Marchetti v. United States Grosso v. United States, s. 2

CourtUnited States Supreme Court
Citation390 U.S. 62,19 L.Ed.2d 906,88 S.Ct. 716
Docket NumberNos. 2,12,s. 2
PartiesJames MARCHETTI, Petitioner, v. UNITED STATES. Anthony M. GROSSO, Petitioner, v. UNITED STATES
Decision Date29 January 1968

390 U.S. 62
88 S.Ct. 716
19 L.Ed.2d 906
James MARCHETTI, Petitioner,



Nos. 2, 12.

Supreme Court of the United States

January 29, 1968

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Charles Alan Wright, Austin, Tex., for petitioner.

Francis X. Beytagh, Jr., Cleveland, Ohio, for respondent, pro hac vice, by special leave of Court.

Mr. Justice HARLAN delivered the opinion of the Court.

Petitioner was convicted in the United States District Court for the Western District of Pennsylvania on 15 counts of willful failure to pay the excise tax imposed on wagering by 26 U.S.C. § 4401, four counts of willful failure to pay the special occupational tax imposed by 26 U.S.C. § 4411, and one count of conspiracy to defraud the United States by evading payment of both taxes. 18 U.S.C. § 371. Petitioner moved before trial to dismiss the counts which charged conspiracy to defraud and failure to pay the excise tax, asserting that payment would have obliged him to incriminate himself, in violation of the privilege against self-incrimination guaranteed by the Fifth Amendment. He reiterated this contention in support of unsuccessful motions for acquittal after verdict and for a new trial. The Court of Appeals for the Third Circuit affirmed the conviction. 358 F.2d 154.

Petitioner did not assert below, and therefore has not urged here, that his privilege was violated by reason of his conviction for failure to pay the special occupational tax. He has contended only

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that payment of the excise tax would have required him to incriminate himself, that he therefore may not properly be prosecuted for willful failure to pay the tax or for conspiracy to evade its payment, and that conduct of the trial court after submission of the case to the jury denied him a fair trial. We granted certiorari, 385 U.S. 810, 87 S.Ct. 47, 17 L.Ed.2d 53, and the case was argued with Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889, decided today.1 For reasons which follow, we reverse.


We turn first to petitioner's contention that payment of the wagering excise tax would have compelled him to incriminate himself. We have summarized in Marchetti, supra, the various state and federal penalties which have been imposed upon wagering. It is enough now to reiterate that Pennsylvania, in which petitioner allegedly accepted wagers, has adopted a comprehensive statutory system for the punishment of gambling and ancillary activities. Pa.Stat.Ann., Tit. 18, §§ 4601—4607 (1963). These penalties, in combination with the federal statutes described in Marchetti, place petitioner entirely within 'an area permeated with criminal statutes,' where he is 'inherently suspect of criminal activities.' Albertson v. SACB, 382 U.S. 70, 79, 86 S.Ct. 194, 199, 15 L.Ed.2d 165. The issues here are therefore

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whether payment of the excise tax would have provided information incriminating to petitioner, and, if it would have done so, whether petitioner is otherwise prevented from asserting the constitutional privilege.

The statutory scheme by which wagering is taxed is described in Marchetti, supra. Two additional observations are, however, required in order to assess fully the hazards of self-incrimination created by the wagering excise tax. First, those liable for payment of that tax are required to submit each month Internal Revenue Service Form 730. Treas. Reg. § 44.6011(a) 1(a). The return is expressly designed for the use only of those engaged in the wagering business; its submission, and the replies demanded by each of its questions, evidence in the most direct fashion the fact of the taxpayer's wagering activities. Although failures to pay the excise tax and to file a return are separately punishable under 26 U.S.C. § 7203, the two obligations must be considered inseparable for purposes of measuring the hazards of self-incrimination which might stem from payment of the excise tax. Nothing in the pertinent statutes or regulations contemplates payment of the tax without submission of the return,2 and we are informed by the United States that if the return does not accompany the tax payment, 'the money is not accepted.' Brief for the United States on Reargument 39, n. 35. We must conclude that here, as in Albertson, the validity under the Constitution of criminal prosecutions for willful failure to pay the excise tax may properly be determined only after assessment of the hazards of incrimination which would result from 'literal and full compliance' with all the statutory requirements. 382 U.S., at 78, 86 S.Ct., at 199.

