May 2010 Meeting of the American Bar Association’s Civil and Criminal Tax Penalties Committee

The Sentencing Guidelines recognize that when indirect methods of proof are used, the amount of tax loss may be uncertain. While the sentencing court is required to make a reasonable estimate based on available facts – in making a reasonable estimate of the total amount of tax loss where multiple instances of fraud are alleged, to what extent may the sentencing court extrapolate the average amount of loss from a sample of audited returns and apply that average to the remaining returns for which the amount of loss is unknown? What factors are most important? Is there a sentencing silver bullet lurking in the closet.