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July 7, 2017


Can tossing old papers lead to obstruction of justice charges?

Do you need to know about an IRS investigation to get charged with obstruction of justice? It may seem like the answer is obvious. After all, how can throwing away old records be tantamount to a crime if you didn’t know the Internal Revenue Service (IRS) was conducting an investigation?

Unfortunately, lower courts have found in favor of the federal agency on this issue. A recent case involving a man who failed to file tax documents, paid his employees in cash and threw away bank statements and other business documents was charged and convicted of obstruction of justice. The problem: the man contends that he should have been aware of an investigation in order to obstruct it. The lower courts disagreed.

The Supreme Court of the United States (SCOTUS) has agreed to hear the case.

Marinello v. United States of America: What is an obstruction of justice for tax law matters?

The case, Marinello v. United States of America, involves a man who operated a freight service. As noted above, the man failed to file tax paperwork and shredded business documents. He was also accused of taking corporate funds for personal use. The court instructed the jury that the man was guilty of obstruction of justice if he committed at least one obstructive act. Based on this instruction, the jury convicted Marinello.

The court of appeals supported the lower court’s holding, noting that the law prohibits any action that impacts the administration of the tax code. The law, it stated, does not require the presence of an ongoing investigation to support an obstruction of justice for tax law matters.

What will SCOTUS decide?

Although it is too soon to predict how SCOTUS will hold on this issue, the case provides an example of the many different ways the IRS can build a case against a taxpayer. As such, those who are facing allegations of violating a tax law are wise to seek legal counsel. The IRS will explore all possible avenues to support charges. The counsel of an experienced attorney can better ensure your rights are protected by working to tailor a defense to the allegations.

Tax Controversy