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Second, although there is no statutory instruction, as there is for the occupational tax, that state and local prosecuting officers be provided listings of those who have paid the excise tax, neither has Congress imposed explicit restrictions upon the use of information obtained as a consequence of payment of the tax. Moreover, it appears that the Revenue Service, evidently acting under the authority of certain general statutory provisions,3 has undertaken to tender this information to interested prosecuting authorities. 4 We can only conclude that those liable for payment of the excise tax reasonably may expect that information obtainable from its payment, or from submission of Form 730, will ultimately be proffered to state and federal prosecuting officers.

In these circumstances, it would be impossible to say that the hazards of incrimination which stem from the obligation to pay the excise tax and to file Form 730 are 'imaginary and unsubstantial.' Reg. v. Boyes, 1 B. & S. 311, 330; Brown v. Walker, 161 U.S. 591, 599—600, 16 S.Ct. 644, 647—648, 40 L.Ed. 819. The criminal penalties for wagering with which petitioner is threatened are scarcely 'remote possibilities out of the ordinary course of law,' Heike v. United States, 227 U.S. 131, 144, 33 S.Ct. 226, 228, 57 L.Ed. 450; yet he is obliged, on pain of criminal prosecution, to provide information which

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would readily incriminate him, and which he may reasonably expect would be provided to prosecuting authorities. These hazards of incrimination can only be characterized as 'real and appreciable.' Reg. v. Boyes, supra, at 330; Brown v. Walker, supra, at 599—600, 16 S.Ct. at 647—648. Moreover, unlike the income tax return at issue in United States v. Sullivan, 274 U.S. 259, 47 S.Ct. 607, 71 L.Ed. 1037, petitioner's submission of an excise tax payment, and his replies to the questions on the attendant return, would directly and unavoidably have served to incriminate him; his claim of privilege as to the entire tax payment procedure was therefore neither 'extreme' nor 'extravagant.' Compare, id., at 263, 47 S.Ct. 607.

We are thus obliged to inquire whether petitioner is otherwise foreclosed from asserting the constitutional privilege. For reasons indicated in Marchetti, supra, we have found nothing in United States v. Kahriger, 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754, or Lewis v. United States, 348 U.S. 419, 75 S.Ct. 415, 99 L.Ed. 475, which now warrants the exclusion of this situation from the privilege's protection.5 It need only be added that the requirements associated with the excise tax are directed wholly to past and present wagering activities; they lack even the illusory prospectivity which characterizes the special occupational tax and registration requirements.

Similarly, we have concluded that the 'required records' doctrine, Shapiro v. United States, 335 U.S. 1, 68 S.Ct. 1375, 92 L.Ed. 1787, cannot be appropriately applied to these circumstances. See generally Marchetti v. United States, supra. The premises of the doctrine, as it is described in Shapiro, are evidently three: first, the purposes of the United

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States' inquiry must be essentially regulatory; second, information is to be obtained by requiring the preservation of records of a kind which the regulated party has customarily kept; and third, the records themselves must have assumed 'public aspects' which render them at least analogous to public documents. There is no need for present purposes to examine the relative significance of these three factors, or to undertake to define more specifically their incidents, for both the first and third factors are plainly absent from this case.

Here, as in Marchetti, the statutory obligations are directed almost exclusively to individuals inherently suspect of criminal activities. The principal interest of the United States must be assumed to be the collection of revenue, and not the prosecution of gamblers, United States v. Calamaro, 354 U.S. 351, 358, 77 S.Ct. 1138, 1143, 1 L.Ed.2d 1394; but we cannot ignore either the characteristics of the activities about which information is sought, or the composition of the group to which the inquiries are made. These collateral circumstances, in combination with Congress' apparent wish that any information obtained as a consequence of the wagering taxes be made available to prosecuting authorities, readily suffice to distinguish these requirements from those at issue in Shapiro. Moreover, the information demanded here lacks every characteristic of a public document. No doubt it is desired by the United States, but we have concluded, for reasons indicated in Marchetti, that this alone does not render information 'public,' and thus does not deprive it of constitutional protection.

We must note that the pertinent Treasury regulations provide that the replies to the questions included on Form 730 are to be compiled each month 'from the daily records required by §§ 44.4403 1 and 44.6001—1.' Treas. Reg. § 44.6011(a)—1(a). It might therefore be argued that Form 730 is merely a monthly abstract of

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records essentially similar to those required to be preserved by the regulations in Shapiro. The difficulties with this argument are two. First, it is scarcely plain that the records required here are 'of the same kind (the...

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