CCA 200106003: Interest and penalties alone do not establish tax evasion deficiency

Plain-English summary

Chief Counsel alerted Criminal Investigation to a court decision addressing the tax deficiency required for a section 7201 evasion charge. The decision said unpaid interest and penalties alone do not constitute that deficiency; some underlying tax must remain due. The court still affirmed the taxpayer's conviction because IRS payment applications left tax unpaid despite payments exceeding the original tax amount. Counsel described the interest-and-penalties point as dicta and said it would matter only in an unusual case involving an attempt to evade those charges without any tax still due. The released document includes a copy of the decision as an attachment.

Ruling snapshot

• Question: Can unpaid interest or penalties alone support the tax deficiency element of a section 7201 evasion charge?
• Outcome: Advice given; the discussed decision says underlying tax must remain due.
• Key authorities: IRC §§ 6211, 6601(e), 7201; United States v. Wright, 211 F.3d 233 (5th Cir. 2000).

Full text (IRS public release)

INTERNAL REVENUE SERVICE

June 6, 2000
Number: 200106003
Release Date: 2/9/2001
CC:EL:CT-109620-00
BCTownsend
UILN: 7201.10-00

MEMORANDUM FOR CHIEF, CRIMINAL INVESTIGATION

FROM: Barry J. Finkelstein
Assistant Chief Counsel (Criminal Tax)

SUBJECT: Tax Evasion - Interest and Penalties

This is to apprize you of a recent decision which appears to be the first criminal tax case to specifically hold, albeit dicta,1 that interest and penalties are not included within the meaning of the term “tax deficiency” for purposes of 7201 violations. See, United States v. Wright, No. 98-50554, 2000 U.S. App. LEXIS 8192 (5th Cir. April 27, 2000) (copy attached). While the import of this decision is debatable, the court sets out a persuasive argument that the existence a tax deficiency cannot be predicated on outstanding interest and penalties. Accordingly, there must be some amount of tax due and owing. In our view, this novel decision should not affect the vast majority of evasion cases which generally involve substantial amounts of tax due and owing.

Theoretically, this decision could preclude an evasion charge in the rarest of cases, i.e, where all the taxpayer had attempted to evade was outstanding interest and/or penalties. We are not aware of this situation ever arising. We further note the Service’s administrative procedures for applying payments for tax and additions to tax may preclude the possibility that a taxpayer could pay off the underlying tax in full and still have amounts of interest and/or penalties due.

U.S. v. Wright

In Wright, supra, Franklin Wright had an outstanding tax liability of $419,000.00, not including penalties and interest, for tax years 1986, 1987 and 1988. In 1992, he submitted an offer in compromise and began paying $5,000.00 a month until December 1994. During the pendency of the offer in compromise, Wright and his wife, with the assistance of their attorney and a friend, purchased a new home in the name of the friend. The Wrights gave their friend $150,000.00 in cash for the purchase of the house. An amended offer in compromise was filed stating the Wrights sold their home because they could not afford the payments and were now renting. The new house

1
This holding has no precedential value because it was not relied upon to dispose of the issue of an actual tax deficiency in the case (see discussion below).

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was not listed in the amended offer. The offer ultimately was rejected because Wright failed to provide required additional information. Through seizures and voluntary payments, Wright paid about $490,000.00 towards his tax liability. The Wrights, the attorney and the friend were convicted of conspiracy to defraud under 18 U.S.C. § 371. Wright was convicted for tax evasion in violation of 26 U.S.C. § 7201 and the attorney was convicted for making false statements in violation of 18 U.S.C. § 1001.

On appeal to Fifth Circuit, the defendants argued there was no underlying tax deficiency to predicate the conspiracy and evasion convictions. They contended Wright only owed interest and penalties and had paid off the $419,000.00 tax liability. The Fifth Circuit agreed that section 7201 requires a tax deficiency and that interest and penalties are excluded from a tax liability for purposes of section 7201. While section 7201 does not define “tax deficiency,” the court relied on its definition elsewhere in the Internal Revenue Code. Specifically, the deficiency procedures set forth in I.R.C. § 6211 define the term as the amount by which the tax exceeds the tax reported on the return plus the amounts previously assessed. Further, I.R.C. § 6601(e) expressly excludes interest from being treated as tax for purposes of deficiency procedures. Thus, the determination of a tax deficiency under these civil procedures do not recognize interest or penalties as part of the tax. Although the deficiency procedures are separate from the criminal liability provisions of the Code, the court refused to assume a broader meaning for a “tax deficiency” under section 7201 than under the deficiency proceedings provision – especially when section 7201 attaches criminal liability to the debt owed. The court also relied on the Sentencing Guidelines exclusion of interest and penalties in assessing the penalty for tax evasion to bolster its interpretation that interest and penalties are not part of a tax deficiency for 7201 purposes.

