Department of Revenue v. Carpet Warehouse, Inc.

• Decision Date: 08 February 1984
• Docket Number: No. 1611,1611
• Parties: DEPARTMENT OF REVENUE, Respondent, v. CARPET WAREHOUSE, INC., Appellant. DEPARTMENT OF REVENUE, Respondent, v. ALAN BOWKER CONSTRUCTION, INC., an Oregon corporation, Appellant. DEPARTMENT OF REVENUE, Respondent, v. Wallace Alan BOWKER, Appellant. ; SC 28984. Supreme Court of Oregon, In Banc
• Court: Oregon Supreme Court

Page 299

676 P.2d 299

296 Or. 400

DEPARTMENT OF REVENUE, Respondent, v. CARPET WAREHOUSE, INC., Appellant.

DEPARTMENT OF REVENUE, Respondent, v. ALAN BOWKER CONSTRUCTION, INC., an Oregon corporation, Appellant.

DEPARTMENT OF REVENUE, Respondent, v. Wallace Alan BOWKER, Appellant.

Tax Court No. 1611; SC 28984.

Supreme Court of Oregon,

In Banc.

Argued and Submitted Dec. 6, 1983.

Decided Feb. 8, 1984.

Thomas D. Kershaw, Jr., Klamath Falls, argued the cause and filed briefs for appellants.

James C. Wallace, Asst. Atty. Gen., Salem, argued the cause for respondent. With him on briefs was Dave Frohnmayer, Atty. Gen., Salem.

JONES, Justice.

This is an appeal from a judgment of civil contempt entered by the Oregon Tax Court. Defendants, Alan Bowker, Carpet Warehouse, Inc. (Carpet Warehouse) and Alan Bowker Construction, Inc. (Bowker Construction), seek reversal of the Tax Court's judgment of contempt and order of incarceration. We review de novo (ORS 305.445) and from the record find the following: Upon application from the Oregon Department of Revenue, pursuant to ORS 314.365, ¹ the Oregon Tax Court issued alternative writs of mandamus directing the three defendants to file tax returns or show cause why they should not. Defendant Bowker was directed to file individual income tax returns for the years 1975 through 1980. Defendants Carpet Warehouse and Bowker Construction were directed to file corporate excise tax returns for the years 1976 through 1979. The defendants failed to comply or show cause why they should not comply with the alternative writs. Peremptory writs of mandamus were issued on November 13, 1981. On April 15, 1982, defendants filed tax return forms for all the years in question which provided defendants' names, addresses and telephone numbers, but no other information. The remainder of the form asserted the privilege against self-incrimination.

Due to defendants' failure to comply with the peremptory writs, a hearing was held in which defendants were directed to show cause why they should not be held in contempt. Findings of fact and conclusions of law were entered in the contempt proceedings. Bowker, individually and as president of the corporations, was found in contempt of court and ordered to be incarcerated "until he complie[d] with the peremptory writ[s] of mandamus." Defendants appealed from those orders.

Defendants claim six assignments of error in this appeal. The first three assignments of error can be dealt with together. Defendants contend that the peremptory writs should not have issued because: (1) the Department of Revenue failed to make a prima facie case as to the legal obligation of Carpet Warehouse and Bowker Construction to file tax returns; (2) the Department of Revenue failed to exhaust its administrative and legal remedies, in particular ORS 305.265(9), ² and thus issuance of the writs, which is an extraordinary remedy to be used only in rare cases, was improper; and (3) the writs were issued pursuant to a statutory scheme which unconstitutionally delegates discretion to the Department of Revenue to elect remedies when a taxpayer fails to file or files an improper tax return and the standards for seeking the remedies provided within the statute are so discretionary as to be unconstitutional.

The present appeal is from a finding of civil contempt for the failure of the defendants to obey peremptory writs of mandamus from which no appeal was filed. Except for jurisdiction, the issues surrounding the correctness of the peremptory writ may not be raised in a collateral appeal. See, Dept. of Rev. v. Bailey, 294 Or. 145, 653 P.2d 1264 (1982). We said in State v. La Follette, 100 Or. 1, 196 P. 412 (1921):

" * * * It is no defense against a contempt proceeding to say that the order which has been disobeyed was not justified by the facts, or was erroneously or improvidently made; because the party has his remedy by appeal and he cannot in a collateral proceeding attack the order for mere irregularities. * * * " Id. at 7, 196 P. 412.

Defendants' assignments of error challenge the propriety of the issuance of the peremptory writs of mandamus. Defendants had their opportunity to appeal the peremptory writs and chose not to appeal. Defendants may not now, in an appeal from a contempt proceeding, raise the three above-stated contentions challenging the bases for the peremptory writs. ³ We, therefore, turn to defendants' fourth contention.

