In United States v. Renner, 648 F.3d 680 (8th Cir. 2011), the Eighth Circuit upheld the district court’s decision to grant a downward variance in a tax evasion case based on the fact that the defendant had consulted with tax professionals, even though the jury did not believe the defendant met all the requirements for a good-faith defense.
Steven Mark Renner (“Renner”) was convicted of four counts of tax evasion, in violation of 26 U.S.C. § 7201. At sentencing, the district court found an offense level of 22 based on a tax loss of approximately $1.13 million. After the court adjusted Renner’s Criminal History Category to I, the advisory Sentencing Guidelines (“Guidelines”) range was 41 to 51 months. The court granted Renner a downward variance and sentenced him to 18 months’ imprisonment.
On appeal, the Eighth Circuit noted that, in the absence of significant procedural error, it was required to review the sentence for substantive reasonableness under an abuse-of-discretion standard. Here, the government argued that the district court abused its discretion and imposed an unreasonably lenient sentence by granting the downward variance based on a fact – i.e., good-faith reliance upon expert advice – that had been considered and rejected by the jury. The appellate court acknowledged that the district court based its variance, in part, on the fact that Renner had consulted with a tax attorney and accountant before filing his tax returns, a fact that the district court believed distinguished Renner from other tax evaders. The appellate court reasoned, however, that the sentence was not based on facts that contravened the jury’s verdict, because the sentencing transcript indicated that the district court accepted the jury’s rejection of the good-faith defense. The appellate court concluded that the district court was entitled to consider that Renner had consulted tax professionals, even if the jury did not believe that Renner met all of the requirements for a good-faith defense.
Holding that the district court did not commit procedural error and that the sentence was substantively reasonable, the Eighth Circuit affirmed the judgment of the district court.