Supreme Court decides IRS obstruction case

Supreme Court decides IRS obstruction case

The US Supreme Court held [opinion, PDF] Wednesday in Marinello v. United States [SCOTUSblog materials] that the federal government must prove a defendant was aware of pending tax-related proceeding in order to convict them under federal law, which makes it a felony to corruptly or by force intimidate or impede any officer acting in their capacity with this proceeding, reversing a decision by the US Court of Appeals for the Second Circuit [opinion, PDF].

Section 7212(a) of the Internal Revenue Code [text] includes a provision that forbids “corruptly or by force or threats of force … obstruct[ing] or imped[ing], or endeavor[ing] to obstruct or impede, the due administration of [the Internal Revenue Code].”

In this case, Carlo Marinello, a freight service operator, operated his business in cash. Without the direction of the IRS, he shredded bank statements and other records without filing tax returns, but he did not withhold employment-related taxes such as payroll taxes.

At oral argument, Marinello had argued [JURIST report] that the Omnibus Clause of 18 USC § 1503 [text] lacks any limiting language, and without the judiciary limiting the statute, this felony could be tacked onto any tax misdemeanor charge or could potentially criminalize otherwise legal tax-planning. The government disagreed, stating that the language § 1503 is clear: obstruction of “due administration of justice” requires interference with court proceedings.

“In context, the Omnibus Clause logically serves as a ‘catchall’ for the obstructive conduct the subsection sets forth, not for every violation that interferes with routine administrative procedures such as the processing of tax returns, receipt of tax payments, or issuance of tax refunds,” Justice Stephen Breyer wrote in the opinion.