OBSTRUCTION

Marinello v. United States

Issues

Does a conviction under 26 U.S.C. § 7212(a) for corruptly endeavoring to obstruct the due administration of the Tax Code require proof that the defendant knew of a pending IRS investigation?

Court below

United States Court of Appeals for the Second Circuit

In this case, the Supreme Court will determine what mental state an individual must possess to be guilty of obstructing an IRS investigation. The case arises out of business owner Carlo J. Marinello’s decisions to avoid paying taxes, destroy business records, and pay his employees under the table. The IRS charged Marinello for these business practices, claiming they obstructed the due administration of the Tax Code. Marinello argues, however, that an individual is guilty of obstructing the IRS only if the IRS can show that the individual knew of an ongoing IRS investigation; Marinello analogizes to other criminal statutes and cites court precedent and later statutory amendments to argue that the government’s contrary conclusion is unconstitutional. The government counters that the ordinary meaning of the relevant statutory clause is unambiguous––due administration of the Tax Code includes all IRS duties––and it is therefore unnecessary to draw analogies or look to legislative history to interpret the clause. Marinello claims that if the government prevails, then the IRS could recast innocent tax planning as a felony and give prosecutors impermissibly broad discretion in charging taxpayers with crimes—a claim the government vehemently denies. Thus, the scope of liability for tax crimes is at stake.

Questions as Framed for the Court by the Parties

Section 7212(a) of the Internal Revenue Code includes the following provision:

Whoever corruptly or by force … endeavors to intimidate or impede any officer … of the United States acting in an official capacity under this title, or in any other way corruptly or by force … endeavors to obstruct or impede[] the due administration of this title, shall, upon conviction thereof, be fined not more than $5,000, or imprisoned not more than 3 years, or both ….

26 U.S.C. § 7212(a) (emphasis added).

The question presented is whether § 7212(a)’s residual clause, italicized above, requires that there was a pending IRS action or proceeding, such as an investigation or audit, of which the defendant was aware when he engaged in the purportedly obstructive conduct.

Between 1992 and 2010, Carlo J. Marinello operated a freight service, Express Courier, in western New York and chose to destroy business records, avoid keeping books, pay his employees in cash, use business income for personal expenses, and avoid filing personal or corporate income tax returns. See United States v. Marinello, 839 F.3d 209, 211–13 (2d Cir. 2016).