The Fifth Circuit was still able to uphold the convictions in this case. The court concluded Wright failed to prove he owed no tax. Although his total payments exceeded the tax owed, the Service collected a substantial portion of the payments through seizure. The IRS applied the seized amounts according to its normal procedure, which is to first extinguish the taxpayer's total tax, interest and penalties for the earliest years owed. Since the seized amounts were not first applied to his tax liability, Wright did have a tax deficiency. Consequently, the convictions were affirmed.

If you have any questions or comments, please feel free to contact Brian Townsend on (202) 622-4470.

cc: Assistant Regional Counsel (CT)

Attachment

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UNITED STATES OF AMERICA, Plaintiff-Appellee, versusFRANKLIN Y WRIGHT, JR; ANNETTE RYAN WRIGHT, also known as Annette S Wright, alsoknown as Annette Kaufman Wright; ROBERT E BARGER, Defendants-Appellants. No. 98-50554

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

211 F.3d 233; 2000 U.S. App. LEXIS 8192; 2000-1 U.S. TaxCas. (CCH) P50,438; 85 A.F.T.R.2d (RIA) 1791

April 27, 2000, Decided

SUBSEQUENT HISTORY: [**1] As Revised April upheld. However, after an enhancement for special 28, 2000. Rehearing Denied May 24, 2000, Reported at: skills, defendant attorney ended up with a more severe 2000 U.S. App. LEXIS 14955. Certiorari Denied sentence than either taxpayer, and record at sentencing October 2, 2000, Reported at: 2000 U.S. LEXIS 6501, indicated court did not know it could depart downward
2000 U.S. LEXIS 6500.
from guidelines to prevent an unjust discrepancy, so the
court remanded for resentencing of this defendant.
PRIOR HISTORY: Appeals from the United States
District Court For the Western District of Texas. SA-97- OUTCOME: The court affirmed all convictions, as CR-112-1. Orlando L Garcia, US District Judge. evidence was sufficient to convict of tax evasion and
conspiracy. However, evidence that court was unaware
DISPOSITION: AFFIRMED AS TO FRANKLIN
that it could depart downward from guidelines to prevent
WRIGHT AND ANNETTE WRIGHT; REMANDED
unfair sentencing discrepancy required remand for
FOR THE RE-SENTENCING OF ROBERT BARGER.
resentencing.
CASE SUMMARY
CORE TERMS: sentence, tax deficiency, departure, evasion, conspiracy to defraud, discrepancy, downward, owed, indictment, enhancement, conspiracy, mortgage,
PROCEDURAL POSTURE: Defendants appealed their involvement, special skill, tax liability, down payment, convictions, in the United States District Court for the sentencing, re-sentencing, co-defendants, seized, depart, Western District of Texas, of various tax evasion-related insufficient evidence, defrauding, prong, sufficient offenses; defendant tax preparer also appealed his evidence to support, criminal liability, community sentence on grounds that it was disproportionate to property, specific notice, crimes charged, tax evasion sentence given to primary taxpayer.
CORE CONCEPTS -
OVERVIEW: Defendant husband and wife concealed
assets, with the advice of defendant attorney and tax Criminal Law & Procedure: Criminal Offenses: Fraud: adviser, while purporting to follow plan to pay off tax Tax Fraud deficiencies. All three appealed convictions of tax Tax Law: Federal Tax Administration & Procedure: evasion and conspiracy. The court held that while Audits & Investigations: Criminal Procedure & Penalties interest and penalties were not part of a tax deficiency, (IRC secs. 7201-7217, 7231-7233, 7240-7242, 7261- evasion of which was a crime under I.R.C. § 7201, there 7262, 7268-7273, 7375) was evidence that payments under the payment plan did The elements of I.R.C. § 7201, the provision not eliminate the whole deficiency. This was the only criminalizing the evasion of taxes, include the existence arguable element of evidence used to find defendants of a tax deficiency. guilty of tax evasion crimes, so their convictions were

