U.S. v. Holroyd, 1016

• Citation: 732 F.2d 1122
• Decision Date: 18 April 1984
• Docket Number: No. 1016,D,1016
• Parties: 84-1 USTC P 9423 UNITED STATES of America, Plaintiff-Appellant, v. John E. HOLROYD, Defendant-Appellee. ocket 83-1451.
• Court: U.S. Court of Appeals — Second Circuit

Page 1122

732 F.2d 1122

84-1 USTC P 9423

UNITED STATES of America, Plaintiff-Appellant, v. John E. HOLROYD, Defendant-Appellee.

No. 1016, Docket 83-1451.

United States Court of Appeals, Second Circuit.

Argued March 28, 1984.

Decided April 18, 1984.

Deborah Wright Dawson, Atty., Tax Div., Dept. of Justice, Washington, D.C. (Glenn L. Archer, Jr., Asst. Atty. Gen., Michael L. Paup, Robert E. Lindsay, Washington, D.C., on brief, Salvatore R. Martoche, U.S. Atty., W.D.N.Y., Buffalo, N.Y., of counsel), for plaintiff-appellant.

Patrick J. Brown, Buffalo, N.Y. (LoTempio & Brown, Buffalo, N.Y., on brief), for defendant-appellee.

Before KAUFMAN, KEARSE and PIERCE, Circuit Judges.

IRVING R. KAUFMAN, Circuit Judge:

Section 7206(1) of the Internal Revenue Code, 26 U.S.C. Sec. 7206(1) (1976), proscribes the willful filing with the Internal Revenue Service of any statement, verified by a written declaration that it is made under penalty of perjury, that an individual does not believe to be accurate in every material respect. ¹ We consider today the question whether a statement on an IRS form whose use is not expressly authorized by statute or regulation may serve as a basis for prosecution under that section.

Judge Curtin, in the court below, 579 F.Supp. 494, dismissed an indictment involving alleged omissions on two forms signed and subscribed by appellee John E. Holroyd. The judge based his action on the authority of the only reported case in point, United States v. Levy, 533 F.2d 969 (5th Cir.1976). It held that Sec. 7206(1) applies only to statements "required by the Internal Revenue Code or by any regulation lawfully promulgated" thereunder, id. at 975.

After a careful examination of that provision, its legislative history and statutory context, we are persuaded that Levy erroneously narrowed the purview of Sec. 7206(1). We conclude that the offenses stated in the indictment may be prosecuted under that section, and therefore reverse the order of the district court and remand for a trial on the indictment. Before turning to the legal issues, we set forth the relevant facts.

I. Background

The history of this case may be briefly stated. On June 15, 1983, a grand jury in the Western District of New York returned a two-count indictment against appellee Holroyd, charging him with willfully signing, under penalty of perjury, and filing with the IRS two materially false statements, in violation of 26 U.S.C. Sec. 7206(1). Count 1 charged that on or about February 18, 1981, Holroyd signed and submitted an IRS Collection Information Statement (Form 433-AB), containing a perjury declaration, on which he knowingly failed to state that he owned a 23-foot Bayliner 2350 Monterey Model power boat. Count 2 charged the same omission with respect to an IRS Collection Information Statement for Individuals (Form 433-A), a successor to the form previously filed, which was submitted on or about April 7, 1982. Both forms were filed with the IRS in connection with an ongoing assessment of Holroyd's ability to pay a tax liability outstanding since 1969. As a result of the false statements, the Government asserted, Holroyd's account was maintained in "uncollectable" status.

On July 25, 1983, Holroyd moved to dismiss the indictment. In ruling on the motion, the district judge noted that the Fifth Circuit's decision in United States v. Levy, supra, also involved felony charges under Sec. 7206(1) based upon allegedly false statements made on IRS Form 433-AB. In attempting to divine the correct interpretation of Sec. 7206(1), the Levy court acknowledged that the literal words of the statute embraced "any return, statement, or other document," with no limiting conditions. It also found the provision's legislative history inconclusive on the proper reading of those terms. The panel reasoned, however, that the "unadorned words" of the section had to be examined in their statutory context to discern their intended meaning. Id. at 972. After citing general principles governing the construction of criminal statutes, the court concluded that the "most tenable" interpretation of Sec. 7206(1) would restrict its application to "any statement or document then, or thereafter, required either by the Internal Revenue Code or by any regulation lawfully promulgated by the Secretary for the enforcement of the Code." Id. at 973. Any broader view, the panel feared, would give IRS revenue officers excessive discretion to compel taxpayers to sign verified forms, which could in turn become the basis for felony prosecutions. Because the Government had conceded that Form 433-AB was not so required, the Levy court held that the indictment could not stand.

