928 F.2d 145 (5th Cir. 1991), 90-5569, United States v. Williams

CourtUnited States Court of Appeals (5th Circuit)
Citation928 F.2d 145
Docket Number90-5569.
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Jerry R. WILLIAMS, Defendant-Appellant.
Date27 March 1991

Page 145

928 F.2d 145 (5th Cir. 1991)

UNITED STATES of America, Plaintiff-Appellee,

v.

Jerry R. WILLIAMS, Defendant-Appellant.

No. 90-5569.

United States Court of Appeals, Fifth Circuit

March 27, 1991

Page 146

Farley P. Katz, C.J. Muller, Matthews & Branscomb, San Antonio, Tex., for defendant-appellant.

Wayne F. Speck, LeRoy Morgan Jahn, Asst. U.S. Attys., San Antonio, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Western District of Texas.

Before RUBIN, POLITZ, and DUHE, Circuit Judges.

POLITZ, Circuit Judge:

Convicted of three felony counts of attempting to evade federal income taxes, 26 U.S.C. Sec. 7201, arising out of his failure to file returns for the years 1983, 1984, and 1985, Jerry R. Williams appeals, contending that the elements of the felony offense were not proven and that the charge in one count was untimely. Finding no error, we affirm.

Background

While employed by the Great American Reserve Life Insurance Company (GARCO), from 1971 through late 1982 Williams maintained on file a W-4 form claiming one personal exemption. Taxes were deducted by his employer but Williams filed no federal income tax returns. In 1982 Williams was promoted and transferred to San Antonio. Anticipating more deductions from increased business expenses and the purchase of a home, in October 1982 he filed a new W-4 claiming 14 exemptions. On March 17, 1983, Williams again revised his W-4 filing, this time submitting a form claiming 50 exemptions. He explained the massive exemption increase in an accompanying note to GARCO's accounting office which read: "I'm going to have to increase my exemption to 50 for a few months. I've got to survive the tax bite until my o/w build up." The "o/w" referred to "overwrites," the payments Williams received based on insurance written by subordinate agents. The "survival period" was extensive. Because of the claimed exemptions, for nearly three years GARCO withheld only negligible amounts, considering Williams' earnings, ranging from just over $1,200 on compensation exceeding $61,000 to $5,455 on earnings exceeding $74,600.

In December 1986 Williams' tax-savings gambit came to an end. A revenue officer went to Williams' office and told him that the IRS had information that he had not filed income tax returns for the prior six years. Asked to confirm or deny, Williams lied, claiming that he had filed the requisite returns and offering to produce copies at a later meeting. Williams conceded, however, that he probably owed taxes beyond the amount paid. A second meeting was scheduled for the following month in the IRS office. During that meeting Williams admitted that he had lied earlier and acknowledged that he had not filed a tax return since 1971. Williams produced W-2 forms for the years 1979, 1980, 1983, 1984, and 1985.

Williams was indicted on December 6, 1989 for three felony counts of attempting to evade federal income tax by failing to file tax returns for the years 1983, 1984, and 1985, failing to pay the tax due, and submitting a false and fraudulent Form W-4 to his employer and maintaining it on file during the indictment period. Williams was convicted on all counts and was sentenced to two concurrent three-year periods of incarceration, an additional suspended three-year term, five years probation, and a fine of $10,000. As a condition of probation

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Williams must pay all taxes, interest, and penalties due. He timely appealed.

Analysis

Williams first contends that his convictions on Counts Two and Three for attempting to evade taxes for tax years 1984 and 1985 should be reversed because the indictment failed to allege a necessary element of the crime charged. Relying heavily on his interpretation of Spies v. United States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418 (1943), and this court's holding in Clay v. United States, 218 F.2d 483 (5th Cir.1955), Williams argues that the government neither alleged nor proved any affirmative act for those tax years and therefore he could not properly have been convicted of a felonious attempt to evade tax.

