.S.C. Sec. 6663) on
the understatements of liability for the years involved; and (3) an agreement by
the defendant to file, prior to sentencing, complete and correct initial or
amended personal returns for the years subject to the above admissions and, if
requested, to provide the IRS with information regarding the years covered by the
returns and to pay, at sentencing, all additional taxes, penalties and interest
which are due and owing and (4) an agreement by the defendant not to file
thereafter any claims for refund of taxes, penalties,
or interest for amounts attributable to the returns filed incident to the plea.
See Memorandum, United States Department of Justice, Tax Division, "Civil
Settlements in Plea Agreement," June 3, 1993, in the Tax Resource Manual.
| March 2001
| USAM Chapter 6-4
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