Change to Sentencing Guidelines Reflects DOJ’s Increased Employment Tax Enforcement Efforts

Pursuant to amendments to the U.S. Sentencing Commission Guidelines Manual (Sentencing Guidelines), the background commentary to the Sentencing Guidelines no longer refers to violations of Code section 7202 as “infrequently prosecuted.” These amendments were passed by the Federal Sentencing Commission on May 5, 2016 and effective November 1, 2016.  Code section 7202 provides that any person who willfully fails to collect or truthfully account for and pay taxes when required shall be guilty of a felony and subject to a fine up to $10,000 and up to five years’ imprisonment. Defense attorneys had been using the “infrequently prosecuted” language to argue for more lenient sentences for Code section 7202 violations, and the Justice Department, citing the increase in prosecutions of Code section 7202 violations, had recommended that the language be removed because it is no longer true. For additional information on the change, please refer to our prior post.

According to Caroline Ciraolo, principal deputy assistant attorney general at the Justice Department’s Tax Division, the Tax Division was responsible for pushing the change through. Employment tax enforcement has been a top priority for the Tax Division in recent years, and Ciraolo noted that it should remain a priority even after she resigns when Obama leaves office.