United States v. Orrock, No. 19-10388 (9th Cir. 2022)
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The government accused Orrock of tax evasion for concealing income he received from the sale of a vacant lot that he controlled. Rather than report the sale proceeds on his personal tax return, Orrock belatedly disclosed the sale in the tax return for a partnership that he also controlled. In that return, he significantly underreported the sale proceeds.
The Ninth Circuit affirmed his conviction for evading the assessment of taxes, 26 U.S.C. 7201, rejecting Orrock’s argument that the statute of limitations barred his conviction because it ran from the date he filed his false personal tax return, not from the later act of filing the partnership return. Acknowledging that some language in precedent may seemingly support that argument, the court clarified that the statute of limitations for evasion of assessment cases under section 7201 runs from the last act necessary to complete the offense, either a tax deficiency or the last affirmative act of evasion, whichever is later. The court aligned evasion of assessment cases with evasion of payment cases and joined all the other circuit courts that have addressed the issue. The indictment was filed within six years of Orrock’s last affirmative act of evasion, the filing of the partnership tax return, and was timely.
Court Description: Criminal Law. The panel affirmed a conviction for evading the assessment of taxes under 26 U.S.C. § 7201, in a case in which a jury convicted the defendant on this evasion charge along with two other tax offenses. The government accused the defendant of tax evasion for concealing income he received from the sale of a vacant lot that he controlled. Rather than report the sale proceeds on his personal tax return, the defendant belatedly disclosed the sale in the return of a partnership that he also controlled. In that return, he significantly underreported the sale proceeds. The defendant argued that the statute of limitations barred his conviction for the evasion of the assessment of taxes. In essence, he contended that the statute of limitations ran from the date he filed his false personal tax return, not from the later act of filing the partnership return. Although some language in this court’s prior cases may seemingly support the defendant’s argument, the panel took this opportunity to clarify that the statute of limitations for evasion of assessment cases under § 7201 runs from the last act necessary to complete the offense, either a tax deficiency or the last affirmative act of evasion, whichever is later. In so ruling, the panel aligned evasion of assessment cases with evasion of payment cases, and joined all the other circuit courts that have addressed the issue. Because the indictment was filed within six years of the defendant’s last affirmative UNITED STATES V. ORROCK 3 act of evasion, the filing of the partnership tax return, the panel saw no bar to the defendant’s prosecution for the evasion of assessment of taxes. In a concurrently filed memorandum disposition, the panel addressed the defendant’s other contentions on appeal, and affirmed in part and vacated in part.
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