Gibson v. Com.

• Decision Date: 28 August 2007
• Docket Number: Record No. 1246-06-4.
• Citation: Gibson v. Com., 649 S.E.2d 214, 50 Va. App. 285 (Va. App. 2007)
• Parties: James Leonard GIBSON v. COMMONWEALTH of Virginia.
• Court: Virginia Court of Appeals

649 S.E.2d 214

50 Va. App. 285

James Leonard GIBSON v. COMMONWEALTH of Virginia.

Record No. 1246-06-4.

Court of Appeals of Virginia, Richmond.

August 28, 2007.

Spencer D. Ault, for appellant.

Eugene Murphy, Senior Assistant Attorney General (Robert F. McDonnell, Attorney General, on brief), for appellee.

Present: FRANK and CLEMENTS, JJ., and FITZPATRICK, Senior Judge.

JEAN HARRISON CLEMENTS, Judge.

James Leonard Gibson (appellant) was convicted in a bench trial of three counts of failure to pay tax, in violation of Code § 58.1-1815. On appeal, he contends the trial court erred in (1) concluding he was subject to conviction under Code § 58.1-1815 despite the fact that he truthfully accounted for his company's tax obligations and took no affirmative action to evade the assessment or payment of those obligations, (2) deciding the penalties and interest imposed for delinquent filings and tax payments constituted "tax" under Code § 58.1-1815, and (3) ruling it did not have authority to defer findings of guilt. For the reasons that follow, we affirm the trial court's judgment and appellant's convictions.

I. BACKGROUND

Taken from a written statement of facts filed in lieu of a transcript pursuant to Rule 5A:8, the facts relevant to our disposition of this appeal are not in dispute.

In 2000, appellant registered his company, Leonard Gibson Excavating, Inc., with the Virginia Department of Taxation (Department) "for sales and withholding taxes." Appellant, the president of the company, was listed as the person responsible for paying those taxes for the company, and he obtained a tax identification number from the Department. Appellant made "significant tax payments" for the company in 2000, 2001, and 2002 and filed "all the required forms." The truthfulness and accuracy of those forms were not disputed. However, in 2002 and 2003, appellant submitted some of the forms without the requisite payment.

Using the forms submitted by appellant, the Department determined that appellant failed to pay $35,314.94 in employer withholding tax for the period November 22, 2002, to May 7, 2003 (count two), and $12,464.04 in employer withholding tax for the period June 11, 2003, to November 24, 2003 (count three). Appellant also failed to pay $278.93 in penalties and interest assessed by the Department for late filings and payments for the period October 16, 2001, to August 22, 2002 (count one), although the underlying tax for that period was ultimately paid.

On January 13, 2004, misdemeanor arrest warrants were issued against appellant, charging him with three counts of failure to pay tax. The general district court convicted him of each count. Appellant appealed the convictions to the circuit court.

A trial de novo was conducted in the circuit court on August 13, 2004. Testifying on his own behalf at trial, appellant acknowledged that, while all of the company's "tax obligations were properly reported," some of those obligations went unpaid. After hearing the evidence and argument of counsel, the trial court found the evidence sufficient to support findings of guilt on all three counts but, by order entered August 24, 2004, "deferr[ed] final disposition" for a period of one year.

Appellant maintained good behavior "during the period of his deferred finding[s]." On December 13, 2005, the judge who deferred the findings of guilt ruled that he lacked authority to defer those findings. Accordingly, he entered findings of guilt on the three counts of failure to pay tax, and subsequently sentenced appellant to twelve months' incarceration on each count, with all but ninety days of the total sentence suspended upon certain conditions.

This appeal followed.

II. NATURE OF THE OFFENSE

Appellant was convicted, on each of the three counts brought against him, of violating Code § 58.1-1815 by willfully failing to pay his company's tax obligations. Code § 58.1-1815 provides, in pertinent part, as follows:

Any corporate. . . officer. . . or any other person required to collect, account for and pay over any sales, use or withholding tax, who willfully fails to collect or truthfully account for and pay over such tax, and any such officer or person who willfully evades or attempts to evade any such tax or the payment thereof, shall, in addition to any other penalties provided by law, be guilty of a Class 1 misdemeanor.

