Monday, October 1, 2007

Back Taxes IRC 7203 finding of tax fraud

A police officer was properly convicted for willfully filing false tax returns because he knowingly failed to report the cash payments received from his part-time employment as a security officer at a strip club. His claim that his failure to report his income was a mistake was insufficient to overcome the government's evidence presented at trial to establish his willful intent to evade taxes. Further, there was no prosecutorial misconduct at trial and the court did not abuse its discretion when it precluded the individual from raising an improper "golden rule" appeal to the jury.


United States of America, Plaintiff-Appellee v. Frank Roman, Defendant-Appellant, U.S. Court of Appeals, 7th Circuit; 06-3450, June 28, 2007.Affirming an unreported DC Ill. decision.[ Code Sec. 7203]Crimes: Conviction: Filing false tax returns: Evidence: Willful failure: Prosecutorial misconduct: Abuse of discretion. --
Before: Ripple, Wood and Evans, Circuit Judges.EVANS, Circuit Judge: Frank Roman was a full-time police officer who had a part-time job working a security detail at a "gentlemen's club" (or, more accurately, a strip joint) called "Heavenly Bodies" in Elk Grove, Illinois. Heavenly Bodies paid Roman in cash --some $37,000 in 1998 and 1999. And like a lot of "cash" that changes hands in the underground economy, Heavenly Bodies' payments to Roman did not find their way onto his federal income tax returns for those years. This state of affairs led to his indictment on two counts of filing a false tax return.Eventually, a jury convicted Roman on both counts, and the district judge, Matthew F. Kennelly, sentenced him to a term of three years probation. Roman appeals, arguing that the government failed to prove beyond a reasonable doubt that he willfully filed false tax returns and that the government committed prosecutorial misconduct when it elicited from him, during cross-examination, that as a police officer he took an oath to uphold and enforce the law. Finally, Roman contends that Judge Kennelly abused his discretion by precluding an argument based on what he characterizes as a "golden rule" appeal. Finding insufficient merit to any of these arguments, we affirm Roman's conviction.The "facts" are undisputed. Roman received cash in payment for his work at Heavenly Bodies, but he didn't report any of it as income on his tax returns. During the trial, while testifying in his own behalf, Roman explained that he didn't think he was required to report the cash he received at Heavenly Bodies as income on his returns. His "defense," if one can call it that, is that he made a "mistake" and did not act willfully to violate the law.As we have said many times, a defendant who challenges his conviction based upon an alleged insufficiency of evidence "bears a heavy burden." United States v. Gonzalez, 933 F.2d 417, 436 (7th Cir. 1991). A jury verdict must be upheld unless the record contains no evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt. See United States v. Cunningham, 108 F.3d 120, 121 (7th Cir. 1997).Roman falls miles short of overcoming his "nearly insurmountable hurdle" of establishing that the evidence against him was insufficient. See United States v. Fassnacht, 332 F.3d 440, 447 (7th Cir. 2003). The jury obviously rejected Roman's claim that failing to report his income from Heavenly Bodies was a "mistake." He knew it was "income." He simply had no conceivable defense to the charge. So we move to the final two claims Roman raises on this appeal.During opening statement, the AUSA prosecuting the case for the government remarked that Roman, as a police officer, violated his oath to uphold the law by failing to truthfully report all of his earned income on his tax returns:
Now, as a police officer, the defendant took an oath to uphold and enforce the law. As a taxpayer, the defendant took an oath to truthfully report all of his income. The defendant broke his oath, and the defendant broke the law, and that is what brings us here today.

....

The defendant willfully filed a false tax return, two, one in 1998 and one in 1999. The defendant did not report his cash income. He broke his oath.
No objection was offered to these statements.Subsequently, on cross-examination, the AUSA again asked about Roman's understanding of oaths:
AUSA: You took an oath at the beginning of today to tell the truth, didn't you?

Defendant: Yes, I did.

AUSA: And you understand your duty to tell the truth, don't you?

Defendant: Yes, ma'am.

AUSA: You took an oath as a police officer, didn't you?

Defendant Yes, I did.

AUSA: That was an oath to uphold the law, right?

Defendant: Yes, ma'am.

AUSA: That means all of the laws, right, state, and federal, is that correct?

Defendant: Yes, ma'am.

AUSA: And that includes the tax laws, correct?
At this point, Judge Kennelly requested a sidebar, during which the following exchange ensued:
Judge: You anticipated something I was going to raise before closing arguments, and I recognize there has not been an objection, but plain error rule being what it is, one of the things that was said in opening was essentially a suggestion that, as a police officer, he may have had some higher duty than other people. And that resonated a little bit because of a discussion that had come up I think with one of the jurors back in chambers. I don't think it is a proper argument, and I think that's where this is going. So this part finishes right now.

