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Wartime Suspension of Limitations Act (“WSLA”)

Posted on Apr. 4, 2023

Today’s post is from Jack Townsend. Jack is a practitioner whose blogs on tax procedure inspired us to start Procedurally Taxing back in 2013. In addition to working with me as the principal contributing author for the chapter in Saltzman and Book on criminal tax penalties, Jack writes widely on issues of tax procedure and tax crimes. In this post focusing on tax crimes, Jack alerts practitioners to the potential application of the Wartime Statute of Limitations Act. 18 USC 3287, the text of which applies to federal crimes “involving fraud or attempted fraud against the United States.” That text would clearly include tax evasion and conspiracy to commit tax evasion. It might also apply to the defraud conspiracy. Jack has offered this post on his blog, and we are reposting it here. Les

I have written before about the Wartime Suspension of Limitations Act (“WSLA”), 18 USC 3287, here, that suspends certain criminal statutes of limitations while “the United States is at war or Congress has enacted a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544(b)).” The statutes of limitations are suspended in relevant part for crimes “(1) involving fraud or attempted fraud against the United States or any agency thereof in any manner, whether by conspiracy or not.” My blogs on this subject discussing the potential application of this WSLA suspension for tax crimes are collected by relevance here and reverse chronological order here. In those blogs, I have noted that the WSLA’s literal application to certain tax crimes involving “fraud” would mean that the WSLA could have a pervasive effect permitting the charging of tax crimes far before the normal suspensions often encountered for tax crimes. See also, Michael Saltzman & Leslie Book, IRS Practice and Procedure, ¶ 12.05[9][a][iii] Suspension and tolling (discussing normal suspensions and discussing § 3287 at n. 933); and John A. Townsend, Federal Tax Procedure (2022 Practitioner Ed.) 317-387 (August 3, 2022). Available at SSRN:

1. The blog supplements those discussions until the next revisions of those respective books (note that I am the principal author of the Saltzman and Book chapter). Since I have already brought the discussion up to date in the 2023 working draft for the Federal Tax Procedure Book (2023 Practitioner Ed.), I will just offer the following from the 2023 draft (which should be finalized by early August 2023). The last sentence in the carryover paragraph will be changed to and a footnote added as follows (note that I link the blog entries and key case entries in this blog but will not link them in the book):

This provision [WSLA] might apply to the Iraqi and Afghanistan engagements, but its application to tax crimes with elements of fraud or attempted fraud is notable only because of the many cases in which it could have been applied but is rarely, very rarely, asserted where statute of limitations defenses are asserted. fn

   fn E.g., Appeals Arguments Over Whether Government Brought Evasion and Tax Conspiracy Charges Within Statute of Limitations With No Mention of WSLA (Federal Tax Crimes Blog 9/19/21), here. Further, the WSLA is not even mentioned in the DOJ Criminal Tax Manual. SEE DOJ CTM 7.00 Statute of Limitations (viewed 3/31/23), here. Apparently because of its rarity of use in tax crimes, the ABA has recommended ”Guidance making it clear that the Service’s Criminal Investigations division will not recommend prosecution for charges that otherwise would be untimely except through the operation of the Wartime Suspension Limitations Act,” I discuss and link this recommendation in ABA Tax Section Recommendation to IRS for Priority Guidance to Disavow Application of WSLA and Further Comments Re Same (Federal Tax Crimes Blog 7/23/21), here; and  More on the Wartime Suspension of Limitations Act (WSLA) (Federal Tax Crimes Blog 2/20/21), here. Nevertheless, the WSLA has been applied in some tax offense and defraud conspiracies. See in addition to cases in the cited blogs, e.g., Daugerdas v. United States, 2021 WL 603068 (S.D. N.Y. 2/16/21), here (noting the Afghanistan and Iraq resolutions and stating: “Accordingly, beginning in September 2001, the WLSA tolled the statute of limitations on the conspiracy to defraud the United States [for tax objects of conspiracy] and mail fraud charges. See Wells Fargo Bank, 972 F. Supp. 2d 593 at 613–14 (holding that the WSLA suspended the ten-year statute of limitations for certain fraud claims arising prior to June 25, 2002 because hostilities had not ended).)”; and United States v. Wellington, 2022 WL 3345759 (D. N.M. 2022), here (Defendant charged “violation of 18 U.S.C. § 371, Conspiracy to Commit Tax Evasion and Defraud the United States;” held WSLA applied based on holding in United States v. Nishiie, 996 F.3d 1013, 1028 (9th Cir. 2021), cert. denied, 142 S. Ct. 2653 (U.S. Apr. 25, 2022) and also citing Wells Fargo.)

