Federal Judges Giving Tax Cheats Sentences Below U.S. Guidelines


Federal judges are going easy on tax cheats, or at least easier than the U.S. Sentencing Commission' s advisory guidelines say they should, reports Forbes magazine. The trend has been building since 2007, but was given a high profile face in January when a Chicago federal judge let billionaire H. Ty Warner off with probation for hiding as much as $106 million for more than a decade and evading at least $5.5 million in tax on his secret accounts. According to the sentencing guidelines, Warner, 69, who made his fortune by creating Beanie Babies, should have got 46 to 57 months in the federal pen. Prosecutors have appealed Warner's sentence, asserting that the judge was unreasonably impressed by his “not so extraordinary” charity and by gushing letters from employees and business associates.

In fiscal 2013, judges gave below-guideline sentences, without buy-in from prosecutors, to 45 percent of those sentenced for tax crimes but just 28 percent of those sentenced for embezzlement, and 26 percent of those sentenced for fraud. The leniency-for-tax crimes trend has been mostly obscured by Internal Revenue Service reports showing the average prison term for “tax and tax related crimes” rising from 21 months in 2004 to 31 months in 2013. The IRS number are skewed by long prison terms meted out to those convicted in an epidemic of identity theft refund fraud, a crime Kathryn Keneally, U.S. Assistant Attorney General for the Tax Division described as “more like street crime.”

Comments are closed.