Niles Elber Comments on Harsher Enforcement for Taxpayers Abusing the Tax System

Following the Supreme Court's narrowing of the tax obstruction felony, the government may resort to more severe alternative charges to prosecute taxpayers who proactively abuse the tax system.

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Niles A. Elber of Caplin & Drysdale said that the Supreme Court had cut a broad swath out of section 7212(a) in response to perceived overuse by the government. Still, proactive tax system abusers should be subject to tax enforcement, he said.

Even if the Supreme Court cut too deeply, the government has “tremendous ability to bring things back to where the government thinks it should be,” especially compared with an individual defendant, Elber said. The government has several ways to try to restore the balance, he said. Those include trying other tax charges or trying to convince courts that the Supreme Court didn’t have proactive tax abusers in mind in Marinello, he said.

Another option would be to approach Congress for a legislative change to clearly apply section 7212(a) to aggressive tax system abuse such as retaliatory filings or excessive use of frivolous tax arguments, Elber said. Unlike the situation in Marinello, where conventional tax misbehavior was at issue, those sorts of situations aren’t likely to lead to a cohesive opposition from the tax criminal defense bar, he said.

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Excerpt taken from the article “Some Tax Obstructionists May Face Harsher Charges After Marinello” by Nathan J. Richman for Tax Notes.