Hudson v. Superior Court of Orange Cnty.

• Decision Date: 26 January 2017
• Docket Number: G052324
• Citation: 7 Cal.App.5th 1165,213 Cal.Rptr.3d 277
• Court: California Court of Appeals Court of Appeals
• Parties: Blake A. HUDSON, Petitioner, v. The SUPERIOR COURT of Orange County, Respondent; The People, Real Party in Interest.

7 Cal.App.5th 1165

213 Cal.Rptr.3d 277

Blake A. HUDSON, Petitioner,

v. The SUPERIOR COURT of Orange County, Respondent;The People, Real Party in Interest.

G052324

Court of Appeal, Fourth District, Division 3, California.

Filed January 26, 2017

Strecker Law Offices and Marc S. Strecker, Anaheim Hills, for Petitioner.

No appearance for Respondent.

Tony Rackauckas, District Attorney, and Yvette Patko, Deputy District Attorney, for Real Party in Interest.

OPINION

MOORE, ACTING P.J.

Generally, a crime occurs when a person commits a wrongful act (an actus reus) with the requisite criminal intent (a mens rea). In some cases, a person's failure to act (an omission) constitutes the actus reus. In California, it is a crime when a person willfully fails to timely file a state tax return (the actus reus) with the intent to evade paying the taxes that are owed (the mens rea). (Rev. & Tax. Code, § 19706.)¹

Here, the prosecution introduced evidence at a preliminary hearing showing that Blake A. Hudson failed to timely file tax returns for three consecutive years in which he owed: $21,974; $27, 205; and $6,505, respectively. Hudson had filed returns in other years and the Franchise Tax Board (FTB) had repeatedly notified Hudson of his duty to file his tax returns. As a result, the magistrate bound Hudson over for trial; and the superior denied his motion to set aside the information. (Pen. Code, § 995, subd. (a)(2)(B).)

Hudson argues that there was insufficient evidence to show his intent to evade paying taxes. We disagree. In addition to evidence of Hudson's failure to timely file tax returns (the actus reus), the evidence of Hudson's intent to evade paying taxes (the mens rea) includes: 1) the considerable amount of taxes Hudson actually owed in multiple years; 2) the FTB's repeated notifications; and 3) Hudson's prior filing history. Thus, there was some rational ground for the magistrate to assume that when Hudson failed to timely file his tax returns he intended to evade paying the taxes that he owed.

Nevertheless, Hudson argues that in order to prove his intent, the prosecution needed to show an additional affirmative act of fraud under section 19706. He is mistaken. Hudson's willful failure to timely file tax returns was the sole actus reus required to be shown under section 19706. This court cannot rewrite the statute.

Hudson's argument is based on a United States Supreme Court opinion interpreting a federal tax law.

(Spies v. United States (1943) 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418 (Spies ).) But unlike our state statute, the federal tax law at issue in Spies does not explicitly make the failure to timely file a tax return a criminal act. That distinction is ultimately fatal to Hudson's claim in this writ proceeding.

IFACTUAL AND PROCEDURAL SUMMARY

In a felony complaint, the prosecution charged Hudson with three counts of willfully failing to timely file tax returns for three consecutive years with the intent to evade paying a tax. (§ 19706.)² A magistrate presided over a preliminary hearing in which an FTB agent testified as the prosecution's sole witness. The agent testified that generally a person must file tax returns by either April 15, or October 15, for the prior taxable year.

The evidence at the preliminary hearing showed that for the first year (count one), Hudson owed $21,974 in tax. Hudson filed a return about five years late, but he did not pay the taxes that were due. For the second year (count two), Hudson owed $27,205 in tax. Hudson filed a return about five years late, but he did not pay the taxes that were due. For the third year (count three), Hudson owed $6,505 in tax. This time, Hudson filed a return about three years late and paid $400 of the taxes that were due.

For each of the three years, the FTB had mailed Hudson a "Demand for Tax Return," asking him to file his returns. According to the FTB agent, the FTB also mailed Hudson: 1) a letter telling him that they would publicly disclose him as one of the 500 largest tax delinquents in the state; 2) a notice of proposed assessment; and 3) a notice of collection. Further, the FTB agent prepared a document showing that Hudson "had a filing history," meaning he had filed returns and had paid his taxes in other years.

The magistrate found that there was sufficient cause to hold Hudson to answer on the felony complaint. (Pen. Code, § 872, subd. (a).) The prosecution filed an information charging Hudson with the same counts that had been alleged in the complaint.³

Hudson filed a Penal Code section 995 motion to dismiss the felony charges. Hudson argued that the prosecution had failed to establish sufficient evidence of his intent to evade paying taxes. (Pen. Code, § 995, subd. (a)(2)(B).) The superior court denied the motion.

