Supreme Court Finds Tax Fraud to be an Aggravated Felony

On February 21, 2012, the U.S. Supreme Court made a decision in Kawishima v. Holder, putting an end to the circuit split on the issue of whether tax fraud constitutes an aggravated felony.  As reported in our November 17, 2011 eNews, the Supreme Court heard oral argument on the Kawishima case on November 7.  The opinion was delivered by Justice Thomas, who was joined by Justices Roberts, Scalia, Kennedy, Alito, and Sotomayor.  Justice Ginsburg, joined by Justices Breyer and Kagan, filed a dissenting opinion.

 Mr. and Mrs. Kawishima were convicted of filing a false corporate tax return in 1997.  An Immigration Judge, and subsequently the Board of Immigration Appeals and Ninth Circuit, found the couple removable and ineligible for cancellation of removal, holding that their tax violations constituted aggravated felonies under Section 101(a)(43)(M)(i) of the Immigration and Nationality Act (“INA” or “Act”).  That section states that an aggravated felony is a crime involving fraud or deceit in which the loss to the victim exceeds $10,000.

The Kawishimas argued that the tax crimes for which they were convicted did not involve fraud or deceit, and thus did not constitute aggravated felonies.  The Supreme Court, however, rejected this argument, finding that although the words “fraud” and “deceit” were not expressly stated in the criminal statutes, the elements of their offenses necessarily entailed fraudulent or deceitful conduct.  The Court stated that aggravated felonies are not limited to offenses that include fraud or deceit as formal elements, but rather refer more broadly to offenses involving fraud or deceit.  The Court also held that the $10,000 loss to the victim of an aggravated felony could include loss to the Government in the form of tax revenue.

In her dissent, Justice Ginsburg states that the Supreme Court’s holding renders INA § 101(a)(43)(M)(i)(ii), relating specifically to tax evasion, superfluous. Additionally, Ginsburg states that the Court’s reading sweeps a wide variety of tax offenses—including misdemeanors—into the “aggravated felony” category, which will have the effect of discouraging foreign nationals from pleading guilty to minor tax offenses.

The full Kawishima opinion can be found here.