from the United States District Court for the Western
District of Tennessee at Memphis. No. 2:16-cr-20078-1-Sheryl
H. Lipman, District Judge.
C. Jermann-Robinson, OFFICE OF THE FEDERAL PUBLIC DEFENDER,
Memphis, Tennessee, for Appellant.
Keith Griffin, UNITED STATES ATTORNEY'S OFFICE, Memphis,
Tennessee, for Appellee.
Before: DAUGHTREY, SUTTON, and DONALD, Circuit Judges.
SUTTON, Circuit Judge.
Ballard lied about his income, hid money in family
members' bank accounts, and filed then dismissed several
Chapter 13 bankruptcy petitions. Through these and other
inartful dodges, he tried to avoid paying $848, 798 in taxes
arising from his income as a securities broker between 2000
and 2008. The Internal Revenue Service noticed. Even after
the IRS started asking questions, Ballard told the agency
that he did not have any income in 2009, when in truth he had
made over $500, 000 as a broker that year. The lies and
deceptions led to a criminal charge, then a guilty plea, for
violating 26 U.S.C. § 7212(a), which prohibits
"corruptly . . . obstruct[ing] or imped[ing] . . .
administration of [the tax laws]."
Sentencing Guidelines say that district courts may sentence
individuals for violations of that provision as a tax evasion
offense or as an obstruction of justice offense, whichever is
"most appropriate." U.S.S.G. App. A, Introductory
cmt. Ballard urged the court to use the obstruction of
justice guideline. The district court disagreed. It rejected
Ballard's argument that he never intended to evade paying
his taxes but was merely delaying the payments (merely
obstructing justice in other words) until he made real
money-apparently more than $500, 000 a year. Use of the tax
evasion guideline led to a higher offense level for Ballard
and an increase in the sentencing range from 8-14 months to
24-30 months, and eventually led to a sentence of 18 months.
in 1998, Ballard worked as a securities broker paid on
commission. Not every firm he worked for withheld his income
taxes. In 2008, the IRS classified him as a
"non-filer" because he filed returns without paying
his tax bills. In response to IRS inquiries, Ballard filled
out Form 433-A in January 2009, claiming no income and no
ability to pay. In truth, he was employed by a securities
brokerage in Texas and ended up making over $500, 000 that
year. Rather than starting to pay off the more than $800, 000
he owed to the government at that point, Ballard spent that
year's income on (1) a new $96, 000 Range Rover, which he
titled in his wife's name and then resold six weeks later
for cash, (2) $25, 000 in furniture for a new house he
started leasing for $6, 000 per month, and (3) an $80, 000,
six-week trip to Palm Beach with his family. He also
sometimes used his wife's and his mother-in-law's
bank accounts to deposit earnings and pay expenses. Unamused,
the IRS issued a notice of intent to levy his brokerage
income in 2010. Ballard responded by quitting his job,
apparently cutting his income to spite the IRS. He filed and
later dismissed a Chapter 13 bankruptcy petition, halting the
collection efforts of the IRS and his other creditors. This
was not the only time he deployed this tactic, having done
the same thing five times before (and ten times since).
evasive actions triggered a criminal investigation. In 2012,
IRS agents interviewed Ballard. He denied having any
employment in 2009 and claimed that all of the money he made
that year arose from work for prior years. But in fact the
money was payment for work he did in January, April, May,
June, August, and December of 2009. And he knew it. That lie,
charged the local United States Attorney, constituted
"corruptly . . . obstruct[ing] or imped[ing] . . .
administration of [the tax laws]" in violation of 26
U.S.C. § 7212(a). He pleaded guilty to that single
raised one objection at sentencing: Rather than sentencing
him under the tax evasion guideline, the district court
should sentence him under the obstruction of justice
guideline, which in his case (though not always) would lead
to a lower base offense level. His offense, he claimed, was
more akin to obstruction of justice than tax evasion because
all that was actually charged was the 2012 lie to IRS
investigators, and he had always intended, he claimed, to pay
his taxes once he had the money. The district court applied
the tax evasion guideline nonetheless, which produced an
advisory range of 24-30 months. The district court varied
downward and sentenced Ballard to 18 months, and it required
him to make full restitution of his unpaid taxes. Ballard
appealed the application of the tax evasion guideline, as his
plea agreement permitted.
taxpayer violates § 7212(a)'s omnibus clause, as
Ballard did, the Guidelines give the sentencing judge two
options: § 2T1.1 (tax evasion) or § 2J1.2
(obstruction of justice). U.S.S.G. App. A.
2T1.1 covers "Tax Evasion; Willful Failure to File
Return, Supply Information, or Pay Tax; Fraudulent or False
Returns, Statements, or Other Documents." It explains
that the base offense level should be calculated under the
Guidelines' tax table according to the "[tax] loss
that would have resulted had the offense been successfully
completed, " and that the applicable "tax loss is
not reduced by any payment of the tax subsequent to the
commission of the offense." U.S.S.G. § 2T1.1. Other
offenses punishable under that section include evading taxes,
26 U.S.C. § 7201, willfully failing to file a tax
return, keep records, or supply information as the tax code
and regulations require, id. § 7203, making
fraudulent statements under penalty of perjury in a
"return, statement, or other document, "
id. § 7206(1), removing, depositing, or
concealing "any [taxed or levied] goods or commodities .
. . with intent to evade or defeat the assessment or
collection of any tax, " id. § 7206(4),
and perpetrating various forms of fraud on the Secretary,
id. §§ 7206(3), 7207; see United
States v. Neilson, 721 F.3d 1185, 1188 (10th Cir. 2013).
2J1.2, in partial but not complete contrast, covers
"Obstruction of Justice." The section's
background note explains that "[n]umerous offenses of
varying seriousness may constitute obstruction of justice,
" including obstructing a criminal investigation,
intimidating jurors, stealing or altering court records,
intercepting grand jury deliberations, altering evidence,
threatening or injuring witnesses, and impeding the
communications of judges or law enforcement. U.S.S.G. §
2J1.2; see 18 U.S.C. §§ 1001, 1503, 1505,
1506, 1508, 1509, 1510(a), 1512, 1513, 1516, 1519; U.S.S.G.
App. A. This guideline thus "covers a broad range of
conduct that generally involves interfering with the
administration of the justice system." Neilson,
721 F.3d at 1188. Its instructions on "specific offense
characteristics" tell courts what to do when the offense