Clarence Thomas and Samuel Alito are the most “conservative” members of the Supreme Court (notwithstanding the new member, Neil Gorsuch who is hard to fully explain this early in his tenure). You might think that the two most conservative members of the Court would be against expanding IRS power, but that’s not what happened. Here is the case of Marinello v. United States [PDF].
TAX CHEAT CHARGED WITH MULTIPLE CRIMES
Carlo Marinello, a small businessman, broke all kinds of IRS laws in a scheme to defraud the federal government of tax revenue. He was busted on a whole series of crimes, misdemeanors and felonies. On top of those crimes, he was charged with a general felony charge of “to obstruct or impede, the due administration” of the tax code. He appealed the “obstruction” felony to the Supreme Court.
THE OMNIBUS CLAUSE
The law in question was named the “Omnibus Clause” or “obstruction clause” which reads:
a) Corrupt or forcible interference
Whoever corruptly or by force or threats of force (including any threatening letter or communication) endeavors to intimidate or impede any officer or employee of the United States acting in an official capacity under this title, or in any other way corruptly or by force or threats of force (including any threatening letter or communication) obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title, shall, upon conviction thereof, be fined not more than $5,000, or imprisoned not more than 3 years, or both …
The Supreme Court looks at the issue to decide whether the “Omnibus Clause” should apply to any or all violations of the Internal Revenue Code, or whether it should apply only to situations where those being investigated in a specific situation obstructed or impeded “due administration.”
CRIMINALIZING EVERYTHING
If the Omnibus Clause applies to any violation of the Code, then each of the provisions that set out specific criminal liability for specific acts are overridden by the more serious felony charge and become effectively meaningless. This cannot be the case. Congress did not define less serious violations so specifically and then override them with a more general and more serious criminal prohibition.
As examples, someone who fills out his W-4 form with the wrong number of dependents to prevent overwithholding of taxes or someone who pays a gardener in cash without issuing a 1099 form — things that happen all the time in every day life and are generally not considered egregious — would suddenly become a felon under threat of multiple years in a federal prison. Surely, the felony Omnibus Clause could not cover all these acts.
DUE ADMINISTRATION
The Court tries to explain what it means when someone “obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title.” There is no historical precedent entirely on point, but there is somewhat similar language in a 1995 case, as described:
In United States v. Aguilar, we interpreted a similarly worded criminal statute. That statute made it a felony “corruptly or by threats or force, or by any threatening letter or communication, [to] influenc[e], obstruc[t], or imped[e], or endeavo[r] to influence, obstruct, or impede, the due administration of justice.” The statute concerned not (as here) “the due administration of” the Internal Revenue Code but rather “the due administration of justice.” In interpreting that statute we pointed to earlier cases in which courts had held that the Government must prove “an intent to influence judicial or grand jury proceedings.” We noted that some courts had imposed a ” ‘nexus’ requirement”: that the defendant’s “act must have a relationship in time, causation, or logic with the judicial proceedings.” And we adopted the same requirement. (Citations omitted)
The 7-2 Court then goes on to find that the obstruction of “due administration” applies to “specific, targeted acts of administration,” and not the Code as a whole. The Court notes that the context of the Omnibus Clause involves threats or force to officers or employees, and the “obstruction” must involve related conduct. The Court also looks at the intent which is quite clear:
According to the House Report, §7212 “provides for the punishment of threats or threatening acts against agents of the Internal Revenue Service, or any other officer or employee of the United States, or members of the families of such persons, on account of the performance by such agents or officers or employees of their official duties” and “will also punish the corrupt solicitation of an internal revenue employee.”
In the end, most of the convictions of tax cheat Marinello stand, but the government does not get to throw a major redundant felony charge on top of it all. He did not get off free with his crimes. And as a result of this 7-2 Supreme Court ruling, we do not all have to worry that we might violate some insignificant or inconsequential obscure IRC provision and wind up in federal prison for years.
CLARENCE THOMAS WANTS FULL IRS TYRANNY
Clarence Thomas, writing for himself with Samuel Alito signing on, were fine with charging felony obstruction on top of everything else. They wanted the obstruction provision to apply to any tax cheating — or even for any violation of the thousands of specific requirements throughout the Internal Revenue Code.
I part ways when the Court concludes that the whole phrase “due administration of the Tax Code” means “only some of “the Tax Code—specifically “particular [IRS] proceeding[s], such as an investigation, an audit, or other targeted administrative action.” That limitation has no basis in the text. In my view, the plain text of the Omnibus Clause prohibits obstructing the due administration of the Tax Code in its entirety, not just particular IRS proceedings.(Citation omitted)
Clarence Thomas looks at the exact words and interprets them in total disregard of the fact that those words conflict with other parts of the very same tax code that sets out specific penalties for specific acts, and disregards legislative intent. In the end, he reaches an absurd result.
For anyone who has ever been to an accountant, we know they sometimes make mistakes. Those mistakes, if they violate the tax law, would become felonies if Clarence Thomas and Samuel Alito could have their way.