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Tax Evasion Can Lead to Deportation for Aliens

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On December 22, 2017, The Tax Cuts and Jobs Act was signed into law. The information in this article predates the tax reform legislation and may not apply to tax returns starting in the 2018 tax year. You may wish to speak to your tax advisor about the latest tax law. This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.

Tax Evasion Can Lead to Deportation for Aliens
Don't get caught with your hand in the government's pocket, especially if you are not a U.S. Citizen. Case in point: Mr. and Mrs. Kawashima have been U.S. resident aliens since 1984 and own restaurants in Southern California.

They were convicted of tax-related schemes and stipulated the tax loss to the government was $245,126. An immigration judge subsequently ruled that these crimes qualified as “aggravated felonies” and were grounds for removal (deportation). Under immigration law, an aggravated felony includes any offense that “(i) involves fraud or deceit in which the loss to the victim or victims exceeds $10,000; or (ii) tax evasion in which the revenue loss to the government exceeds $10,000.”

The Kawashimas appealed the judge's ruling to the Ninth Circuit Court of Appeals, arguing that filing a false return did not involve “fraud or deceit” since to secure a conviction, the government is not required to prove any intent to deceive. Their position was that lying or committing perjury is not equivalent to deceit. The Ninth Circuit upheld the lower court's ruling, and the case ultimately ended up in the U.S. Supreme Court, which upheld both lower courts' rulings in a 6-3 decision issued in February 2012.

This has significant implications for all aliens, both legal resident and undocumented. Tax evasion of $10,000 or more becomes an aggregated felony with potential for deportation. The dissenting justices, led by Justice Ginsberg, noted that the decision “may discourage aliens from pleading guilty to tax offenses, thereby complicating and delaying enforcement of the internal revenue laws.”

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