Although the Government rarely invokes the WSLA, I presume it did in Daugerdas and know it did in Wellington. For example, see U.S. Response in Wellington asserting WSLA (at pp. 2-3), here:

2. The key to those potential applications is “war or Congress has enacted a specific authorization for the use of the Armed Forces.” The United States is not now at war, but there are some specific authorizations for the use of military force. As news reports have recently discussed, the Senate has voted to revoke the AUMF for the Iraqi War. See Barbara Sprunt & Susan Davis, Senate votes to repeal Iraq War authorization (NPR 3/29/23), here (discussing the Senate action and noting that the House must now act). Just focusing on that Iraq War AUMF, if the revocation is enacted (must pass House), it will cause the WSLA 5-year statute on that AUMF to start. But there was a separate AUMF for the 9/11/01 attack (Afghanistan) and even earlier AUMFs that have not been repealed. See P.L. 107-40, 115 STAT. 224 9/18/01, here; and see the Caveat in BA Tax Section Recommendation to IRS for Priority Guidance to Disavow Application of WSLA and Further Comments Re Same (Federal Tax Crimes Blog 7/23/21), here, that are still effective and could potentially still require suspension of the criminal statutes of limitations even if the Iraq AUMF is revoked.

3. I have stated my concern that § 371’s defraud conspiracy will not support application of the WSLA because the term “defraud” in 18 USC § 371 (defining offense and defraud conspiracies) is broader than the term “fraud” as generally used in criminal or related statutes such as § 3287. See More on the Wartime Suspension of Limitations Act (WSLA) (2/20/21), here, ¶¶ 3 and 4. In both Daugerdas and Wellington the courts thought it did to apply the WSLA to the defraud conspiracy. I think that was simply a gut holding assuming that “fraud” in § 3287 and “defraud” in § 371 are coextensive; the two terms are not coextensive because of the atypical and broader interpretation the Court put on § 371’s use of “defraud” in Hammerschmidt v. United States, 265 U.S. 182 (1924).

a: Upon reflection, I am not sure that the Hammerschmidt holding that the § 371 “defraud” conspiracy is boader than “fraud” as used in the WSLA will foreclose using a defraud conspiracy to invoke the WSLA. Conceivably, the “defraud” conspiracy as interpreted in Hammerschmidt includes two types of objects: (i) a defraud conspiracy with an object to commit fraud; and (ii) a defraud conspiracy with an object to defraud without an object to commit fraud. A special interrogatory or a question on the verdict form might answer which of the two types were used. Cf. United States v. Pursley, 22 F.4th 586, 591-593 (5th Cir. 1/13/22). A special interrogatory could be used to determine ensure that the jury determines which type of object is involved.

b. Use of special interrogatories in criminal cases have received much judicial and scholarly discussion, the concern being that special interrogatories can “lead” the jury to conviction and thus are anti-defendant. They are used, nevertheless for specialized needs such as the statute of limitations which is a jury issue if the defense of the statute of limitations is in issue in the case and a defendant requests an appropriate submission of the statute of limitations issue to the jury. I won’t get into the nuances of the concerns about special interrogatories, but just cite generally a recent article: But see e..g. Charles Eric Hintz, Fair Questions: A Call and Proposal for Using General Verdicts with Special Interrogatories to Prevent Biased and Unjust Convictions, 4 U.C. Davis L. Rev. Online 43 (2021), here; and Kate H. Nepveu, Beyond “Guilty” or “Not Guilty”: Giving Special Verdicts in Criminal Jury Trials, 21 Yale L. & Pol’y Rev. 263 (2003), here.

c. I offer an example of how a special interrogatory may be framed in a defraud conspiracy case potentially involving the WSLA and the distinction between defraud and fraud. The judge would give the jury standard jury instructions about the defraud conspiracy (based on the Hammerchmidt broad reading of defraud and explaining the that defraud conspiracy includes both actual fraud or the broader defraud definition of Hammerschmidt (this type of iinstruction would be required to properly instruct the jury that it could convict for defraud which does not require fraud). The judge would submit to the jury a general jury verdict (Guilty/Not Guilty) form. The judge contemporaneously would submit a sealed envelope with a separate form to be opened and completed only if and after the jury rendered a unanimous general Guilty verdict for the defraud conspiracy defined per Hammerschmidt. determines unanimously Guilt for the defraud conspiracy. The form inside the sealed envelope would ask whether the jury can find beyond a reasonable doubt that the defraud conspiracy for which the jury found the defendant guilty included at least one overt act with the intent to commit actual fraud (properly defined) after the starting date for the applicable statute of limitations (based on the WSLA).

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