By: Derek Hawkins//March 14, 2016//
7TH Circuit Court of Appeals
Case Name: United States of America v. Rex Black
Case No.: 13-3908
Officials: FLAUM, WILLIAMS, and HAMILTON, Circuit Judges.
Focus: Tax Evasion – Sentencing
Court misapplies tax loss definition to facts of the case, warranting resentencing.
“In this circuit, “[w]e take the phrase ‘the object of the offense’ to mean that the attempted or intended loss, rather than the actual loss to the government, is the proper basis of the tax‐loss figure.” United States v. Chavin, 316 F.3d 666, 677 (7th Cir. 2002). Here, the object of Black’s offense was the amount of money that he attempted to avoid paying, which is the actual amount of taxes, penalties, and interest that was due. Black owed the IRS unpaid taxes for 1997 and 1998 plus penalties and interest. The IRS filed a lien to satisfy the tax debt in the amount of $4,856,895.49. Black wrote a bad check in this amount. The IRS notified Black that he owed an additional $505,993.68 in penalties and interest, and Black wrote a bad check for this amount. At that point, Black owed the IRS $5,362,889.17. Diligent in its collection efforts, the IRS filed three additional liens for $1,467,168.33, $1,417,804.18, and $4,954,049.40—all to collect the same $5.3 million Black owed. Black responded by writing two bad checks and two fraudulent bills of exchange to satisfy the tax liens. The district court added the face value of each fraudulent instrument submitted to the IRS to determine the tax loss was over $14 million. Doing so was improper under § 2T1.1. From the record, it appears that the tax loss was only approximately $5.3 million.
Vacated and Remanded