In addition to time in prison, defendants convicted of financial crimes in federal court are usually subject to fines and restitution. While the focus of most sentencing hearings is the length of any period of incarceration to be imposed, defense counsel need to consider and address the potentially substantial monetary penalties that can apply. Last month, the U.S. Court of Appeals for the Second Circuit decided United States v. Adams, 955 F.3d 238 (2020), which addressed not just the calculation of tax loss for purposes of the U.S. Sentencing Guidelines, but also the availability and extent of restitution orders and fines. As such, Adams is an important reminder of the wide range of issues affecting criminal tax defendants at sentencing.

‘United States v. Adams’

In October 2017, David Adams pled guilty to a six-count indictment that charged him with three counts of subscribing false tax returns in violation of 26 U.S.C. §7206(1); two counts of tax evasion in violation of 26 U.S.C. §7201; and one count of attempting to interfere with the administration of the internal revenue laws in violation of 26 U.S.C. §7212(a). These charges arose out of a 14-year-long “concerted campaign to obstruct the IRS’s efforts to collect his delinquent tax payments and secure overdue tax returns.” After the Probation Department for the District of Connecticut calculated the total tax loss to be approximately $4.87 million, the Honorable Vanessa L. Bryant sentenced Adams principally to 90 months’ imprisonment and the full amount of the loss ($4.87 million) in restitution payable to the IRS.

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