AUSA: I am sorry. I was trying to get to truthtelling.

Judge: All right.
Nothing more was said on the point until Roman filed a post-trial motion for judgment of acquittal or new trial, arguing that the AUSA made improper remarks in referring to the fact that, as a police officer, Roman took an oath to uphold the law. Judge Kennelly rejected the argument, explaining:
At sidebar, the Court advised the prosecutor that we did not believe her last inquiry was proper because it suggested that Mr. Roman somehow had a higher duty than other citizens to obey the tax laws. Government counsel advised that was not her intent. The Court had (and has) no reason to doubt her veracity. We advised the government, however, that we would not permit further inquiry along these lines. Following the sidebar, the Court struck the law question and answer --the one concerning whether Mr. Roman's oath as a police officer to uphold the law included the tax laws --and directed the jury to disregard that question and answer. The government made no reference to the point thereafter, including during closing and rebuttal argument.
We think Judge Kennelly could not have perceived or handled the matter any better than he did. It was a model of how an unobjected to, but arguably erroneous, (1) comment made during opening statement, and (2) questions asked during cross-examination, should be handled. We perceive no error on this record even if the areas of inquiry were improper, a point we need not pursue because at best it could never amount to anything above the category of harmless.Which brings us to the final issue Roman raises on this appeal. Before the trial kicked off, the government filed a motion in limine to preclude Roman from making a socalled "Golden Rule" appeal, i.e., that the jury should place itself in his shoes. In support of its motion, the government relied on United States v. Teslim, 869 F.2d 316, 328 (7th Cir. 1989), for the proposition that such arguments are improper. Judge Kennelly agreed and granted the government's motion.Teslim ironically involved an improper "Golden Rule" argument by the government: "[I]f it happened to you and you had nothing to hide --" Here, Roman was rebuffed when he sought to argue that the jurors should put themselves in his shoes and consider "There but for the grace of God go I."This proposed argument was correctly foreclosed by Judge Kennelly. As we explained in Teslim, a "Golden Rule" appeal in which the jury is asked to put itself in the defendant's position "is universally recognized as improper because it encourages the jury to depart from the neutrality and to decide the case on the basis of personal interest and bias rather than on the evidence." 869 F.2d at 328.In his brief, Roman writes:
In a tax evasion case such as this, it is a logical extension to ask the jury to think about evil versus stupid, to speculate what they would do, were they to be placed in the subjective shoes of the defendant. This is precisely what "there, but for the grace of God" requests. No more no less than the objective discernment of evil as viewed from the defendant's subjective eyes. "God" in this context being a surrogate for the all knowing introspective "See," the diviner of the secrets in men and women's heart.Whatever can be said about this contention, one thing is certain: it's not persuasive. We see no reason why the rule against arguing about the Golden Rule should be reconsidered in this case.For these reasons, the judgment of the district court is AFFIRMED


Alvin S. Brown, Esq.
Tax Attorney
703 425-1400
http://www.irstaxattorney.com/

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1 comment:

Alvin Brown & Associates said...

Willful Failure to File Return, Supply Information, or Pay Tax: Willful evasion of tax

Before a defendant can be found guilty of a felony for willful attempt to evade or defeat the income tax there must be proof other than that necessary to make out the misdemeanors for failure to file returns, submit information, or pay tax. Use of the word "attempt" in the Code indicates the need for some willful commission in addition to the willful omissions that make up the misdemeanors.

Spies, 43-1 USTC ¶9243, 317 US 492.

J.H. Jones, CA-5, 47-2 USTC ¶9402, 164 F2d 398.

G.L. Smith, CA-3, 53-2 USTC ¶9538, 206 F2d 905.

E.J. Mesheski, CA-7, 61-1 USTC ¶9233, 286 F2d 345.

A. Burrell, CA-5, 75-1 USTC ¶9152, F2d 904.

Conviction and sentence for willfully attempting to evade tax were affirmed.

Orzechowski, CA-3, 1930 CCH ¶9100, 37 F2d 713.

R. Capone, CA-7, 2 USTC ¶786, 51 F2d 609. Cert. denied, 284 US 669.

G.G. Oliver, CA-7, 1931 CCH ¶9649, 54 F2d 48. Cert. denied, 285 US 543.

Pappas, CA-10, 54-2 USTC ¶9637, 216 F2d 515.

Clayton-Kennedy, DC, 1933 CCH ¶7079, 2 FSupp 233.

J.J. Sullivan, CA-2, 38-2 USTC ¶9429, 98 F2d 79.

J.J. McCormick, CA-2, 3 USTC ¶1187, 67 F2d 867. Cert. denied, 291 US 662.