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Criminal Law & Procedure: Criminal Offenses: Fraud: of the conspirators in furtherance of the agreement. Tax Fraud Tax Law: Federal Tax Administration & Procedure: Criminal Law & Procedure: Criminal Offenses: Fraud: Audits & Investigations: Criminal Procedure & Penalties Tax Fraud (IRC secs. 7201-7217, 7231-7233, 7240-7242, 7261- Tax Law: Federal Tax Administration & Procedure:
7262, 7268-7273, 7375)
Audits & Investigations: Criminal Procedure & Penalties
Tax Law: Federal Tax Administration & Procedure: Tax (IRC secs. 7201-7217, 7231-7233, 7240-7242, 7261- Liabilities & Credits: Interest (IRC secs. 6601-6631) 7262, 7268-7273, 7375) While I.R.C. § 7201 does not describe "tax deficiency," A conviction under I.R.C. § 7201 requires a showing of it is defined at I.R.C. § 6211 as the amount by which the willfulness, a tax deficiency, and an affirmative act tax exceeds the tax reported on the return plus the constituting evasion. amounts previously assessed as a tax deficiency. I.R.C.
§ 6601(e) specifically excludes interest from being Criminal Law & Procedure: Criminal Offenses: Fraud: treated as tax for purposes of deficiency procedures. Tax Fraud
To establish a violation of 18 U.S.C.S. § 1001(a)(3), the Criminal Law & Procedure: Criminal Offenses: Fraud: Government must show a statement that is false and
Tax Fraud
material and made knowingly and willfully.
Criminal Law & Procedure: Sentencing: Sentencing
Guidelines
Criminal Law & Procedure: Sentencing: Sentencing
Tax Law: Federal Tax Administration & Procedure: Guidelines Audits & Investigations: Criminal Procedure & Penalties Downward departure factors should normally not be (IRC secs. 7201-7217, 7231-7233, 7240-7242, 7261- ruled out on a categorical basis; courts may depart if the
7262, 7268-7273, 7375)
case is outside the heartland of U.S. Sentencing
Tax Law: Federal Tax Administration & Procedure: Tax Guidelines Manual. Liabilities & Credits: Interest (IRC secs. 6601-6631) U.S. Sentencing Guidelines Manual § 2T1.1 and Criminal Law & Procedure: Sentencing: Sentencing application notes exclude interest and penalties in Guidelines
assessing the penalty for tax evasion.
Criminal Law & Procedure: Sentencing: Appeals
A United States Court of Appeals may review a federal Criminal Law & Procedure: Criminal Offenses: Fraud: district court's refusal to grant a downward departure
Tax Fraud
only if the district court mistakenly concluded that the
Criminal Law & Procedure: Criminal Offenses: Inchoate U.S. Sentencing Guidelines Manual did not permit the
Crimes: Conspiracy
departure.
18 U.S.C.S. § 371 prohibits the defrauding of the United
States, not just the evasion of taxes.
COUNSEL: For UNITED STATES OF AMERICA,
Plaintiff - Appellee: Joseph H Gay, Jr, Assistant US Criminal Law & Procedure: Criminal Offenses: Fraud: Attorney, Angela S Raba, US Attorney's Office, San
Tax Fraud
Antonio, TX.
Criminal Law & Procedure: Criminal Offenses: Inchoate
Crimes: Conspiracy
For FRANKLIN Y WRIGHT, JR, Defendant -
18 U.S.C.S § 371 has two prongs: it prohibits a Appellant: Reese L Harrison, Jr, Oppenheimer, Blend, conspiracy to commit an offense against the United Harrison & Tate, San Antonio, TX. Paul David States, or one to defraud the United States. Barkhurst, Oppenheimer, Blend, Harrison & Tate, San
Antonio, TX.
Criminal Law & Procedure: Criminal Offenses: Inchoate
Crimes: Conspiracy
For ANNETTE RYAN WRIGHT, Defendant -
To establish a conspiracy under 18 U.S.C.S. § 371, the Appellant: Lucien B Campbell, Philip J Lynch, Federal Government must prove: (1) an agreement; (2) to Public Defender's Office, San Antonio, TX. commit a crime; and (3) an overt act committed by one

