Sentencing — tax fraud — tax loss

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United States Court of Appeals For the Seventh Circuit

Criminal

Sentencing — tax fraud — tax loss

In calculating tax loss, the district court is not required to consider unclaimed and undocumented expenses.

“Psihos requests that this court overrule Chavin based on a recent Tenth Circuit decision, United States v. Hoskins, 654 F.3d 1086 (10th Cir. 2011). In Hoskins, the Tenth Circuit said that the sentencing guidelines do ‘not categorically prevent a court from considering unclaimed deductions in its sentencing analysis.’ Id. at 1094. The Hoskins court also noted, however, that the guidelines do not require a sentencing court to engage in the ‘nebulous and potentially complex exercise of speculating about unclaimed deductions’ where the defendant ‘offers weak support’ for his tax-loss estimate. Id. (internal quotation omitted). In this case, even if we were to follow the reasoning of Hoskins, Psihos would not benefit because, as the district court concluded, there was an utter lack of support for Psihos’s claimed cash payments. While he had kept meticulous records of the cash receipts and also kept detailed notes of some cash offsets, Psihos has absolutely no documentation to support his other claimed cash payments. For the same reason, Psihos’s reliance on dicta from the Second Circuit indicating that a tax loss under the guidelines could be adjusted for ‘legitimate but unclaimed deductions,’ United States v. Martinez-Rios, 143 F.3d 662, 671 (2d Cir. 1998); United States v. Gordon, 291 F.3d 181, 187 (2d Cir. 2002), serves him no better. In short, even if the sentencing guidelines did not ‘categorically prevent a court from considering unclaimed deductions,’ Hoskins, 654 F.3d at 1094, the absence of any contemporaneous supporting documentation of the purported cash outflows makes this case well suited to the general rule established in Chavin—that other deductions are not considered in determining the tax loss. Under these circumstances, we see no reason to reconsider our decision in Chavin.”

Affirmed.

11-2683 U.S. v. Psihos

Appeal from the United States District Court for the Northern District of Illinois, Manning, J., Manion, J.