Supreme Court limits application of tax crime statute in obstruction
WASHINGTON (AP) — The Supreme Court ruled Wednesday to make it harder for the federal government to use a section of tax law to convict someone of obstruction.
The government had interpreted a section of the tax code to give it a broad ability to charge someone with obstructing or impeding the work of the Internal Revenue Service. It argued that someone could violate the statute by doing something intended to obstruct the IRS’ work, like shredding records, even if the person wasn’t under investigation at the time or was under investigation but didn’t know it.
But the Supreme Court ruled 7 to 2 to limit the application of the statue. The justices said that to convict someone, the government must show a connection between the obstructive action the person takes and a particular investigation or audit that was pending, or at least reasonably foreseeable.
The court’s majority opinion pointed out problems with reading the law broadly.
“Interpreted broadly, the provision could apply to a person who pays a babysitter $41 per week in cash without withholding taxes, leaves a large cash tip in a restaurant, fails to keep donation receipts from every charity to which he or she contributes, or fails to provide every record to an accountant. Such an individual may sometimes believe that, in doing so, he is running the risk of having violated an IRS rule, but we sincerely doubt he would believe he is facing a potential felony prosecution for tax obstruction,” Justice Stephen Breyer wrote for court.
Justice Clarence Thomas and Justice Samuel Alito dissented.
The case the justices ruled in involves New York resident Carlo J. Marinello II, who owned and managed a freight service that took items between the United States and Canada.
Marinello was charged with failing to file personal or corporate tax returns for the years 2005 through 2008. Prosecutors alleged that during that time he shredded and discarded business records and hid business income in personal accounts, among other things. A jury ultimately convicted him of nine tax-related offenses, eight misdemeanors and a felony. He was ordered to pay more than $350,000 and spend three years in prison.
Marinello challenged his felony conviction, arguing that he could only be convicted under the statute he’d been charged with violating if he knowingly interfered with a pending IRS investigation.
Land bank OKs Detroit’s proposal for fairgrounds property
DETROIT (AP) — The city of Detroit wants to buy 142 acres at the old Michigan Fairgrounds site for redevelopment.
The Michigan Land Bank Fast Track Authority board on Wednesday approved selling the property to Detroit for $7 million.
In a separate deal, ex-NBA star Earvin “Magic” Johnson’s Magic Plus LLC development company is buying about 16 acres from the land bank for just over $29,500 per acre.
Detroit’s City Council must approve the city’s purchase. The council already has approved Detroit’s 2018-19 budget which calls for $4 million to cover up-front costs for the land. The remaining amount would be paid once the property is developed.
The state fair was held at the site from 1905 through 2009.
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