D.D. Battjes, CA-6, 49-1 USTC ¶9149, 172 F2d 1.

J.F. Keenan, CA-7, 59-1 USTC ¶9349, 267 F2d 118.

R.G. Carlisle, CA-6, 59-1 USTC ¶9462, 266 F2d 551.

S. Lefkowitz, DC, 59-1 USTC ¶9449, 173 FSupp 932.

Yarborough, CA-4, 56-1 USTC ¶9295, 230 F2d 56. Cert. denied, 351 US 969.

A.C. Willingham, CA-5, 61-1 USTC ¶9401, 289 F2d 283. Cert. denied, 368 US 828.

L.A.E. Mollet, CA-2, 61-1 USTC ¶9444, 290 F2d 273.

L.M. Bernard, CA-7, 61-1 USTC ¶9221, 287 F2d 715. Reh'g denied, on other grounds, CA-7, 61-1 USTC ¶9378.

H.L. Taylor, CA-4, 62-2 USTC ¶9590, 305 F2d 183. Cert. denied, 371 US 894.

G.E. Baldwin, CA-7, 62-2 USTC ¶9644, 307 F2d 577. Cert. denied, 371 US 947.

N. Madden, CA-4, 62-1 USTC ¶9378, 300 F2d 757.

F.W. Malone, CA-5, 62-2 USTC ¶9582, 304 F2d 878.

A.C. Cain, CA-7, 62-1 USTC ¶9226, 298 F2d 934. Cert. denied, 370 US 902.

I. Woodner, CA-2, 63-2 USTC ¶9515, 317 F2d 649. Cert. denied, 375 US 903.

M. Sherwin, CA-9, 63-2 USTC ¶9550, 320 F2d 137. Cert. denied, 375 US 964.

D.S. Fago, CA-2, 63-2 USTC ¶9576, 319 F2d 791. Cert. denied, 375 US 906.

A.M. Katz, CA-1, 63-2 USTC ¶9600, 321 F2d 7. Cert. denied, 375 US 903.

J.B. Cooper, CA-5, 63-2 USTC ¶9651, 321 F2d 274. Cert. denied, 375 US 964.

B. Mortimer, CA-7, 65-1 USTC ¶9301, 343 F2d 500. Cert. denied, 382 US 842.

J. Grandinetti, CA-3, 64-2 USTC ¶9822, 337 F2d 1010.

E.O.D. Campbell, CA-2, 65-2 USTC ¶9664, 351 F2d 336. Cert. denied, 383 US 907.

H.C. Trownsell, CA-7, 66-2 USTC ¶9661.

H. Roy, CA-9, 67-1 USTC ¶9355, 377 F2d 544. Cert. denied, 389 US 936.

C.E. Mansfield, CA-7, 67-2 USTC ¶9586, 381 F2d 961. Cert. denied, 389 US 1015.

W.P. Johnson, Jr., CA-3, 67-2 USTC ¶9750, 386 F2d 630.

J.D. McCarty, CA-10, 69-1 USTC ¶9322, 409 F2d 793. Cert. denied, 396 US 836.

E.E. Haseltine, CA-9, 70-1 USTC ¶9140, 419 F2d 579.

H.G. Browney, CA-4, 70-1 USTC ¶9154, 421 F2d 48.

W.B. Aberson, CA-2, 70-1 USTC ¶9167, 419 F2d 820. Cert. denied, 397 US 1066.

E.E. Matosky, CA-7, 70-1 USTC ¶9210, 421 F2d 410. Cert. denied, 398 US 904.

S.J. Spinelli, CA-9, 71-1 USTC ¶9434, 443 F2d 2.

A.L. Dowell, CA-10, 71-2 USTC ¶9642, 446 F2d 145. Cert. denied, 404 US 984.

A.M. Siragusa, CA-2, 71-2 USTC ¶9730, 450 F2d 592. Cert. denied, 405 US 974.

L.L. Bursten, CA-5, 72-1 USTC ¶9152, 453 F2d 605. Cert. denied, 409 US 843.

L. Potts, CA-7, 72-1 USTC ¶9371, 459 F2d 412.

A.M. Newman, CA-5, 72-2 USTC ¶9719, 468 F2d 791. Cert. denied, 411 US 905.

K. Vanderburgh, CA-9, 73-1 USTC ¶9304, 473 F2d 1313.

G. Stribling, CA-6, 73-2 USTC ¶9604.

G.O. Meriwether, CA-5, 73-2 USTC ¶9731, 486 F2d 498.

D.M. Sarvis, CA-9, 73-2 USTC ¶9787, 488 F2d 526.