Our analysis begins with the recognition that before one may be convicted of the felony offense charged there must be the requisite proof of a specific intent of the accused to defeat or evade the payment of the subject tax. United States v. Nelson, 791 F.2d 336 (5th Cir.1986). Spies v. United States is the Supreme Court's seminal case distinguishing between the misdemeanor of willful failure to file, 26 U.S.C. Sec. 7203, and the felony of attempting to evade or defeat tax under section 7201. Both crimes are based on similar provisions in the Internal Revenue Code, 1 and both require willfulness, Sansone v. United States, 380 U.S. 343, 85 S.Ct. 1004, 13 L.Ed.2d 882 (1965), but, as Justice Jackson wrote in Spies:

The difference between the two offenses, it seems to us, is found in the affirmative action implied from the term "attempt," as used in the felony subsection. It is not necessary to involve this subject with the complexities of the common-law "attempt." The attempt made criminal by this statute does not consist of conduct that would culminate in a more serious crime but for some impossibility of completion or interruption or frustration. This is an independent crime, complete in its most serious form when the attempt is complete, and nothing is added to its criminality by success or consummation, as would be the case, say, of attempted murder. Although the attempt succeed in evading tax, there is no criminal offense of that kind, and the prosecution can be only for the attempt. We think that in employing the terminology of attempt to embrace the gravest of offenses against the revenues, Congress intended some willful commission in addition to the willful omissions that make up the list of misdemeanors. Willful but passive neglect of the statutory duty may constitute the lesser offense, but to combine with it a willful and positive attempt to evade tax in any manner or to defeat it by any means lifts the offense to the degree of felony.

317 U.S. at 498-99, 63 S.Ct. at 368, 87 L.Ed. at 423 (footnote omitted). The Court, noting congressional use of the term "in any manner," provided an illustrative, non-exhaustive list of incidents upon which an inference of affirmative willful attempt could be predicated, including keeping false or double books, false invoicing, destruction of records, concealment of assets, and "any conduct, the likely effect of which

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would be to mislead or to conceal." Id. at 499, 63 S.Ct. at 368, 87 L.Ed. at 423.

The Clay case, which Williams vigorously insists is both squarely on point and completely supportive of his position, is, in fact, neither. Will Clay and three other men were convicted of willfully attempting to evade a tax imposed on persons engaged in the business of accepting wagers. The indictment alleged only "that appellants were engaged in the business of accepting wagers without having paid the occupational tax." We applied the Spies analysis and...

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3 practice notes
  • Tax evasion.
    • United States
    • American Criminal Law Review Vol. 33 Nbr. 3, March 1996
    • March 22, 1996
    ...the felony act as requiring willful commission, and the misdemeanor act as requiring willful omission); United States v. Williams, 928 F.2d 145, 148 (5th Cir.) (dismissing an indictment for felony tax evasion invalid which lacked an allegation of an affirmative act to mislead or conceal), c......
  • Tax evasion.
    • United States
    • American Criminal Law Review Vol. 34 Nbr. 2, January 1997
    • January 1, 1997
    ...the felony act as requiring willful commission, and the misdemeanor act as requiring willful omission); United States v. Williams, 928 F.2d 145, 148 (5th Cir. 1991) (dismissing an indictment for felony tax evasion invalid which lacked an allegation of an affirmative act to mislead or concea......
  • Tax violations.
    • United States
    • American Criminal Law Review Vol. 35 Nbr. 3, March 1998
    • March 22, 1998
    ...1992) (defining felony act as requiring willful commission, and misdemeanor act as requiring willful omission); United States v. Williams, 928 F.2d 145, 148 (5th Cir. 1991) (dismissing indictment for felony tax evasion as invalid because lack of allegation of affirmative act to mislead or c......
3 books & journal articles
  • Tax evasion.
    • United States
    • American Criminal Law Review Vol. 33 Nbr. 3, March 1996
    • March 22, 1996
    ...the felony act as requiring willful commission, and the misdemeanor act as requiring willful omission); United States v. Williams, 928 F.2d 145, 148 (5th Cir.) (dismissing an indictment for felony tax evasion invalid which lacked an allegation of an affirmative act to mislead or conceal), c......
  • Tax evasion.
    • United States
    • American Criminal Law Review Vol. 34 Nbr. 2, January 1997
    • January 1, 1997
    ...the felony act as requiring willful commission, and the misdemeanor act as requiring willful omission); United States v. Williams, 928 F.2d 145, 148 (5th Cir. 1991) (dismissing an indictment for felony tax evasion invalid which lacked an allegation of an affirmative act to mislead or concea......
  • Tax violations.
    • United States
    • American Criminal Law Review Vol. 35 Nbr. 3, March 1998
    • March 22, 1998
    ...1992) (defining felony act as requiring willful commission, and misdemeanor act as requiring willful omission); United States v. Williams, 928 F.2d 145, 148 (5th Cir. 1991) (dismissing indictment for felony tax evasion as invalid because lack of allegation of affirmative act to mislead or c......

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