Defendants contend that the Tax Court erred in rejecting their assertion that to comply with the writs was impossible and thus they should not have been held in contempt. Defendant Bowker, individually and as president of the corporations, claimed that he could not file the tax returns because the process was too costly and too complex. No authority excuses taxpayers from filing Oregon Income Tax returns merely because they assert the forms are too complex or the taxpayer cannot afford to pay someone to fill out the forms. While inability to comply with a court order may be grounds for discharge from imprisonment due to contempt (see, e.g., Maggio v. Zeitz, 333 U.S. 56, 75-76, 68 S.Ct. 401, 411-412, 92 L.Ed.2d 476 (1948)), the inability cannot be brought on by defendant's own contumacious conduct. State ex rel. v. Nichol, 142 Or. 235, 237, 20 P.2d 221 (1933). Here, as mentioned, Bowker and the corporate defendants alleged an inability to comply because the filing of tax returns for five and three years, respectively, would be too complex and costly. Defendants brought this situation upon themselves by not filing returns for those years and cannot now claim a self-induced inability to comply as a defense to a contempt order. The Tax Court properly rejected defendants' contention.

Bowker's fifth contention is that the Tax Court erred in rejecting his claim that to obey a writ of mandamus may tend to incriminate him in impending federal tax prosecutions. Bowker makes his claim under the United States Constitution and not under the Oregon Constitution.

Originally, Bowker did not file income tax returns for the years 1976-1980. Then, on April 15, 1982, Bowker filed state tax returns for the years in question and on each form he listed his name, his wife's name, their address and telephone number, and he and his wife signed the return. The remainder of each form was completed with the words "Obj 4th & 5th Amend." Attached to the bottom of the form was the following:

"Note Obj 4th & 5th amend. means an objection is taken to the question based on the 4th & 5th amendment to the US Constitution.

"I do not understand this return nor the laws that may apply to me. Signature is involuntarily given under threat of statutory punishment and has not been given freely as to admission of requirement to file this form. I request complete immunity per 18 USC § 6002 & § 6004 before waiving any constitutional or natural rights, including the Fifth Amendment guarantee of not being a witness against myself."

No information was included from which Bowker's tax liability could be calculated. At the time of the contempt hearing, Bowker was under investigation by the federal government for failure to file federal tax returns for the same years in question. According to the defendant, a Federal Grand Jury had been called, but no indictment had been issued.

The Supreme Court of the United States has held that the privilege against self-incrimination does not justify an outright refusal to file any income tax return. United States v. Sullivan, 274 U.S. 259, 47 S.Ct. 607, 71 L.Ed. 1037 (1927). In United States v. Daly, 481 F.2d 28 (8th Cir.1973), and United States v. Irwin, 561 F.2d 198 (10th Cir.1977), cert. den. 434 U.S. 1012, 98 S.Ct. 725, 54 L.Ed.2d 755 (1978), those United States Courts of Appeal concluded that a tax return form from which no tax liability can be calculated does not constitute a tax return within the meaning of the tax laws. These courts applied Sullivan and invalidated the Fifth Amendment privilege.

In United States v. Daly, supra, defendant filed an income tax return in which he supplied his name, address, occupation and signature. Defendant objected to providing other information on Fifth Amendment grounds. The court said that a tax return not containing information relating to a taxpayer's income from which tax can be computed is not a tax return within the meaning of the Internal Revenue Code. The Fifth Amendment privilege against self-incrimination does not extend to a failure to file a return.

In United States v. Irwin, supra, defendant filed a tax return containing his name, address and indicating that defendant was entitled to a refund of approximately $5,000. The remainder of the form showed defendant's objection to the questions asked. The court held that the requirement that an income tax return be filed does not violate the Fifth Amendment because "the privilege cannot be stretched so far as to absolve a taxpayer's duty to file a return." 561 F.2d at 201. While it is possible that a valid claim of privilege could be asserted as to specific items of information requested, a return containing no information from which a tax could be determined constitutes no return at all.

We adopt the rationale of these federal cases and conclude that Bowker's tax returns are not tax returns within the definition of the Oregon tax laws, because they contain no information from which tax liability can be calculated. The privilege against self-incrimination does not extend to a failure to file a tax return. The Tax Court was correct in rejecting defendant's self-incrimination claim because defendant filed the functional equivalent of no tax return.

Defendants' final assignment of error is that the Tax Court found Bowker, individually and as president of defendant corporations, in civil contempt without evidence of or a finding of a wilful violation of a court order. The Tax Court issued peremptory writs of mandamus. Those writs commanded ...