L. Kalmanson, CA-5, 74-1 USTC ¶9128.

J.B. Pinner, CA-4, 74-2 USTC ¶9547, 498 F2d 1398.

J.E. Smith, CA-4, 74-2 USTC ¶9709, 502 F2d 1150.

W.A. Lisowski, CA-7, 74-2 USTC ¶9784, 504 F2d 1268.

E. Cook, CA-5, 75-1 USTC ¶9134. Aff'd, per curiam, CA-5, 77-1 USTC ¶9165, 546 F2d 82.

E.J. Barrett, CA-7, 75-1 USTC ¶9340, 505 F2d 1091.

G.B. Parr, CA-5, 75-1 USTC ¶9349, 509 F2d 1381.

N.D. Anderson, CA-4, 75-1 USTC ¶9368.

D.C. Ross, CA-5, 75-1 USTC ¶9428, 511 F2d 757. Cert. denied, 423 US 836.

N.L. Ordoneaux, CA-5, 75-2 USTC ¶9516.

M. Stern, CA-9, 75-2 USTC ¶9637, 519 F2d 521.

J.G. Martin, CA-2, 75-2 USTC ¶9699, 525 F2d 703. Cert. denied, 423 US 1035.

J.L Allen, CA-6, 75-2 USTC ¶9685, 522 F2d 1229. Cert. denied, 423 US 1072.

J.H. Fendley, CA-5, 76-1 USTC ¶9110.

C.E. Prevatt, CA-5, 76-1 USTC ¶9180, 526 F2d 400.

V. Bernabei, CA-6, 76-2 USTC ¶9648.

J.W. Venditti, CA-5, 76-2 USTC ¶9492, 533 F2d 217.

B. Daniels, CA-5, 80-1 USTC ¶9438, 617 F2d 146.

W.L. Davis, CA-6, 81-1 USTC ¶9346.

S. Dwoskin, CA-5, 81-1 USTC ¶9416, 644 F2d 418.

R. Hebel, CA-8, 82-1 USTC ¶9162, 668 F2d 995. Cert. denied, 102 SCt 2014.

L.F. Shelton, CA-7, 82-1 USTC ¶9166, 669 F2d 446.

R.C. Thetford, CA-5, 82-1 USTC ¶9393, 676 F2d 170.

H. Stone, CA-9, 85-2 USTC ¶9652, 770 F2d 842.

D.K. Turner, CA-10, 86-2 USTC ¶9647, 799 F2d 627.

R.A. Copeland, CA-7, 86-1 USTC ¶9314, 786 F2d 768.

W. Jeffries, CA-7, 88-2 USTC ¶9459, 854 F2d 254.

M.C. Frederickson, CA-8, 88-2 USTC ¶9405.

F.C. Parrino, CA-8, 88-1 USTC ¶9348.

D.G. Auen, CA-2, 89-1 USTC ¶9105.

M.W. Williams, CA-11, 89-2 USTC ¶9390, 875 F2d 846.

H. Michaud, CA-1, 88-2 USTC ¶9577, 860 F2d 495.

J.J. Hogan, CA-1, 88-2 USTC ¶9593, 861 F2d 312.

W.A. Connor, Jr., CA-3, 90-1 USTC ¶50,166, 898 F2d 942.

W. Willie, CA-10, 91-2 USTC ¶50,409.

J.J. DiPetto, CA-2, 91-2 USTC ¶50,407, 936 F2d 96. Cert denied, 10/7/91.

R.W. Daniel, CA-6, 92-1 USTC ¶50,095.

E.A. Boone, CA-9, 92-1 USTC ¶50,179.

L. Chesson, Jr., CA-5, 92-1 USTC ¶50,230.

P.B. Bonneau, CA-1, 92-2 USTC ¶50,385, 970 F2d 929.

F.O. Becker, CA-7, 92-2 USTC ¶50,314, 965 F2d 383.

R.L. McGill, CA-1, 92-1 USTC ¶50,052.

W. Rea, CA-2, 92-1 USTC ¶50,191, 958 F2d 1206.

J.A. Brimberry, CA-7, 92-1 USTC ¶50,288, 961 F2d 1286.

R.L. Huguenin, CA-1, 91-2 USTC ¶50,571, 950 F2d 23.

R.W. Charroux, CA-5, 93-2 USTC ¶50,628, 3 F3d 827.

J.L. Martin, CA-4 (unpublished opinion), 97-2 USTC ¶50,727, aff'g, per curiam, an unreported District Court decision.

S.J. Holland, CA-7, 98-2 USTC ¶50,898, 160 F3d 377.

J.E. Codner, CA-10 (unpublished opinion), 2000-1 USTC ¶50,389, aff'g an unreported District Court decision.

