18. Memorandum re Standard Language for Pleas and Orders in Criminal Tax Cases Involving Restitution

In 2002, in response to a growing perception that many criminal defendants, despite being convicted of violating the tax laws, are nevertheless escaping all responsibility for the payment of the taxes associated with the offenses for which they had been convicted, a joint IRS/Department of Justice Task Force was formed to study the issue of restitution in criminal tax cases.

In May 2005, the Attorney General issued new guidelines on Victim and Witness Assistance. Those guidelines require that prosecutors in all cases "must consider 'requesting that the defendant provide full restitution to all victims of all charges contained in the indictment or information, without regard to the counts to which the defendant actually plead[s].' (Pub. L. No. 104-132 § 209; 18 U.S.C. § 3551 note)." Guidelines at 39.

On June 23, 2005, the Administrative Office of the United States Courts informed all of the Clerks of the United States Courts that the IRS has designated a centralized office for the collection and processing of all restitution payments made to the IRS. On June 30, 2005, the Executive Office for United States Attorneys informed all United States Attorneys' Offices, Financial Litigation Unit Supervisors, Financial Litigation Units, and Victim Witness Coordinators of the new IRS restitution office. In order for the IRS to be able to properly process and account for restitution payments made by defendants in criminal tax cases, it is vital that it receive information detailing the tax periods or years for which the restitution payments are being made.

In order to help Assistant United States Attorneys and other federal prosecutors, as well as the defendants and the Clerks of the United States District Courts, to provide the required information to the IRS, the Joint Task Force has developed proposed plea language for the restitution portion of a plea agreement and a proposed restitution order. Prosecutors should use the relevant proposed language in criminal tax cases involving defendants who agree or are ordered to pay restitution. The proposed language for the restitution portion of plea agreements is intended to be used when a defendant agrees, as part of the plea negotiations, to pay restitution for the portion of the tax liability caused by his or her criminal conduct. The proposed language may be modified to conform to local practices, but Assistant United States Attorneys should not compromise the IRS's ability to assess and collect civil taxes and penalties (see paragraphs eight and nine of the proposed plea agreement language).

The proposed order language is intended to be used in two circumstances: first, when a judge orders a defendant to pay restitution pursuant to a plea agreement; and second, when a defendant is convicted after a trial and the prosecutor seeks restitution for the portion of the tax liabilities caused by the defendant's criminal conduct. It is essential that the restitution order include the tax years at issue and the loss attributable to each tax year.

To ensure that the IRS can properly account for and retain restitution payments made in the context of criminal tax cases, it is incumbent on all prosecutors handling criminal tax matters to arrange the assignment of an IRS agent who will prepare the documentation the defendant will be required to sign to enable the IRS to assess the amount ordered as restitution. If you have any questions regarding restitution in criminal tax cases, or questions about the use of the standard language, please contact Elissa Hart-Mahan in the Criminal Appeals and Tax Enforcement Policy Section, Tax Division, Department of Justice, at (202) 305-7397, or the IRS case agent assigned to your case.

[updated November 2010] [cited in USAM 6-4.370]