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Supreme Court's Decision in Kawashima v. Holder and the Hard-Learned Lessons of an Old Tax-Crime Conviction

A married couple, natives of Japan, small business owners, who immigrated to the U.S. legally and became Legal Permanent Residents (green card holders) in 1984, began, and continue to run, successful Japanese restaurants in various affluent areas of California. Over two decades ago, in 1991, the couple made false statements on their federal corporate tax return, and were convicted of the related crimes in 1997 in federal court, one spouse for making the false statements, the other for assisting with making them. The spouse convicted of making the false statements served a four-month prison sentence, and the couple paid $245,000 back to the government that it was found to have owed in taxes and penalties.

Their troubles, however, were far from over, as many long-term green card holders who were convicted of certain crimes have come to know in the severest of ways.

Three years after their convictions in 2001, the legacy Immigration and Naturalization Service (INS) brought removal (deportation) charges against the couple in immigration court, alleging their convictions amounted to commissions of “aggravated felonies,” types of crimes, which, if committed, result, according to the immigration law, in automatic removal from the U.S.

Thus began a legal battle through the Immigration Court, the Board of Immigration Appeals, the United States Court of Appeals for the Ninth Circuit and, finally, the Supreme Court of the United States, in what is now the precedent to be known as Kawashima v. Holder, 565 U.S. ____ (2012), decided on February 21, 2012.

In this case, the couple argued that the crimes for which they were convicted, specifically those related to making false statements on a tax return in violation of 26 U.S.C. §7206(1) and (2), respectively, did not meet the relevant statutory definition of an “aggravated felony.” The Supreme Court, in a 6-3 decision, disagreed, affirming the Ninth Circuit’s decision and finding that the crimes for which the couple were convicted indeed qualify as aggravated felonies that render them automatically deportable from the United States.

Which particular crimes will be classified as aggravated felonies is not always clear, hence, the lengthy court battles that can ensue. Congress provides categories of offenses to be considered aggravated felonies at 8 U.S.C. §1101(a)(43). Some of the categories appear more explicit, such as “murder, rape, or sexual abuse of a minor,” (8 U.S.C. §1101(a)(43)(A)), and “a theft offense (including receipt of stolen property) or burglary offense for which the term of imprisonment [is] at least one year,” (8 U.S.C. §1101(a)(43)(A)(G)), while others, like the one the Court addressed in Kawashima, appear to leave more room for interpretation.

In the case of the Kawashimas, the government sought to have them deported from the U.S. based upon the definition of "aggravated felony” found at 8 U.S.C. §1101(a)(43)(M), for having been convicted of “an offense that (i) involves fraud or deceit in which the loss to the victim or victims exceeds $10,000; or (ii) is described in section 7201 of title 26 (relating to tax evasion) in which the revenue loss to the Government exceeds $10,000.” The couple was convicted of crimes related to false statements on tax returns, not tax evasion specifically, and so the Immigration Judge found that it was “clause one,” i.e., crimes involving fraud or deceit in which the loss to the victim (in this case, the U.S. government) exceeds $10,000, which qualified the crimes for which they were convicted for the “aggravated felony” classification thus rendering them both deportable.

The Supreme Court rejected all arguments made by the Kawashimas, including that the crimes for which they were convicted were not crimes of “fraud and deceit,” since fraud and deceit were not specific elements of the crimes for which they were convicted; that by only specifically including tax evasion in the category of definitions, Congress intended that to be the only tax crime that should fall within the aggravated felony definition; that, if tax crimes were to be deemed crimes of fraud and deceit in accordance with “clause one,” then “clause two,” which addressed tax evasion only, would be rendered superfluous; and that the statute was ambiguous and should, therefore, given the severity of the punishment of deportation, be construed in their favor, citing the Court’s decision in INS v. St. Cyr, 533 U.S. 289 (2001).

The Court found that making false statements on tax returns necessarily entails fraud and deceit, that there were likely special reasons for why Congress determined it needed to mention tax evasion specifically in its own clause that had nothing to do with intending to limit the scope of crimes, tax crimes included, that could be included in the definition of aggravated felony under “clause one,” thus rendering “clause two” non superfluous. Moreover, it stated, the statute’s meaning was clear enough not to warrant a St. Cyr type of deference.