L. Tekle, CA-9 (unpublished opinion), 2002-1 USTC ¶50,225, aff'g an unreported District Court decision.

T.P. Brennan, CA-3 (unpublished opinion), 2002-1 USTC ¶50,455, aff'g an unreported District Court decision.

M. Wick, CA-9 (unpublished opinion), 2002-1 USTC ¶50,456, aff'g an unreported District Court decision.

Willfulness may be negated by a good-faith misunderstanding of the law or a good-faith belief that there is no violation regardless of whether the claim is objectively unreasonable.

J.L. Cheek, SCt, 91-1 USTC ¶50,012, 11 SCt 604.

The Seventh Circuit, on remand, reversed and remanded the unreported DC Ill. decision.

J.L. Cheek, CA-7, 91-1 USTC ¶50,232, 931 F2d 1206.

A pilot's contention that the trial court erred in not instructing the jury on the advice of counsel defense was not valid because the court's instructions treated the issues fairly and accurately. Moreover, the court's instructions as to willfulness encompassed any defense claiming a good faith belief of lawful conduct. Thus, the taxpayer's conviction and sentencing for tax evasion and failure to file returns on retrial were upheld, consistent with the U.S. Supreme Court's opinion in J.L. Cheek, SCt, 91-1 USTC ¶50,012.

J.L. Cheek, CA-7, 93-2 USTC ¶50,473, 3 F3d 1057. Cert. denied, 2/22/94.

Similarly.

R.G. Powell, CA-9, 91-2 USTC ¶50,320, 936 F2d 736. Amended, CA-9, 92-1 USTC ¶50,128, 955 F2d 1206.

Evidence was sufficient to find the taxpayer guilty of attempted evasion of income taxes.

M.C. Goldberg, DC, 62-2 USTC ¶9638, 206 FSupp 394. Aff'd on another issue, CA-3, 64-1 USTC ¶9316, 330 F2d 30.

W.A. Mousley, CA-3, 63-1 USTC ¶9245, 311 F2d 795. Cert. denied, 372 US 966.

P.J. Richard, DC, 63-1 USTC ¶9243. Aff'd on other grounds, CA-1, 63-1 USTC ¶9376, 315 F2d 331.

M.R. Scheetz, DC, 64-1 USTC ¶9364, 224 FSupp 789.

V.M. Gase, DC, 66-1 USTC ¶9288, 248 FSupp 704.

M.L. Donovan, DC, 66-1 USTC ¶9231, 250 FSupp 463.

G.L. Mancuso, CA-4, 67-2 USTC ¶9487, 378 F2d 612. Petition for rehearing denied, CA-4, 68-1 USTC ¶9166, 387 F2d 376. Cert. denied, 390 US 955.

D.E. Bartone, CA-6, 68-2 USTC ¶9564, 400 F2d 459.

A.T. Critzer, CA-4, 74-2 USTC ¶9505, 498 F2d 1160.

R.E. Berzinski, CA-8, 76-1 USTC ¶9211, 529 F2d 590.

B. Kaatz, CA-10, 83-1 USTC ¶9156, 705 F2d 1237.

W. Greene, CA-9, 83-1 USTC ¶9175, 698 F2d 1364.

F.J. Hecht, CA-8, 83-1 USTC ¶9233, 705 F2d 976.

J.A. Shorter, Jr., CA-D.C., 87-1 USTC ¶9127, 809 F2d 54.

R.S. Hart, DC Ind., 88-2 USTC ¶9467.

G.M. House, DC Mich., 87-2 USTC ¶9561.

D.E. Dack, CA-7, 93-1 USTC ¶50,162, 987 F2d 1282.

H.J. Sallee, CA-5, 93-1 USTC ¶50,236, 984 F2d 643.

W.J. Benson, CA-7, 95-2 USTC ¶50,540, 67 F3d 641.

J. Klausner, CA-2, 96-1 USTC ¶50,173.

R.A. Valenti, CA-7, 97-2 USTC ¶50,629, 121 F3d 327.

See also ¶41,318.177.

Taxpayer was found not guilty of fraud with intent to evade tax.

F. Palermo, CA-3, 58-2 USTC ¶9850, 259 F2d 872.

A.T. Critzer, CA-4, 74-2 USTC ¶9505, 498 F2d 1160.

L. Harris, CA-7, 91-2 USTC ¶50,433, 942 F2d 1125.

B. Romano, CA-2, 91-2 USTC ¶50,471, 938 F2d 1569.

J.R. Montgomery, DC, 54-1 USTC ¶9247.

M.J. Marler, DC, 56-1 USTC ¶9483.

