Townsend: Tax Obstruction Crimes

John A. Townsend (Townsend & Jones, Houston) has published Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough? Online Appendix, 9 Hous. Bus. & Tax L.J. A-1 (2009):

These examples illustrate anecdotally the range of audit avoidance conduct – i.e., the intent to lower the audit profile coupled with some legal − even morally neutral objective – conduct. ...

These examples illustrate the dangers of the Government’s expansive imagination of the tax obstruction crimes in § 7212 and the Klein conspiracy. Most practitioners have engaged in some patterns of conduct that would be deemed not dissimilar to many of the examples. While as among the examples, there are differences in nuance, there is no principled difference between or among them that would provide guidance as to which of the transactions should be subject to a Government Klein conspiracy or tax obstruction charge and which ones would not. I hope that those of you who are in the trenches in the real world of tax practice will instinctively recoil at the notion that the legal conduct of the type described, even where the tax rules are clearly manipulated without falsity or misrepresentation, could be criminalized. But, more importantly for all of us, I hope also that the courts will recoil when the prosecutors exercise indiscretion in this area.