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For ROBERT E BARGER, Defendant - Appellant: Roy house. Annette claims that she was unable to secure R Barrera, Sr, Nicholas & Barrera, San Antonio, TX. financing for the home because of Franklin’s tax
problems. She asked a friend, Caroline Haggard, to buy
JUDGES: Before REYNALDO G. GARZA,
the home in Haggard’s name and stated that she would
HIGGINBOTHAM, and BENAVIDES, Circuit Judges. assume the mortgage once the tax issues had been resolved. Haggard agreed to this arrangement.
OPINIONBY: PATRICK E. HIGGINBOTHAM,
[236] Franklin and Annette brought her almost
OPINION: [235]
$150,000 for the house in a bag containing $100 bills.
Franklin told Haggard[3] that the cash was money
PATRICK E. HIGGINBOTHAM, Circuit Judge:
from his law practice. Haggard testified at trial that the
Wrights assured her that the taxes had been paid on the
This appeal presents various challenges to the tax money but warned that she should avoid depositing the evasion-related convictions of Franklin Wright, his wife funds in the bank to avoid problems with the IRS. Annette Wright, and Franklin’s attorney and tax preparer, Robert Barger. Barger also appeals his sentence. We Haggard decided to deposit the money anyway, reject the defendants’ legal challenges to the convictions resulting in a report to the IRS. She called Barger for and find that the evidence was sufficient to support each advice, and Barger asked her why she had deposited the of the verdicts. Because it appears that the district court money when she had been told not to. Barger also believed it could not downward depart under the participated in the home purchase in other ways: he Sentencing Guidelines based on a discrepancy in assisted Haggard in gathering financial records in order sentences among the co-defendants, we remand for the to qualify for the mortgage; drew up papers transferring
re-sentencing of Barger.
the mortgage to Annette; and loaned Franklin $64,000
for the remainder of the down payment. In April 1993,
I
Barger submitted an amendment to the Offer in
Compromise stating that the Wrights had sold their
The charges against all of the defendants stem from tax house because they could no longer make mortgage deficiencies owed by Franklin Wright for 1986, 1987 payments and were now renting. The form did not list and 1988. Collection proceedings began in 1988, and the the new home as potential community property. Internal Revenue Service ("IRS") and Franklin began a
long period of negotiation.
The government indicted the Wrights, Barger and
Haggard for conspiracy to defraud, Franklin for tax
In August[2] 1992, Barger submitted an Offer in evasion, and Barger for making false statements. Compromise to the IRS and set up a $5,000-a-month Haggard, also facing prosecution on unrelated Medicaid payment plan for Franklin, which Franklin followed fraud charges, plead guilty[**4] to all charges and until December 1994. Although the offer was testified on behalf of the government. A jury found all substantial, the IRS eventually rejected it because three of the others guilty. n1 The district court sentenced Franklin failed to provide required additional Franklin to concurrent 12-month terms. Annette received information. Through seizures and voluntary payments, five years’ probation so that she could care for the however, Franklin eventually paid about $490,000 couple’s small children. Barger received concurrent 18- toward his tax liability of $419,000, not including month terms; his sentence included a two-point
penalties and interest.
enhancement for use of a special skill. Haggard
attempted to withdraw her plea after the trial, claiming
Franklin and Annette married in 1989, after Franklin that she was innocent of the tax charges; her appeal accumulated his deficiency. The government charged proceeded separately and was rejected by a panel of this Annette with assisting Franklin in hiding assets from the court. At issue today are the appeals of the other three IRS. In August 1992, while the Offer in Compromise defendants. was pending, Annette decided to sell the home she had owned before her marriage to Franklin and buy a new n1 Barger was acquitted on one of the counts of making