C. Jannuzzio, DC, 60-2 USTC ¶9512, 184 FSupp 460.

J.C. Tyler, DC, 61-1 USTC ¶9290.

R.E. Ford, Sr., DC, 62-1 USTC ¶9417.

W.B. Archer, DC, 63-2 USTC ¶9632.

J.B. Nicosia, DC, 73-2 USTC ¶9587, 360 FSupp 814.

K. Frosch, BC-DC Pa., 2002-1 USTC ¶50,124.

A judgment by the Court of Appeals for the Fifth Circuit affirming the taxpayer's conviction by a jury for willfully attempting to evade taxes was vacated and remanded on certiorari by the U.S. Supreme Court, which followed the Solicitor General's recommendation that certiorari be granted because the government failed to disclose written or recorded statements or reports of its witnesses in its possession.

N.C. Beasley, SCt, 76-2 USTC ¶9555, 425 US 956, vacating and remanding CA-5, 75-2 USTC ¶9725, 519 F2d 233.

Pursuant to the Supreme Court decision above, the Court of Appeals for the Fifth Circuit remanded the case to the District Court with instructions to consider the issues raised by the Solicitor General's investigation.

N.C. Beasley, CA-5, 76-2 USTC ¶9556, 535 F2d 293, on remand from SCt, 76-2 USTC ¶9555, 425 US 956.

On appeal, after the remand, it was held that the government's failure, albeit in good faith, to produce pre-trial statements given by a key prosecution witness violated the Jencks Act. The viola tion, however, constituted reversible error as to only one of the two charges.

N.C. Beasley, CA-5, 78-2 USTC ¶9586, 576 F2d 626. Defendant's petition for rehearing denied, CA-5, 79-1 USTC ¶9107.

Insufficient evidence was presented to support married taxpayers' convictions for tax evasion where the government failed to prove the required existence of a tax deficiency. Under the "no earnings and profits, no income" rule established in P.F. DiZenzo, CA-2, 65-2 USTC ¶9518, amounts that the couple diverted from their wholly owned corporation could not be taxable to them personally as a constructive dividend, where the company had no earnings or profits. Instead, the diverted funds constituted a nontaxable reduction of the couple's shareholder loan account.

J. D'Agostino, CA-2, 98-1 USTC ¶50,380, 145 F3d 69.

The conviction of a lawyer for tax evasion where the amounts of depreciation on some 90 pieces of taxpayer's property, which were large and important items in the net worth method used to determine his income, were based upon speculative and uncertain values and economic lives was reversed.

R.G. Lenske, CA-9, 67-2 USTC ¶9631, 383 F2d 20.

On evidence that the taxpayer had failed to file returns for the years in issue because he was "unable to pay" but that he submitted or caused others to submit W-2 forms disclosing his tax responsibility to the Government, the Court found an absence of an "evil motive", such as is required for conviction. Accordingly, the motion for judgment of acquittal was granted.

R.R. Power, DC, 68-2 USTC ¶9443.

Where the evidence indicated that the taxpayer's purpose in failing to pay over collected taxes for his clients was to take advantage of the time lag in the government's investigation of delinquent returns to tide him over during a period of personal financial hardship, he was not guilty of willfully attempting to evade the payment of taxes of his clients. District Court reversed.

C.L.O. Edwards, CA-9, 67-1 USTC ¶9356.



A dentist who opened two bank accounts using false personal information in an attempt to prevent the IRS from collecting taxes owed was properly convicted of tax evasion and failure to pay tax. The taxpayer transferred large amounts of income earned from his dental practice to bank accounts upon receiving deficiency notices for the tax years in issue. His use of a false social security number (SSN), birth place and birth date could have easily misled or concealed information from the IRS.

R.S. Carlson, CA-9, 2001-1 USTC ¶50,152.

Conviction for willfully attempting to evade taxes by filing false returns was reversed on two counts because there was insufficient evidence to determine that a bank installment loan department head had received money illegally from a bank client.

G.O. Meriwether, CA-5, 73-2 USTC ¶9731, 486 F2d 498.

The Court of Appeals for the Third Circuit, regarding the lower court's conclusion that there was willful evasion of taxes for 1966, reversed with respect to the taxpayer-husband and reversed and remanded with respect to his wife. There should have been a reasonable doubt as to whether the husband had thwarted the investigation by the IRS by taking steps to conceal their 1965 tax records. Since there was a question for the jury regarding the wife's willfulness, she was granted a new trial because the jury was exposed to considerable evidence bearing on willful conduct in prior years for which the government failed to prove any deficiency.

E.F. House, CA-3, 75-2 USTC ¶9782, 524 F2d 1035, rev'g in part and rem'g in part DC, 75-1 USTC ¶9285. Reh'g denied by CA-3, 76-2 USTC ¶9616.

