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Supreme Court rules that tax fraud has immigration consequences

It is now late February, and North Carolina residents are likely gathering last year's financial information in preparation for the mid-April deadline for filing tax returns. While it is important for all taxpayers to fill out their returns faithfully and accurately, it may be even more important for those who do not yet have U.S. citizenship, as a recent Supreme Court case reveals.

In that case, a majority of the Court held that filing false returns can be grounds for deportation. The defendants in the case were a couple who were in the United States legally, but had not become citizens. They got into trouble with the IRS when the husband filed a false corporate tax return. His wife was charged with aiding his illegal activity. The IRS estimated that they cost the government nearly $250,000 in unpaid taxes.

There are specific penalties prescribed for violating the tax laws. But immigration officials believed that their crimes contravened immigration laws and merited deportation. The basis for that reasoning is a provision in immigration law that allows deportation for what are called "aggravated felonies." A number of crimes fall under that description, including those involving "fraud or deceit" where the amount of monetary loss is greater than $10,000, or those involving tax fraud where the government's tax loss is greater than $10,000.

The couple appealed to the Supreme Court after losing their initial case and a subsequent appeal. They argued to the Court that their activity did not constitute "fraud or deceit," but six of the nine Justices did not agree. In dissent, three Justices cautioned that the majority's ruling would bring a number of minor tax offenses into the circumference of the "aggravated felony" category, possibly resulting in deportation proceedings against non-citizens for relatively minor crimes.

Source: Forbes, "Supreme Court Finds Tax Crimes Are Grounds for Deportation," Kelly Phillips Erb, Feb. 22, 2012.

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