Irvine, California – Engaging in intentional tax evasion can result in imprisonment, with the duration typically determined by the financial loss inflicted upon the government. The federal sentencing guidelines generally dictate that defendants causing greater tax losses face longer prison sentences.
In a landmark case, United States v. Upshur (2023), the Third Circuit Court of Appeals established that “intended tax loss” should be used in sentencing calculations for tax crimes, rather than the actual loss incurred. Intended tax loss represents the hypothetical financial harm the government would have suffered if the defendant’s evasion attempts had been successful.
The Upshur case involved a defendant engaging in two fraudulent tax schemes over a decade. While these schemes ultimately failed to generate significant refunds, the court determined an intended-loss figure of $325 million based on potential consequences. This figure, applied to the U.S. Sentencing Guidelines table, resulted in a recommended sentence of 324-328 months. While the lower court imposed a less severe sentence of 84 months, the Third Circuit upheld the use of intended tax loss in calculating the sentence.
This ruling sets a precedent for future tax evasion cases, emphasizing the potential harm intended by the defendant, even if the actual financial loss differs.