Willfulness need only exist when the returns are filed. The subsequent payment of enough to satisfy liability cannot be used to show the lack of willfulness.

C.F. Quinn, DC, 77-2 USTC ¶9503.

Willfulness was shown by consistent failure to report large amounts of income, failure to comply with summonses and the making of a false statement to an IRS agent.

C.A. Schafer, CA-5, 78-2 USTC ¶9717, 580 F2d 774.

The evidence showed that tax evasion was willful. The defendant had admitted to the IRS that he knew the tax laws well, that he knew that illegally obtained income was reportable and that he had considered reporting it but feared that if he did his employer would discover his activities.

L. Ojala, CA-8, 78-2 USTC ¶9845, 587 F2d 395.

The jury properly concluded, based on all the psychiatric testimony, that the defendant was not mentally ill during the years in question. No error was involved in allowing the government's doctors to testify as to his competency to commit the offense even though they were initially appointed to determine his competency to stand trial.

B. Klein, CA-10, 80-1 USTC ¶9109.

Evidence of a consistent pattern of not reporting large amounts of income is in itself evidence of wilfulness.

S.R. King, CA-8, 80-1 USTC ¶9251, 616 F2d 1034.

Operators of a legal house of ill repute were properly convicted of tax evasion for failing to withhold tax as to wages paid to auxiliary employees such as maids and bartenders. The amounts received by those persons were wages, not tips. The overall operation established an intent to deprive the government of taxes.

J. Conforte, CA-9, 80-1 USTC ¶9417, 624 F2d 869. Cert. denied, 449 US 1012, 101 SCt 568.

Before the Spies case it was held that willful failure to file a return was in itself evidence of an attempt to evade and defeat the income tax laws.

L.C. O'Brien, CA-7, 1931 CCH ¶9474, 51 F2d 193. Cert. denied, 284 US 673.

Miro, CA-2, 1932 CCH ¶9396, 60 F2d 58.

The filing of a false W-4 form by an insurance agent was found to be the affirmative act necessary to support a felony charge of willful evasion of tax.

J.R. Williams, CA-5, 91-1 USTC ¶50,197, 928 F2d 145. Cert. denied, 10/7/91.

An individual's conviction for attempting to evade assessment of income taxes was upheld because the filing and maintaining on file of Forms W-4, on which he falsely claimed exemption from withholding, constituted the necessary affirmative act of evasion. A reasonable jury could have concluded that the taxpayer filed the forms with the intent of permanently eliminating income tax withholding. The government fulfilled its obligation of showing that the individual willfully attempted to evade assessment, and whether or not he was successful was irrelevant.

R.A. King, CA-7, 97-2 USTC ¶50,746, 126 F3d 987.

A subcontractor who received earned income for services rendered but who directed that his paychecks be made payable to a tax avoidance organization was properly convicted of tax evasion and failure to file income tax returns. Testimony and documentary evidence established that the subcontractor received earned income and filed no returns; thus, the existence of a tax deficiency was proven. Moreover, the taxpayer's admissions to a co-worker, as well as instructions to make checks payable to the tax protest organization, were indicative of his willful evasion of taxes.

L. Beall, CA-7, 92-2 USTC ¶50,417, 970 F2d 343.

The indictment leading to a steam fitter's conviction for tax evasion, which charged conduct constituting both evasion of assessment of tax and evasion of payment of tax, was not duplicitous. The individual's filing of a fraudulent Form W-4 was a sufficient affirmative act to support a felony tax evasion prosecution.

R.S. Mal, CA-9, 91-2 USTC ¶50,518, 942 F2d 682.

An individual's motion for judgment of acquittal notwithstanding jury verdicts that he was guilty of the crimes of tax evasion and the willful failure to file returns was denied. Evidence of fraudulently filed withholding forms established the affirmative act element of the crime of tax evasion. Willfulness was established for both crimes through evidence of an incorrect address and false information provided during the IRS investigation.

J.R. Crocker, DC Del., 92-1 USTC ¶50,008, 753 FSupp 1209.

The IRS did not have to prove that the form filed by a massage parlor operator was a "return" in order to establish tax evasion because the filing of a return is not an element of the crime of tax evasion. Similarly, in proving that the taxpayer filed a false return, the IRS was not required to establish that it was a joint return, as described in the indictment.

S.N. Robinson, CA-5, 92-2 USTC ¶50,565, 974 F2d 575.

A taxpayer who provided false social security numbers to his bank and brokerage firms, which in turn caused these payors to issue Forms 1099 to the IRS under the false social security numbers, was properly convicted on four counts of tax evasion.

