Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

Defendant, convicted under 18 U.S.C. 371 of conspiracy to defraud the United States while serving as in-house general counsel to the company involving the company's filing of false tax returns with the IRS. He was sentenced to 41 months of imprisonment, followed by three years of supervised release, and ordered to pay restitution to the IRS. The Sixth Circuit affirmed. The jury instructions adequately addressed the elements of conspiracy. There was no need for mention of the attorney-client privilege or of an attorney's potential obligation to report illegal activity. The government’s theory of liability was not dependent on whether defendant had an affirmative duty to inform, yet failed to do so; conviction did not turn on whether defendant's actions were governed by the attorney-client privilege. There was sufficient evidence to support the conviction.

The Chapter 7 debtors' federal tax return listed: withholding of $6,777; total tax liability of $2,934, a non-refundable child tax credit of $2,903, an additional child tax credit of $1,097, and a total federal tax refund of $8,542. The credit allows some taxpayers to claim a tax credit of $1,000 for each qualifying child. If the taxpayers have tax liability, the non-refundable portion is applied to satisfy the tax liability. If the taxpayer qualifies, a portion of the refundable amount of the credit, not used to offset tax liability, is sent as an income tax refund. The refundable portion, unlike the non-refundable portion, is treated as an overpayment. The bankruptcy court sustained the trustee's objection that the $2,903 credit was not exempt. The Sixth Circuit affirmed. Under 26 U.S.C. 24(a) and (d), the non-refundable portion of the credit is not property of the estate cannot be exempted as a payment under Ohio Rev. Code 2329.66(A)(9)(g). The entire tax refund of $8,542 is property of the estate from which the debtors may exempt $1,097 as the refundable portion of the credit.

During 10 years in a 12-year period the defendant, an Ohio physician, filed federal income tax returns that showed she owed taxes â but she failed to pay them. The United States brought an action for judgment and to foreclose on its tax liens on defendant's real property. Defendant argued that her Chapter 7 bankruptcy petition discharged her tax liabilities for some of the years preceding the filing. The district court disagreed and entered a $319,698 judgment in favor of the United States, finding that she had willfully attempted to evade paying taxes for those years, preventing discharge of the obligations through her bankruptcy filing. The Sixth Circuit reversed, holding that the government did not establish willfulness as required by 11 U.S.C. 523(a). There was no evidence that the defendant lived lavishly; the district court incorrectly applied the test applicable only to student loans and made assumptions about her ability to earn more money and her husband's failure to contribute.

The IRS auctioned the taxpayer's property for back taxes. Letters sent by the taxpayer, in an attempt to resolve or appeal the decision, were incorrectly addressed. The district court dismissed a suit for damages. The Sixth Circuit affirmed, but held that failure to exhaust administrative remedies (26 U.S.C. 7433)did not deprive the court of jurisdiction. What is mandatory is not necessarily jurisdictional; the context shows that the requirement is a limit on relief.