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false statements.
Although the deficiency procedures are separate from
the criminal liability provisions, we are persuaded[6] that the definition of "tax liability" excluding penalties and interest extends to § 7201. We decline to assume a broader meaning for a "tax deficiency" under § 7201
II
than under the deficiency proceedings provision,
especially when § 7201 attaches criminal liability to the
All three defendants raise several legal challenges to debt owed. The Guidelines merely confirm our the convictions. First, they claim that the convictions are conclusion. improper because Franklin had no underlying tax deficiency. Franklin contends that he owed only interest [*237] Franklin fails to demonstrate, however, that he and penalties and could not be prosecuted for evasion if owed no tax during the alleged period of evasion.
no tax was owed.
Although his total payments eventually exceeded his tax
owed, the IRS collected a significant portion of the paid
The Supreme Court has[5] held that the elements of amounts through seizure. The IRS applied the seized Internal Revenue Code ("I.R.C.") § 7201, the provision amounts according to its normal procedure, which is first criminalizing the evasion of taxes, include the existence to extinguish the taxpayer's total tax, interest and of a "tax deficiency." n2 While § 7201 does not describe penalties for the earliest year owed. n6 Franklin cites no "tax deficiency," it is defined elsewhere in the IRC as the authority for the proposition that his requests as to how amount by which the tax exceeds the tax reported on the the IRS should apply his voluntary payments must also return plus the amounts previously assessed as a tax have been honored as to the seized amounts. n7 Without deficiency. n3 The IRC specifically excludes interest having all of the seized amounts first applied to his tax from being treated as tax for purposes of deficiency liability, Franklin continued to have a tax deficiency. n8 procedures. n4 The Sentencing Guidelines also exclude interest and penalties in assessing the penalty for tax n6 See Rev. Ruling 73-305, 1973-2 C.B. 43, amended by
evasion. n5
Rev. Ruling 79-284, 1979-2 C.B. 83.

n2 See Sansone v. United States, 380 U.S. 343, 351, 13
L. Ed. 2d 882, 85 S. Ct. 1004 (1965).
[**7]
n7 We are unpersuaded that Franklin had such a right under the Due Process Clause of the Constitution.

n3 See I.R.C. § 6211.

n8 Even if successful, this argument would affect only the I.R.C. § 7201 conviction and not the convictions
n4 See § 6601(e).
based on conspiracy under 18 U.S.C. § 381. The latter
provision prohibits the defrauding of the United States, not just the evasion of taxes.

n5 See U.S. SENTENCING GUIDELINES MANUAL
§ 2T1.1 & App. Notes; United States v. Clements, 73
F.3d 1330, 1339 (5th Cir. 1996).
The defendants also argue that the indictments under
18 U.S.C. § 371 impermissibly varied from the proof presented at trial. Section 371 has two prongs: it prohibits a conspiracy to commit an offense against the

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United States, or one to defraud the United States. The argument regarding Haggard's testimony is foreclosed by first prong refers to specific offenses criminalized United States v. Webster, 162 F.3d 308 (5th Cir. 1998). elsewhere in the federal code; the second stands independently. The government charged the defendants with conspiracy to defraud. Franklin argues that the defrauding indictment was impermissible because the alleged conduct could have been charged as a specific III offense: concealing income or assets from the IRS.
Franklin and Annette each challenge the sufficiency of
Franklin relies on United States v. Minarik, which held the evidence to support the jury verdicts. To establish a that the government [8]must proceed under the more conspiracy under 18 U.S.C. § 371, the government must specific clause of § 371 if it applies. n9 Minarik, prove (1) an agreement (2) to commit a crime and (3) an however, has since been limited: it now applies only overt act committed by one of the conspirators in [*238] when the taxpayer's duties are technical, the violation furtherance of the agreement. n12 A conviction under was too isolated to comprise a "conspiracy to defraud," I.R.C. § 7201 requires[10] a showing of willfulness, a and the defendant receives no specific notice of the tax deficiency, and an affirmative act constituting crimes charged. n10 Here, the conduct was not a mere evasion. n13 technical violation of the tax code, the allegations went beyond a single incident of violation, and the indictment, n12 See United States v. Gray, 96 F.3d 769, 772-73 (5th which exhaustively set forth the government's Cir. 1996). allegations, gave specific notice of the crimes charged.

n9 875 F.2d 1186, 1193-94 (6th Cir. 1989).
n13 See Sansone, 380 U.S. at 351.

n10 See United States v. Khalife, 106 F.3d 1300, 1304-
06 (6th Cir. 1997). Other courts also follow this rule. See
United States v. Goulding, 26 F.3d 656, 663 (7th Cir. There was sufficient evidence to support Franklin's 1994); United States v. Notch, 939 F.2d 895, 901 (10th and Annette's convictions. Key evidence included
Cir. 1991).
Haggard's testimony regarding the delivery of the cash.
While Annette's purchase of the home could have been bona fide, even if she accepted money from Franklin for the house, the manner of payment, including the bag of cash and Franklin's comments, gave rise to an inference
Finally, the three defendants seek a motion for new of illegal activity. In addition, Annette's claims that she trial based on Haggard's post-trial attempts to wanted the house to be hers alone are contradicted by withdraw[9] her plea. n11 Haggard told several Franklin's funding of the down payment. The jury could individuals that she believed she was not guilty of reasonably have inferred from this account that Franklin conspiracy to defraud the IRS but had been pressured and Annette conspired to hide assets from the IRS, and into pleading to avoid a more severe penalty regarding that Franklin thus attempted to evade the payment of his the Medicaid fraud. Because Haggard has never denied tax deficiency. the truthfulness of her testimony regarding the three other defendants, however, her assertion of her own IV innocence is immaterial to the other three convictions. The denial of a new trial was not an abuse of discretion. Barger challenges the sufficiency of the evidence
against[11] him, as well as his sentence. He argues n11 The defendants concede that their Singleton that there is insufficient evidence of his involvement in

