On February 21, 2012, the US Supreme Court issued an opinion in Kawashima v. Holder. The key litigated issue was whether a conviction for filing, or aiding in filing, a false tax return, was an "aggravated felony" under the Immigration and Nationality Act (INA).

Akio and Fusako Kawashima are lawful permanent residents of the US. In 1997 Mr. Kawashima pled guilty to willfully making and subscribing a false tax return in violation of 26 USC § 7206(1), and Mrs. Kawashima pled guilty to aiding and assisting the preparation of a false tax return in violation of 26 USC § 7206(2). The legacy Immigration and Naturalization Service, now known as the US Citizenship and Immigration Services (USCIS), then sought to deport the Kawashimas from the US because the INA allows deportation of aliens convicted of an aggravated felony. Specifically, the USCIS charged the Kawashimas with being deportable for committing aggravated felonies under Section 1101(a)(43)(M) of the INA.

Under Clause (i) of Section 1101(a)(43)(M) ("Clause (i)"), aggravated felonies include crimes involving fraud or deceit which result in a loss to the victim exceeding $10,000. Under Clause (ii) of Section 1101(a)(43)(M) ("Clause (ii)"), aggravated felonies include tax evasion crimes that result in a loss of government revenue exceeding $10,000.

The Kawashimas unsuccessfully argued at their deportation hearing that convictions for filing false tax returns are not aggravated felonies under Section 1101(a)(43)(M). The Board of Immigration Appeals upheld this decision, and the Kawashimas appealed to the US Court of Appeals for the Ninth Circuit, which held that they violated Clause (i).

The Kawashimas petitioned the US Supreme Court for a writ of certiorari to determine whether their crimes are aggravated felonies warranting deportation.

In a six to three decision, the Supreme Court affirmed the decision of the Ninth Circuit.

The Kawashimas argued that:

On the first issue, the Court explained that Clause (i) refers to crimes that involve "fraud or deceit," even if those two terms are not formal elements of the crimes in question. The Kawashimas' crimes under 26 USC § 7206 involved fraudulent and deceitful conduct because:

These crimes involve "fraud or deceit" within the meaning of Clause (i) because they necessarily entail deceitful conduct.

On the second issue, the Court rejected the Kawashimas' claim that Clause (i) does not address tax crimes. The Court reasoned that Clause (i) captures a broad group of crimes involving fraud or deceit, and Congress did not intend to remove tax crimes from that group merely because a specific tax crime is included in Clause (ii).

Furthermore, as the form of tax evasion identified in Clause (ii) does not necessarily involve fraud or deceit, Congress probably included Clause (ii) to eliminate any doubt that tax evasion is a qualified felony. Therefore, Clause (ii) is not surplus language.

Finally, even though crimes involving taxation and crimes involving fraud and deceit are treated differently in the United States Sentencing Guidelines, the Court did not apply this dichotomy to Clauses (i) and (ii) because Clause (ii) did not include all tax crimes, only tax evasion.

As a result of this analysis, the Court concluded that tax crimes that result in revenue loss to the government in excess of $10,000 are "aggravated felonies" under Clause (i).

Resident aliens who commit tax crimes, including the filing of false tax returns, that result in revenue loss to the government greater than $10,000 are subject to deportation because such crimes are "aggravated felonies" under the INA.

For resources on legal immigration, see PLC Cross-border and Immigration.