The Internal Revenue Service typically does not take kindly when one of its employees is convicted of tax fraud. This recent case is no exception. (Senyszyn v. Department of the Treasury, CAFC No. 2011-3226 (nonprecedential), 2/10/12)
Mr. S. worked for IRS as a revenue agent in the large- and mid-sized operation division where he examined more complex tax returns of large businesses and organizations. Among other things, he looked for indications of fraud and reported it to the appropriate IRS office.
A federal grand jury issued a 7-count indictment charging Mr. Senyszyn with “various tax and financial offenses.” (Opinion p. 2)
Mr. S., represented by his attorney, worked out a plea agreement. As a result Mr. S. pled guilty to four counts including filing false tax returns as an IRS agent and tax evasion. During the plea hearing, the Assistant US Attorney recited specifics of the offenses. These specifics included that Mr. S. “knowingly made a false representation on a tax return,” and that Mr. S. was accused of “knowingly and intentionally filing tax returns that failed to report substantial amounts of taxable income.” (p. 3) At the plea hearing, Mr. S. admitted the truth of the allegations as recited by the AUSA. The court accepted his plea and found Mr. S guilty. (p. 3)
Before sentencing, Mr. S. attempted to withdraw his guilty plea on the tax evasion charge, claiming he had not fully understood and that he was actually innocent with regard to that particular charge. The court denied his request to withdraw the plea on that particular count and sentenced Senyszyn to 34 months prison, 5 years probation and a $12,500 fine. (p. 3)
Mr. S. did not appeal his sentence or conviction but he did appeal the denial of his motion to withdraw the guilty plea with regard to the tax evasion count. That appeal was ultimately unsuccessful. (p. 3)
Not long after his guilty plea, the IRS proposed to remove Mr. S. based on that plea. In particular, the notice pointed out that the prohibition against filing false tax returns as an IRS agent—which Mr. S. had pled guilty to doing—requires the agency to remove an employee for violation (26 USC 7214(a)(7)). Citing Mr. S’s duties with regard to detecting fraud in complex tax returns, the agency concluded that there was a nexus between his criminal pleas and his job duties. (p. 4)
When the agency made the final removal decision, Mr. S. appealed to the Merit Systems Protection Board. The Administrative Judge weighed the admissions made by Mr. S. during his criminal plea and found that he was estopped from challenging the charges of misconduct based on the plea. The AJ found removal was the appropriate penalty and that had IRS done anything less “it would lose all credibility with the tax paying public.” (p. 5)
Mr. S. took his case to the appeals court where he has found no sympathy. Among other things, he argued that it was wrong of the MSPB to apply collateral estoppel to the facts of his case. Not so, ruled the court, holding that “the doctrine saves an adjudicating body from wasting resources on unnecessary litigation of an issue when that issue was decided in an earlier proceeding.” (p. 6) The court goes on to point out that when he pled guilty to the criminal charges, the trial court explained that the law required that he be removed “as a consequence of the guilty plea….” and when asked “whether he understood that consequence…” Mr. S. said he did. (pp. 8-9)
Finding Mr. Senyszyn’s other arguments “unpersuasive,” the court has now affirmed his removal.