Jenner & Block

US Supreme Court Grants Certiorari in High-Profile Dispute about IRS Tax Obstruction Statute

Jenner & Block next fall will argue a high-profile case regarding the scope of the federal tax obstruction statute.  Marinello v. United States promises to be of great interest to the business community, and business and tax groups urged the Court to grant the firm’s petition of certiorari; it did so on June 27, 2017.  The question is whether the statute, Section 7212(a), requires that a defendant be aware of a pending IRS action or proceeding when engaging in purportedly obstructive conduct. 

The firm is representing the petitioner, Carlo Marinello, on a pro bono basis.  Mr. Marinello is challenging a Second Circuit decision upholding his felony conviction for obstructing an IRS investigation.  The government reads the statute to criminalize any “corrupt” act, taken at any time, that ultimately hinders the administration of the tax code.  The firm argues that the obstruction statute should be interpreted like other obstruction statutes—to apply when the defendant intends to hinder an investigation that he or she knows about.   “Under the Second Circuit’s construction, any action that could make the IRS’s ability to assess and collect taxes more difficult—say throwing away an old business receipt or asking for a tip in cash—could be the basis of a felony obstruction charge if alleged by a prosecutor to be ‘corrupt.’  Indeed, this interpretation of Section 7212(a)’s residual clause is so broad that it swallows up other tax crimes.  It is difficult, for example, to conceive of any act of tax evasion or tax fraud that could not also be charged as tax obstruction on the Second Circuit’s reading,” according to the writ of certiorari.

The team representing Mr. Marinello is led by Partners Matthew S. Hellman and Geoffrey M. Davis and includes Partner Adam G. Unikowsky and David Bitkower, Associates Corinne M. Smith and Michael E. Stewart,and SEO Fellow Imara McMilan.  Former associate Emma Stimson assisted with the petition.  The Jenner & Block Supreme Court and Appellate clinic at the University of Chicago Law School is assisting in the case.

The case has been reported in several media outlets, including Bloomberg BNA.  In an article titled “Supreme Court to Rule on Conviction for Obstructing IRS,” Mr. Hellman is quoted saying the Second Circuit’s ruling “is a boundless interpretation of the tax obstruction statute that goes well beyond what Congress intended.”  Mr. Davis is quoted in the same article saying that the government uses the obstruction statute to charge taxpayers with a felony when a taxpayer’s other violations, like Mr. Marinello’s, were only misdemeanors.  The Second Circuit’s interpretation makes it easy to get the felony conviction, he observes.