Page 9 - Jay R. Nanavati Quoted in Tax Notes Article on Pending Supreme Court Case

A former federal prosecutor argued that the Second Circuit misread its own precedent, stating “Marinello misapplied the Second Circuit law as to the standard of intent.”
“The statute was written to incorporate the concept of intent. Although I share the concerns articulated by the ACTC, I don’t think it criminalizes otherwise non-criminal behavior,” said Erbsen. “It depends on prosecutors to exercise judgment and discretion.” Senior prosecutors and courts must continue to police misuse of prosecutorial discretion and ensure exercise of judgment-based discretion.
“I donʹt think section 7212(a) is necessary. The other crimes in IRC and title 18 are sufficient. You donʹt need section 7212(a). If youʹre going to keep it, the Kassouf standard puts it in line with the other obstruction statutes and reinforces the requisite intent,” said Keneally.
What should disturb practitioners about Marinello is the court’s holding that an omission is sufficient to sustain an oversight charge. Businesses routinely make tax compliance omissions all over the place. “I would be very surprised if a court were to find that a simple omission in and of itself would be sufficient to support this charge,” said a former federal prosecutor.
The Marinello interpretation “criminalizes anything done with the intent to mess with IRS,” said Neiman. “The government shouldnʹt have unlimited power to criminalize omissions.” But the Supreme Court did not grant cert on the more interesting omission question. 
TAX HISTORY
Do High Rates Cause Permanent Damage to the Tax System?
by Joseph J. Thorndike
“Where’s the outrage?” is the animating question behind Steven A. Bank’s new article on the moral status of tax avoidance. In “When Did Tax Avoidance Become Respectable?” (forthcoming in the Tax Law Review), Bank notes the recent string of tax avoidance stories in the popular press — from the Panama Papers to Donald Trump’s apparent loss carryforwards to the tax troubles of famous soccer players. But none of these scandals — if that’s what they are — have generated much in the way of outrage and indignation.
“What is most remarkable about the recent tax scandals is not that they have been so numerous, but rather that they have been relatively non- scandalous,” Bank observes. “Tax avoidance continues to be in the news and authorities continue to pursue tax avoidance prosecutions where appropriate and to close loopholes where possible, but the evidence of tax avoidance has, outside of certain pockets, failed to generate much reaction in the political or popular arena. Indeed, some stoutly defend such avoidance as not simply legitimate, but moral.”
Public indifference seems to hang on the distinction between avoidance and evasion. Today we treat that division as a vital line of moral demarcation, but in the early and middle decades of the 20th century, it was widely considered a distinction without a difference.
We treat the division between avoidance and evasion as a vital line of moral demarcation, but in the early and middle decades of the 20th century, it was widely considered a distinction without a difference.
“During the 1930s, even the use of perfectly legal provisions for reducing income taxes was attacked as morally suspect,” Bank writes. Wall Street titan J.P. Morgan Jr. was a case in point, pilloried for paying no income taxes during the darkest years of the Great Depression despite the
NEWS AND ANALYSIS
TAX NOTES, AUGUST 28, 2017
1053
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