Judge Smells a Rat in Government's Use of Tax Loss Presumption for Restitution

The tax loss is the principal determinant in tax Guidelines sentencing calculations. The Guidelines "contemplate that the court will simply make a reasonable estimate based on the available facts." SG 2T1.1, Application Note 1. Where the tax loss is not "reasonably ascertainable," the sentencing court may use certain "presumptions" to estimate the tax loss "unless the government or defense provides sufficient information for a more accurate assessment of the tax loss." Id. And, SG 2T1.1(c)(2)(A) provides that "If the offense involved failure to file a tax return, the tax loss shall be treated as equal to 20% of the gross income * * * less any tax withheld or otherwise paid, unless a more accurate determination of the tax loss can be made."

Restitution is a different concept designed to make the victim of the crime whole. Although, in tax cases, the tax loss and the restitution amount is often -- perhaps usually -- the same, it is not necessarily the same because the tax loss can, in some cases, include tax loss the defendant intended but never realized whereas restitution is allowed only for the realized tax loss.
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