Hudson petitioned for a writ of prohibition and/or mandate in this court challenging the denial of his Penal Code section 995 motion by the respondent superior court. (Pen. Code, § 999a.) This court summarily denied the writ petition.

Hudson subsequently filed a petition for review. The California Supreme Court granted Hudson's petition and transferred the matter to this court with directions to vacate our order denying the petition for writ of prohibition and/or mandate and issue an order to show cause.⁴ We did so and stayed the trial court proceedings. The district attorney, as real party in interest, filed a return. Hudson filed a reply.

IIDISCUSSION

In a Penal Code section 995 motion to set aside an information, the superior court determines " ‘if there is some rational ground for assuming the possibility that an offense has been committed and the accused is guilty of it.’ " (People v. Chapple (2006) 138 Cal.App.4th 540, 545, 41 Cal.Rptr.3d 680.) In reviewing a denial of a motion to dismiss under Penal Code section 995, "an appellate court must draw every legitimate inference from the evidence in favor of the information." (Sea Horse Ranch, Inc. v. Superior Court (1994) 24 Cal.App.4th 446, 454, 30 Cal.Rptr.2d 681.)

" ‘[A]lthough there must be some showing as to the existence of each element of the charged crime [citation] such a showing may be made by means of circumstantial evidence supportive of reasonable inferences on the part of the magistrate.’ [Citations.]" (People v. Superior Court (Jurado ) (1992) 4 Cal.App.4th 1217, 1226, 6 Cal.Rptr.2d 242.) A defendant can properly challenge an order denying a motion to dismiss an information under Penal Code section 995 in a petition for writ of prohibition. (Pen. Code, § 999a.)

A. It Is Rational to Assume That Hudson Intended to Evade Paying His Taxes.

Section 19706 states in relevant part: "Any person ... who, within the time required by or under the provisions of this part, willfully fails to file any return ... with intent to evade any tax imposed ..., is punishable by imprisonment in the county jail not to exceed one year, or in the state prison...." Thus, the prosecution needed to make some showing as to each of four elements: (1) Hudson was required to file a tax return; (2) Hudson did not file a tax return within the required time; (3) Hudson willfully chose not to file a tax return; and (4) when Hudson made that choice, he intended to evade paying a tax. (See § 19706 ; see also CALCRIM No. 2801.)

In this writ proceeding, as in the trial court, Hudson challenges only the fourth element. That is, he argues there was insufficient evidence presented at the preliminary hearing to show that when he chose not to file his tax returns in a timely manner he intended to evade paying a tax. We disagree.

It is important to keep in mind that a person's intent "is a question of fact to be determined from all the circumstances of the case, and usually must be proven circumstantially." (See People v. Fujita (1974) 43 Cal.App.3d 454, 469, 471, 117 Cal.Rptr. 757 [conspiracy to commit theft may be inferred from the close association of those promoting an illegal scheme]; see also In re Leanna W. (2004) 120 Cal.App.4th 735, 741, 15 Cal.Rptr.3d 616 [in a burglary charge the "theft of property from a dwelling may create a reasonable inference that there was intent to commit theft at the time of entry"].) "In every crime or public offense there must exist a union, or joint operation of act and intent...." (Pen. Code, § 20.)

Again, what is at issue in this case is Hudson's failure to timely file tax returns "with intent to evade any tax." (§ 19706, italics added.) The word "evade" is a synonym for "avoid," "elude," or "get out of." (Roget's International Thesaurus (4th ed. 1977) p. 486; compare Civ. Code, § 1714.41 [assisting a person who seeks to "escape, evade, or avoid" paying child support].) There is no indication that the Legislature intended the word "evade" to have any technical meaning peculiar to the law. (See CALCRIM No. 200 ["Words and phrases not specifically defined in [jury] instructions are to be applied using their ordinary, everyday meanings"].)

Here, the evidence presented at the preliminary hearing showed that Hudson failed to timely file tax returns for three consecutive years and for those three years he owed $21,974 in taxes in the first year, $27,205 in the second year, and $6,505 in the third year. Had Hudson not owed any tax, or if he was entitled to a tax refund, it would of course be irrational to assume that by not timely filing tax returns he intended to avoid paying taxes he did not owe. (See People v. Mojica (2006) 139 Cal.App.4th 1197, 1203–1204, fn. 4, 43 Cal.Rptr.3d 634 (Mojica ) [there must be some evidence of a tax deficiency under section 19706, although the amount need not be substantial].) Conversely, it is entirely rational to assume that Hudson willfully failed to timely file his tax returns precisely because he intended to evade or avoid paying the substantial taxes that he owed.

But beyond the evidence that Hudson, in fact, owed taxes when he failed to timely file his returns, there was additional evidence of Hudson's intent to evade paying taxes. The evidence showed that...