The Sentencing Sophisticated Means Enhancement Is Not Easy to Avoid

The Sentencing Sophisticated Means Enhancement Is Not Easy to Avoid

The critical Sentencing Guidelines calculations for tax cases require a two step enhancement to the Base Offense Level for "sophisticated means" in the commission of the crime of conviction. S.G. 2T1.1(b)(2), here. Observers of the tax crimes scene have noted for some time that it does not take very much for a tax crime to have been committed by sophisticated means, thus requiring the enhancement. In United States v. Jennings, ___ F.3d ___, 2013 U.S. App. LEXIS 6690 (9th Cir. 2013), here, the Ninth Circuit reminded us that most tax crimes of the type that actually get prosecuted involve sophisticated means [enhanced version available to lexis.com subscribers].

In Jennings, the evasion was a corporate diversion to an account owned by Jennings but titled in a name that was very close to one of the corporation's legitimate vendors. The paperwork establishing the account showed that Jennings owned it and had his social security number associated with it. Jennings and another co-owner defendant used the account to fund their personal living expenses. The income was not reported.

On this fact pattern, the Ninth Circuit sustained the sophisticated means enhancement. Here is the Court's entire discussion (bold face added by JAT):

...

View Jack Townsend's opinion in its entirety on the Federal Tax Crimes blog site.

For additional insight, explore Tax Crimes, authored by Jack Townsend and available at the LexisNexis® Store.

...

Discover the features and benefits of the LexisNexis® Tax Center.

For quality Tax & Accounting research resources, visit the LexisNexis® Store.

For more information about LexisNexis products and solutions connect with us through our corporate site.