J.C. Payne, CA-10, 92-2 USTC ¶50,555, 978 F2d 1177. Cert. denied, 113 SCt 2995.

The IRS failed to prove that a husband and wife willfully attempted to evade or defeat payment of their taxes. There was no fraud on the part of the wife in signing returns and filing for bankruptcy shortly after the taxes were eligible for discharge in bankruptcy. Although the husband claimed excessive exemptions and filed late returns after being contacted by the IRS, the IRS's assertion that he willfully attempted to avoid paying taxes by making minimal payments on the overdue amounts was not supported by the evidence. The sparse stipulated facts that the IRS relied upon did not establish that the husband knew he had a duty to pay the taxes and that he voluntarily and intentionally violated that duty.

R.A. Peterson, BC-DC Wyo., 93-2 USTC ¶50,499, 160 BR 385.

An individual who prepared sham promissory notes for tax protestors, listed the debt on their bankruptcy petition forms and filed the petitions in order to cause the IRS to release tax levies on their wages was properly convicted of aiding and abetting attempted income tax evasion. Although the bankruptcy filings alone did not constitute an unlawful attempt to evade payment of tax, the false assertions of heavy debt and financial distress, which had the purpose of depriving the government of amounts collectible under the levies, supported the conviction. Similarly, convictions for conspiracy to defraud the United States were sustained because the false assertions provided the required element of dishonesty.

R. Huebner, CA-9, 95-1 USTC ¶50,008, 48 F3d 376. Cert. denied, 116 SCt 71.

An attorney who served as administrator of an estate was properly convicted of tax evasion. The attorney's transfers of estate funds among accounts at the same bank were not only part of an embezzlement scheme, but also constituted affirmative acts showing an intent to conceal receipt of embezzled funds. Also, the attorney sought an extension of time to file his tax return and underpaid estimated taxes in order to mislead the government as to his true amount of income.

W.E. Eaken, CA-7, 94-1 USTC ¶50,098, 17 F3d 203.

A married couple and their tax attorney were properly convicted of tax evasion despite their claim that the husband's underlying tax deficiency had been eliminated. His voluntary payments and the proceeds from the sale of his seized property did not eliminate his original tax liability and the IRS was not required to apply the seized amounts in the same manner as he requested for his voluntary payments. The IRS applied the seizure proceeds to his total tax, interest and penalties for the earliest year owed; thus, there continued to be a deficiency even thought the husband's total payments exceeded the amount of tax that he originally owed.

F.Y. Wright, Jr., CA-5, 2000-1 USTC ¶50,438, 211 F3d 233. Aff'g in part and rem'g in part an unreported District Court decision.

A bankruptcy court's determination that the government failed to meet its burden of proving that an individual willfully evaded taxes was erroneous. Prior to the debtor's bankruptcy filing, a federal district court allowed the government's federal tax lien to take priority over the mortgage and that may have implicated a finding of fraud. In addition, the bankruptcy court erred in its finding that the debtor did not have the ability to pay his tax liabilities in light of his substantial income tax liability three years after he allegedly ceased to earn an income. Accordingly, the bankruptcy court was instructed to make a factual determination as to whether evidence of a willful attempt to evade taxes existed under a totality of the circumstances.

S.M. Spiwak, DC Fla., 2002-2 USTC ¶50,568, 285 BR 744.

The IRS reached an agreement with Doctors Benefit Insurance Company (DBIC), assignee of xélan Insurance Company Limited, with respect to group supplemental insurance programs offered to members of xélan. DBIC agreed to stop operations and return $500 million to the programs' participants. DBIC is required to withhold money on these payments, as well as make a $2.34 million payment to the IRS to resolve issues arising in connection with these policies.

IRS News Release IR-2005-114, October 3, 2005.

A dentist who was a persistent "tax protestor" willfully attempted to evade the federal income tax in violation of Code Sec. 7201. The government's evidence established that the dentist earned taxable income, owed substantial income tax, knew that he was required to file an income tax return, failed to pay any income taxes and willfully attempted to evade the taxes he owed. Thus, the evidence was sufficient to establish the offense of willful tax evasion.

R.E. Nolen, CA-5, 2007-1 USTC ¶50,285.

The evidence was sufficient to support a married couple's conviction for willfully attempting to evade or defeat tax. The husband, a certified public accountant, failed to report his accounting income from the nonprofit organization for which his wife was the executive director. He also did not report the rental income received from property that was leased to the organization on the couple's joint tax returns. The wife reported only half the rent she received for the property leased to the organization on her returns. Moreover, she used organization funds for her own purposes and tried to conceal such activities from the organization's auditors and the government by underreporting her income.

W.D. Madison, CA-6, 2007-1 USTC ¶50,495.