Judge Curtin noted that no case decided since Levy suggested that a different result was appropriate in the instant case. The judge declared that this case involved facts "almost identical" to those in Levy. Deciding on the authority of that case that Forms 433-AB and 433-A are not "statements" within the meaning of Sec. 7206(1), the judge accordingly dismissed the indictment. The Government appeals, urging that the district court's order be reversed and the case remanded for trial.

II. Discussion

We agree with Judge Curtin that this case is virtually on all fours with Levy, and that his dismissal order was compelled if Levy was properly decided. We are thus squarely presented with the question of the correctness of Levy's reading of the language of Sec. 7206(1).

The words chosen by Congress in drafting Sec. 7206(1) are, as the Levy court stated, unambiguous; the provision on its face applies to the making and subscribing of "any return, statement, or other document" (emphasis added), without qualification. Similarly, we agree that the legislative history provides no guidance on the propriety of a broad or restrictive reading of the section. In enacting the predecessor of Sec. 7206(1), Sec. 3809 of the Internal Revenue Code of 1939, Congress was concerned with eliminating the oath required for tax forms and substituting a written verification on the forms themselves. It simultaneously adopted a felony sanction for fraudulent statements on verified forms, which was recodified as Sec. 7206(1) of the Internal Revenue Code of 1954. The legislative history does not define the words "return", "statement", or "document". See H.Rep. No. 1337, 83rd Cong., 2d Sess. A425 (1954), reprinted in 1954 U.S.Code Cong. & Ad.News 4025, 4573; S.Rep. No. 1622, 83rd Cong., 2d Sess. 602 (1954), reprinted in 1954 U.S.Code Cong. & Ad.News 5252.

We draw different conclusions, however, than do our Fifth Circuit colleagues. Our analysis is constrained by a fundamental rule of statutory construction: when the express language of a statute is clear, a court will not adopt a different construction absent clear legislative history contradicting the plain meaning of the words. See, e.g., United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981); Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980); Aaron v. Securities and Exchange Commission, 446 U.S. 680, 695, 100 S.Ct. 1945, 1955, 64 L.Ed.2d 611 (1980); In re Grand Jury Investigation of Cuisinarts, Inc., 665 F.2d 24, 32 (2d Cir.1981), cert. denied sub nom. Connecticut v. Cuisinarts, --- U.S. ---, 103 S.Ct. 1520, 75 L.Ed.2d 945 (1983). Given the inconclusiveness of the legislative history of Sec. 7206(1), we can find no warrant for deviating from the words chosen by Congress, which set out the scope of the provision with patent clarity.

In interpreting a provision of law, "our lodestar must be the statute's fundamental purpose." Silver v. Mohasco Corp., 602 F.2d 1083, 1087 (2d Cir.1979), rev'd on other grounds, 447 U.S. 807, 100 S.Ct. 2486, 65 L.Ed.2d 532 (1980). Section 7206(1) is part of the "hierarchy of tax offenses", United States v. Bishop, 412 U.S. 346, 359, 93 S.Ct. 2008, 2016, 36 L.Ed.2d 941 (1973), the proscriptions of which "singly or in combination were calculated to induce prompt and forthright fulfillment of every duty under the income tax law ...", Spies v. United States, 317 U.S. 492, 497, 63 S.Ct. 364, 367, 87 L.Ed. 418 (1943). Indeed, the Supreme Court has noted the "formidable line of precedent construing congressional intent to uphold the claimed enforcement authority of the Service if such authority is necessary for the effective enforcement of the revenue laws and is not undercut by contrary legislative purposes." United States v. Euge, 444 U.S. 707, 715-16, 100 S.Ct. 874, 880-81, 63 L.Ed.2d 141 (1980). We are of the view that the IRS's enforcement powers should not be narrowly construed, in derogation of its paramount duty to assess and collect taxes, "absent unambiguous directions from Congress." United States v. Bisceglia, 420 U.S. 141, 150, 95 S.Ct. 915, 921, 43 L.Ed.2d 88 (1975).

Moreover, our reading of Sec. 7206(1) is buttressed by comparison of this section with other sections of the Code. Section 6065 requires verification of "any return, declaration, statement, or other document required to be made under any provision of the internal revenue laws or regulations ..." ² (emphasis added). Had Congress meant the same limiting construction to attach to Sec. 7206(1), it failed to so state respecting that section. Comparison with two other sections of the Internal Revenue Code is also appropriate. 26 U.S.C. Sec. 7206(3), another of the felony sanctions accompanying Sec. 7206(1), makes it a crime to simulate or falsely or fraudulently execute or sign "any bond, permit, entry, or other document required by the provisions of the internal revenue laws, or by any regulation made in pursuance thereof ...." Even within the same section, then, Congress attached this limiting language when it intended to restrict a subsection's application.

In addition, 26 U.S.C. Sec. 7207 creates a misdemeanor offense for knowingly and willfully making a materially fraudulent...