Justice Ginsberg, on the other hand, joined by Justices Breyer and Kagan in her dissent, agreed with the Kawashimas that the statute was ambiguous, and that, given the severity of the deportation punishment, its meaning should be construed in their favor. She also pointed out that the crimes for which the Kawashimas were convicted were lesser offenses than crimes of tax evasion, and surmised that Congress likely intended to limit the tax crimes that could be deemed to be aggravated felonies to tax evasion by giving it its own clause in the list of aggravated felony definitions. She further expressed concerns that this precedent would hurt the prosecution of tax cases by dissuading foreign nationals charged with tax crimes from pleading to lesser offenses, thus delaying the government’s ability to collect on and enforce the tax laws. Moreover, she worried about the floodgates aspect of the case, namely, that the Court’s decision throws open the definition of “aggravated felony” under “clause one” to encompass a vast array of tax crimes at the federal, state and local levels, including misdemeanors.

Obviously and unfortunately, dissenting opinions, no matter how well-reasoned and humanitarian, are not binding precedent, and, the law that allows foreign nationals to be deported based on an aggravated felony conviction is discomfortingly unambiguous: “[a]ny alien who is convicted of an aggravated felony at any time after admission is deportable,” (8 U.S.C. §1227(a)(2)(A)(iii). This means that if the court finds that a crime for which a foreign national was convicted is deemed to fit within one of the descriptive categories of aggravated felonies as laid out by Congress in the immigration law, no matter how long ago the conviction was, no matter how dearly the foreign national paid for it through imprisonment and/or fines, and regardless of whether the foreign national otherwise has led, and now leads, a perfectly law-abiding life that includes raising a family here in the U.S., and running successful businesses that create jobs and fuel the economy, that foreign national is still deportable.

It goes without saying that here the importance of honestly and meticulously filing tax returns cannot be overestimated. The IRS can and does investigate businesses large and small, as well as individuals. Small business owners and green card holders should enlist the professional help of seasoned, reputable tax accountants in preparing their returns, and make sure that they are given complete copies of the returns that were filed with all of the worksheets. These records should be maintained indefinitely, in an organized manner, and in a safe place.

Green card holders should also seriously consider applying for U.S. citizenship through naturalization as soon as they are eligible to apply. Generally, to become a naturalized citizen, the legal permanent resident must complete the U.S. Citizenship and Immigration Services (“USCIS”) Form N-400 with supporting documentation, be at least eighteen years old and of good moral character, must pass a civics exam and meet certain English language requirements, and meet a physical presence requirement.

To meet the physical presence requirement, the individual generally must have resided continuously as a Legal Permanent Resident in the U.S. for at least five (5) years prior to filing the N-400 application, or for at least three years if married to and living with the same U.S. Citizen for the last three (3) years; have been physically present in the U.S. for at least thirty (30) months out of the previous five (5) years (absences of more than six (6) months but less than one year break the continuity of residence unless it is established that residence was not abandoned during such period); and have resided within the state or USCIS district in which they are applying for naturalization for at least three months. Certain applicants such as members of the U.S. Armed Forces serving during periods of conflict are not subject to the continuous residence requirement, and, in many cases, the naturalization process for U.S. military personnel is expedited.

It bears remembering that while there are certain situations in which individuals can be stripped of their naturalized U.S. citizenship and face deportation (e.g., treason, fraud on a citizenship application), they are rare and extreme. Critically, naturalized citizens cease to be “aliens” in the eyes of U.S. immigration law, and are not deportable under the aggravated felony provision.

Foreign nationals charged with crimes while in the U.S. should, before entering a plea agreement or otherwise, make certain to secure seasoned immigration counsel with specific experience in navigating the immigration consequences of criminal convictions, in addition to any counsel that may be representing them on the criminal charges. This cannot be emphasized enough. A seasoned immigration attorney will have an in-depth knowledge of the aggravated felony provisions and the laws governing deportation and will be able to work with criminal counsel to competently try his or her best to achieve an outcome that will not have the brutal after-effect of triggering the aggravated felony provisions of the immigration law.

Finally, it should also be remembered that there is more cooperation among related U.S. government agencies. Cooperation has been observed in similar cases where Immigration and Customs Enforcement (ICE), the Department of Labor, the Department of Justice and/or the Internal Revenue Service increased investigations, including worksite enforcement actions, based on tax evasion issues. Foreign nationals with businesses in the United States need to ensure that they are in compliance with all applicable laws.

©2020 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume II, Number 86

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2018 Go To Thought Leader AwardGreenberg Traurig’s Immigration & Compliance Practice represents businesses, organizations, and individuals from around the world on a wide range of immigration matters and visa needs.

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