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March 27, 2012

Filing False Returns: A Deportable Offense Under Immigration Laws

Guest Author: Matthew R. Porter, Esq., Columbus, Ohio

If you are lawful permanent resident holding a green card, or if you are in the United States on a temporary visa, and you have filed a fraudulent or false tax return, the Supreme Court recently held that you are subject to deportation or removal from the U.S. as an aggravated felon.

In a 6-3 decision, the United States Supreme Court issued its opinion for Kawashima v. Holder, affirming a Ninth Circuit Court of Appeals decision that filing false returns is a deportable offense. This article provides guidance as it relates to permanent residents or temporary visa holders who have filed a false or fraudulent return.

In Kawashima, the issue before the Court was whether the filing of a false or fraudulent return is a deportable offense for lawful permanent residents and green card holders. In 1997, Mr. Kawashima plead guilty to a violation of IRC §7206(1), for willfully filing a fraudulent or false return. After his conviction, Mr. Kawashima was subject to deportation proceedings pursuant to the Immigration and Naturalization Act. His wife, Mrs. Kawashima, was also subject to the deportation proceedings for her guilty plea and related conviction for violating of IRC §7206(2), willfully assisting in the preparation of a fraudulent or false return.

For fully naturalized residents of the United States, a conviction of either §7206(1) or §7206(2) can result in a maximum penalty of $100,000, 3 years in prison, or both.  In addition, for lawful permanent residents and green card holders, deportation proceedings can be initiated, in addition to fines and jail time related to the offense.

The Immigration and Naturalization Act (“INA”) provides that any alien convicted of an aggravated felony is a deportable offense. See 8 U.S.C.A. 1227(a)(2)(A). Further, the Act provides that aggravated felonies under this provision include offenses under Internal Revenue Code §7201, where the revenue loss to the government exceeds $10,000.  See 8 U.S.C.A. 1101(a)(43)(M).

The Court rejected the Kawashima’s argument that “fraud” and “deceit” were necessary elements of the deportation provision under the INA.  Rather, the Court held that the INA broadly refers to offenses with elements necessarily entailing fraudulent or deceitful conduct. Thus, once the Kawashima’s plead guilty to filing a false or fraudulent return, and assisting in the filing of a false return—an offense fraudulent or deceitful in nature—they became deportable, and subject to removal from the United States under the provisions of the INA.

Cases such as this present a multitude of issues for potential defendants since there are two formal proceedings: one for the violation of the Internal Revenue Code, and one for the deportation proceedings.  Thus, for any lawful permanent resident, or visa holder, it is important to fully understand the unintended consequences of any action, including entering into a plea agreement.  If you are a lawful permanent resident residing within the United States, and are the subject of an IRS examination, please contact the Nardone Law Group for assistance.  The professionals at Nardone Law Group have experience dealing with immigration and tax litigation and can assist you in the resolution of these matters, including the impact on your immigration status. 

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« Internal Revenue Service Announces Relief for Unemployed Taxpayers | Main | Internal Revenue Service and Offer-in-Compromise »

March 27, 2012

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