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the conspiracy because his assistance with the purchase not profit from[*13] the crime. n15 In Koon v. United of the home was innocent. Barger further argues that States, the Supreme Court held that departure factors there was insufficient evidence regarding his false should normally not be ruled out on a categorical basis statement conviction. To establish a violation of 18 and that courts may depart if the case is outside the U.S.C. § 1001(a)(3), the government must show a Guidelines' heartland. n16 [239] After the Seventh statement that is false and material and made knowingly Circuit categorically denied departures based on
and willfully. n14
discrepancies among co-defendants' sentences, the
Supreme Court remanded the case for reconsideration in n14 See United States v. Puente, 982 F.2d 156, 158 (5th light of Koon. n17 Cir. 1993). n15 Franklin will serve his time in a halfway house.
With an 18-month sentence, Barger is ineligible for the halfway program.

We find support for both counts of Barger's conviction.
On the amended Offer in Compromise form, he omitted
any reference to Franklin's possible ownership interest in
the home and stated that the Wrights were renting their n16 See 518 U.S. 81, 116 S. Ct. 2035, 2051, 135 L. Ed. residence because they could not make house payments. 2d 392 (1996). Barger's involvement with the home purchase was sufficient to infer that he knew that some of the down payment might be Franklin's funds, thus requiring him to list the home as potential community property,[12] and that he knew that the Wrights were able to make n17 See United States v. Meza, 127 F.3d 545, 547-48 payments on a house. His involvement also provides (7th Cir. 1997). sufficient evidence to support the conspiracy conviction. His reproach to Haggard after she had deposited the money indicated his intimate knowledge with the details of the transaction.
This court may review a district court's refusal to grant
Barger raises two challenges to his sentence. He argues a downward departure only if the district court that the district court clearly erred in applying a two- mistakenly concluded that the Guidelines did not permit level enhancement for the use of a special skill and that the departure. n18 From our review of the sentencing it erred in failing to recognize that it could shorten transcript, it is evident that the district court was troubled Barger's sentence based on sentencing disparities. by the discrepancy in sentences between Franklin[14]
and Barger. The district court concluded, "I still don't
The district court found that Barger's special skills as a like how [Barger] can be assessed more time. And I'm Certified Public Accountant and tax attorney were already giving him time for the attorney role, but I find essential to the evasion scheme. While Barger's no - I don't have a basis here to depart, though." contribution to the scheme was not particularly Although this candid comment was doubtless not sophisticated, part of it did involve his preparation of the intended to be a full explication of the court's rationale, Offer in Compromise and other legal documents. the court appears to have believed that the discrepancy Because this use of special skills did further the could not be a basis for a downward departure. We conspiracy, it was not clearly erroneous for the district remand to the district court for re-sentencing. court to apply the enhancement.
n18 See United States v. Palmer, 122 F.3d 215, 222 (5th Barger argues for a downward departure based on the Cir. 1997). sentencing disparity between Franklin, the taxpayer, and Barger, who played a much more peripheral role and did

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applying the special skill [**15] enhancement to Barger's sentence. As it appears that the district court
We find no legal grounds warranting reversal of any of believed that the Sentencing Guidelines did not permit a the convictions: Franklin had a tax deficiency for downward departure based on discrepancies in sentences purposes of I.R.C. § 7201; the indictment was proper; among co-defendants, we REMAND for the re- and Haggard's recantation is not material to any of the sentencing of Barger. defendants' convictions. There was sufficient evidence to convict the Wrights and Barger of conspiracy to defraud, AFFIRMED AS TO FRANKLIN WRIGHT AND Franklin of evasion, and Barger of making false ANNETTE WRIGHT; REMANDED FOR THE RE- statements. The district court did not clearly err in SENTENCING OF ROBERT BARGER.