Those taxpayers who are not U.S. citizens, and are convicted of filing a false tax return under Internal Revenue Code section 7206(1), may be deported from the United States. This was a ruling by a divided Supreme Court in Kawashima v. Holder, Attorney General (S. Ct. 02/21/2012), No. 10-577. The Supreme Court affirmed the Ninth Circuit opinion, holding that a conviction under section 7206(1) for willfully makiing and subscribing a false tax return is a deportable offense. The Court reached the same conclusion with respect to a conviction under section 72-6(2) of the Code for aiding and assisting int he preparation of a false tax return.
Akio and Fusako Kawashima, were natives and citizens of Japan who have been lawful permanent residents of the U.S. since 1984. In 1997, Mr. Kawashima pleaded guilty to one count of willfully making and subscribing a false tax return in violation of Code Sec. 7206(1). Mrs. Kawashima pleaded guilty to one count of aiding and assisting in the preparation of a false tax return in violation of Code Sec. 7206(2).
Following their convictions, the Immigration and Naturalization Service charged the Kawashimas with being deportable from the U.S. under 8 U. S. C. §1227(a)(2)(A)(iii) as aliens who had been convicted of an aggravated felony. An aggravated felony is classified as an offense that either: “(i) involves fraud or deceit in which the loss to the victim or victims exceeds $10,000; or (ii) is described in Code Sec. 7201 (relating to tax evasion) in which the revenue loss to the Government exceeds $10,000. At their deportation hearing, the Kawashimas argued that their convictions under Code Sec. 7206 did not qualify as aggravated felonies. The Immigration Judge disagreed and ordered removal. They appealed to the Board of Immigration Appeals Board, which affirmed the Immigration Judge’s decision. The Kawashimas then sought review in the Ninth Circuit, which held that convictions for violating Code Sec. 7206(1) and Code Sec. 7206(2) in which the tax loss to the Government exceeds $10,000 constitute aggravated felonies under subsection (M)(i).
The Supreme Court agreed with the Ninth Circuit that convictions under Code Sec. 7206(1) and Code Sec. 7206(2) in which the Government’s revenue loss exceeds $10,000 qualify as aggravated felonies pursuant to Clause (i). It rejected the Kawashimas’ argument that they could not be deported for the commission of an “aggravated felony” because crimes under Code Sec. 7206(1) and Code Sec. 7206(2) do not involve the fraud or deceit required by Clause (i).
Although the words “fraud” and “deceit” are absent from Code Sec. 7206(1) and are not themselves formal elements of the crime, the Supreme Court said that it does not follow that Mr. Kawashima’s offense fell outside Clause (i). Mr. Kawashima’s conviction under Code Sec. 7206(1) involved deceitful conduct in that he knowingly and willfully submitted a tax return that was false as to a material matter. Mrs. Kawashima committed a felony involving deceit by knowingly and willfully assisting her husband’s filing of a materially false return.
This case is a good illustration of how potential tax crimes may affect immigration status of those U.S. taxpayers who do not have a U.S. citizenship. This issue should be considered before making any plea agreement. Our former IRS trial attorneys can assist with questions related to potential violations of the U.S. tax laws. To schedule a consultation, please call us at 310-550-6200.
Author: Igor S. Drabkin, J.D., Former IRS Attorney.
Copyright (c) 2012 Igor S. Drabkin. All Rights Reserved.