Criminal Tax Sentencing Statistics for 2017

The sentencing commission is responsible for collecting and analyzing large amounts of data pertaining to federal sentences across the country.  Further, the commission amends sections of the sentencing guidelines and clarifies statutory meaning within the manual itself.  Periodically, the commission publishes a report for particular criminal activity, including criminal tax cases.  This report includes information on tax offender demographics, average sentences, average tax loss, and common enhancements.  The following is a breakdown of the commission’s report for 2017.  The report is based on persons convicted of tax fraud, tax evasion, failure to file, and aiding or assisting in the false preparation of returns.  This encompasses all criminal tax defendants sentenced under U.S.S.G. § 2T1.1 or 2T1.4.

Tax Offender Demographics

  • 69.4% of tax fraud offenders were male.
  • The demographics for offenders: 52.4% white, 30.8% black, 10.3% Hispanic, and 6.5% belonging to other races.
  • The average age of tax offenders in 2017 was 52 years old.
  • 93.8% of tax offenders were United States citizens.
  • 80.5% of tax offenders had no prior criminal history and were sentenced in criminal history category I.

Tax Loss Involved

  • The median tax loss for all offenses was $277,576.
  • 87.2% of cases involved a tax loss of $1,500,000 or less.
  • 19.8% of cases involved a tax loss of $100,000 or less.

Common Enhancements in Criminal Tax Cases

  • 12.5% of tax offenders received an enhancement for using a sophisticated means to execute or conceal the offense.
  • 8.4% of tax offenders received an enhancement for having a leadership or supervisory role in the offense.
  • 3.8% of tax offenders received an enhancement for abusing a public position of trust or using a special skill.
  • 8.7% of tax offenders received an enhancement for obstructing or impeding the administration of justice.
  • 2.4% of tax offenders received a reduction in offense level because they were a minor or minimal participant in the offense.

Criminal Tax Sentences

  • 59.1% of all tax fraud offenders were sentenced to imprisonment.
  • The average length of incarceration was 17 months

For all criminal tax cases, the trial court will be given a guideline range recommendation.  Normally, a trial court will sentence the client somewhere within that span of months.  Using personal characteristics of the defendant under § 3553(a), and other offense specific facts, the trial court may deviate from the recommended guideline range.  For good cause, the trial court may depart from the guideline range up or down depending on the circumstances.  The frequency of departures in tax fraud cases has been increasing over the last five years.  In 2013, 36.1% of criminal tax sentences were within the recommended guideline range.  In 2017, 26.5% of sentences fell within the recommendation of the sentencing guidelines.  This decrease in guideline sentences is interesting to follow as trial courts continue to look at specific offense/offender characteristics when finding appropriate sentences.

Over the past five years, trial courts have remained relatively consistent in departing downward from the guideline range.  Approximately 75% of criminal tax convictions result in sentences below the sentencing guidelines recommendation.  25% of all sentences fall below the guideline range following the government’s sponsorship of a below guideline request.  The most common government sponsorship falls under U.S.S.G. § 5K1.1.

One of the most often used sections to justify downward departure is found under U.S.S.G. § 5K1.1.  This section allows the trial court to depart if the tax offender substantially assists the government in other criminal matters.  Substantial assistance is discussed in more detail in a previous post.  15-17% of criminal tax cases involved a downward departure under § 5k1.1 over the last five years.  The average reduction in sentence was 67.3% from the recommended guideline range.  This corresponds with an average reduction of 17 months.

Other government sponsored departures (excluding § 5K1.1) were granted in 7-13% of cases over the last five years.  Criminal tax defendants who received government sponsored departures saw an average reduction of 68.1%.

We have seen an increase in below guideline sentences over the last five years.  These statistics exclude any sentence which a departure was requested by the government under § 5K1.1 or otherwise.  In 2013, 40.8% of tax fraud cases received below guideline sentences.  In 2017, that number rose to 45.9%.  However, the reduction was smaller with each tax defendant receiving a 59% reduction in sentence.

The average sentence handed down in criminal tax cases has remained stagnate over the last five years.  During this time period, the average guideline range has been 24-26 months.  The average sentence has been 15-18 months.  These numbers fit neatly with the previous statistics which show a liberal use of downward departures in criminal tax cases.

It is always interesting to watch the trends in sentencing for criminal tax cases.  It gives litigators an idea of where most district court judges are leaning when sentencing this class of defendant.  But it is important to understand the below guideline frequency is not solely based on the nature of the offense.  It is also based on the type of defendant normally found in a criminal tax case.  In large part, the below guideline sentence frequency is due to the lack of criminal history and the common traits of criminal tax defendants.  Unlike many street criminals, those charged with white collar crimes often have low criminal history points and can put forward a compelling case for departure under § 3553(a).  In addition, most United States Attorneys are more willing to find a less severe sentence when the client has worked his whole life, taken care of his family, and lived a law-abiding life before running afoul of the IRS.  While these characteristics are not solely reserved for white collar criminals, they are more prevalent in this area of federal defense.

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