Disposition of tax cases through pleas. The Government disposes of an overwhelming percentage of all criminal tax cases by entry of a plea of guilty. The Tax Division authorizes the United States Attorney’s Office to accept a plea of guilty to the major count(s) of the indictment or information, without first obtaining Tax Division approval. The United States Attorney’s Office also may seek a plea to more than the major count(s) if it thinks the Government should accept such a plea. In most cases, the Tax Division identifies the major count(s) that have been authorized for prosecution in the Tax Division's prosecution memorandum or in its case transmittal letter.

Major Count Designations. When it designates the major count, the Tax Division primarily considers the following:

1. 1. Felony counts have priority over misdemeanor counts.

2. 2. Tax evasion counts (26 U.S.C. § 7201) have priority over all other substantive tax counts.

3. 3. The count charged in the indictment or information that carries the longest prison sentence is the major count.

4. 4. As between counts under the same statute, the count involving the greatest financial detriment to the United States (i.e., the greatest additional tax due and owing) is the major count.

5. 5. As between counts, if the financial detriment does not differ significantly, the relative flagrancy of the offense is determinative.

The United States Attorney’s Office may request the Tax Division to consider other factors not included above.

Other Factors in Designating Major Count. The Tax Division may need to designate more than a single count as a major count when the computed guideline sentencing range exceeds the maximum sentence that the court can impose under a single count.
If the Government charges both tax and non-tax counts, the Tax Division's selection of which tax count to designate as the major count may not have any effect on the applicable guideline range. This lack of effect occurs when the offense level of the group or groups of non-tax offenses is nine (9) or more levels higher than the offense level of the group containing the tax charges. See U.S.S.G. §§ 3D1.2 and 3D1.4. In such a case, if its designation will not affect the applicable guideline range, the Tax Division may designate a less serious tax offense in the group as the major count.

If all of the tax charges are not part of the same course of conduct or common scheme or plan, the Department's plea policy for Sentencing Guidelines cases may require that the Tax Division either designate one count from each group of unrelated counts as major counts or designate one count from one of the groups of unrelated counts as the major count and have the prosecutor obtain a stipulation from the defendant establishing the commission of the offenses in the other group. See U.S.S.G. § 1B1.2(c). The Tax Division engages in this process to determine the combined offense level for the case under U.S.S.G. § 3D1.4.

No Reduction from Felony to Misdemeanor. When the major count of a tax indictment charges a felony offense, the United States Attorney’s Office may not accept a plea to a lesser-included offense nor substitute a misdemeanor offense for the felony offense charged. Absent unusual circumstances, the Tax Division will not approve the reduction of a charge from a felony to a misdemeanor merely to secure a plea.

Post-Plea Dismissal of Remaining Counts. After the court accepts a defendant's guilty plea to one or more major counts and imposes a sentence, the United States Attorney’s Office may move to dismiss the remaining counts of the indictment or information.

Pleas Taken in Advance of Indictment or Information. A defendant who has not yet been charged sometimes indicates an intent to enter a guilty plea to the major count(s). If this occurs, the United States Attorney’s Office, when presenting the factual basis for the prosecution, in compliance with Federal Rule of Criminal Procedure 11, must include the full extent of the defendant's tax violations on all of the counts in order to demonstrate the defendant's actual criminal intent. In most cases, all of the tax charges are related. Consequently, even if the defendant pleads to only a single count, the court should take into account the tax loss from all of the years when it determines the tax loss for the offense to which the defendant pleads.

[updated June 2020] [cited in JM 6-2.000]