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Watch your Tax Return when Residing in a Foreign Country

Mar 16, 2012

Watch your tax return! Tax is very important when residing in foreign countries

Example: USA, Immigration Consequences of Tax Evasion

On February 21, 2012, the Supreme Court of the United States issued a 6-3 ruling regarding the deportability of aliens for commission of certain federal tax crimes. Such a case should be a caution to individuals considering filing a false return.

Factual Background

A married couple (Japanese citizens) had been lawful permanent residents of the United States since June ,1984. The husband pled guilty in 1997 to one count of willfully making and subscribing a false tax return under 26 USC 7206(1) and the wife pled guilty to aiding and assisting in the preparation of a false tax return under 26 USC 7206(2). The amount the government was owed in taxes exceeded $10,000. The Immigration and Naturalization Service (now Immigration and Customs Enforcement) then charged both of them with being deportable from the United States for being convicted of an aggravated felony.

Statutory Provisions

Under 8 USC 1227(a)(2)(A)(iii) “Any Alien who is convicted of an aggravated felony at any time after admission is deportable.” 8 USC 1101(a)(43) enumeration of aggravated felonies includes in subparagraph M an offense that either “(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 court held that although fraud or deceit are not formal elements of 26 USC 7206(1) or (2), the couple were convicted of offenses which amounted to “deceit” and the offense committed by both therefore amounted to aggravated felony within the definition of 8 USC 1101(a)(43)(M)(i)

Even though the statute in (ii) specifically states that conviction for an offense under 26 USC 7201 when the loss to the government exceeds $10,000 is an aggravated felony, this does not mean that other tax offenses are not covered by the general definition of an offense which “involves fraud or deceit in which the loss to the victim or victims exceeds $10,000” (The court reasoned that( ii) was included to avoid any doubt that a conviction under 7201 was an aggravated felony, when the loss exceeds $10,000).

Also, even though the criminal sentencing guidelines treat tax crimes and crimes involving fraud or deceit differently, this did not mean that tax crimes would not fall within the definition of 8 USC 1101(a)(43)(M)(i).

As such, the couple is subject to deportation.


As such, any alien in the US should be aware of the serious consequences to filing a false tax return. Not only is a fine or prison sentence risked but deportation. It is advisable to consult an attorney before filing a return in any country. This will ensure that an accurate return is filed, avoiding any negative consequences.

 Case: Kawashima v Holder, available at http://www.supremecourt.gov/opinions/11pdf/10-577.pdf

Shinji SUMIDA, Japanese Attorney

Michael CROWTHER,  Attorney admitted to the State Bar of California

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