On appeal, appellant does not challenge the trial court's findings that he was the individual responsible for paying over his company's tax obligations to the Department under Code § 58.1-1815 and that he willfully failed to pay over some of those obligations as required. Instead, he contends the trial court improperly convicted him of failure to pay tax, in violation of Code § 58.1-1815, because it was uncontradicted that he truthfully accounted for his company's tax obligations and that he took no affirmative steps to willfully evade the assessment or payment of those obligations.¹ He maintains that, pursuant to the plain language of Code § 58.1-1815, a corporate officer is subject to conviction for failing to pay his company's tax obligations only if he both fails to pay those obligations and fails to truthfully account for those obligations. Accordingly, he further maintains, it is not criminal to simply fail to pay a tax obligation; there must be a "willful evasion of a tax obligation." "Absent a showing of willful evasion by failing to file the accountings or willfully providing false information on a filed form, the elements of the statute are not met," appellant asserts. Hence, he argues, his mere willful failure to pay his company's tax obligations, without more, did not amount to a crime under the plain language of the statute and he "should have been acquitted." Thus, appellant concludes, the trial court erred, as a matter of law, in finding him criminally liable under Code § 58.1-1815.

In response, the Commonwealth contends that, because Code § 58.1-1815 requires that appellant both "truthfully account for and pay over such tax," appellant's admitted willful failure to pay his company's tax obligations is sufficient, by itself, to constitute a violation of the statute. We agree with the Commonwealth.

Because the issue presented is a question of law involving the interpretation of Code § 58.1-1815, we review the trial court's judgment de novo. See Sink v. Commonwealth, 28 Va.App. 655, 658, 507 S.E.2d 670, 671 (1998) ("Although the trial court's findings of historical fact are binding on appeal unless plainly wrong, we review the trial court's statutory interpretations and legal conclusions de novo.").

In interpreting the meaning of the statutory words in controversy, we are mindful of the long-standing principle that,

[w]hen we know the object of a statute and are called upon to construe a phrase or a sentence which, standing alone, may be susceptible of different interpretations, we know of no safer rule than to take the statute by its four corners and critically examine it as a whole to ascertain the legislative intent, as manifested by its different provisions. If, upon such an examination, an interpretation can be made, consistent with the language used, which will carry into effect the object sought to be accomplished by the statute, that interpretation should be adopted, in preference to one which would be equally consistent with the language used, standing alone, but which would defeat, or tend to defeat, the manifest intent of the legislature.

Harris v. Commonwealth, 142 Va. 620, 625, 128 S.E. 578, 579 (1925). Additionally, "`[a]lthough [ambiguous] penal laws are to be construed strictly [against the Commonwealth], they ought not to be construed so strictly as to defeat the obvious intent of the legislature.'" Williams v. Commonwealth, 43 Va.App. 1, 5, 595 S.E.2d 497, 499 (2004) (second and third alterations in original) (internal quotation marks omitted) (quoting Willis v. Commonwealth, 10 Va.App. 430, 441, 393 S.E.2d 405, 411 (1990)). Moreover,

[t]he rules of statutory interpretation argue against reading any legislative enactment in a manner that will make a portion of it useless, repetitious, or absurd. On the contrary, it is well established that every act of the legislature should be read so as to give reasonable effect to every word and to promote the ability of the enactment to remedy the mischief at which it is directed.

Jones v. Conwell, 227 Va. 176, 181, 314 S.E.2d 61, 64 (1984).

As relevant to the issue before us, the language of Code § 58.1-1815 clearly manifests the legislature's intent to ensure the proper collection, accounting, and payment of sales, use, and withholding tax by subjecting those responsible for such collection, accounting, and payment to criminal penalties for their failure to properly perform their responsibilities in accordance with the statute. To that end, the statute expressly provides that any such individual who "willfully fails to collect or truthfully account for and pay over any such tax" or who "willfully evades or attempts to evade any such tax or the payment thereof" is subject to a misdemeanor conviction.

Relying on the fact that he truthfully accounted for his company's tax obligations, appellant contends that, because the phrase "truthfully account for and pay over any such tax" is stated in the conjunctive, his mere willful failure to pay some of those obligations to the Department was not enough to subject him to conviction under Code § 58.1-1815. The willful failure to perform both duties—to account for and pay over—must be established to sustain such a conviction, he argues. Conversely, the Commonwealth contends the phrase "truthfully account for and pay over any such tax" is phrased in the conjunctive because it requires the person responsible for collecting, accounting for, and paying over a company's tax obligations to both truthfully account for and pay over those obligations. Since the statute explicitly requires the fulfillment...