U.S. v. Neff

• Decision Date: 28 February 1980
• Docket Number: No. 79-1286,79-1286
• Parties: 80-1 USTC P 9397, 6 Fed. R. Evid. Serv. 169 UNITED STATES of America, Plaintiff-Appellee, v. Robert NEFF, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1235

615 F.2d 1235

80-1 USTC P 9397, 6 Fed. R. Evid. Serv. 169

UNITED STATES of America, Plaintiff-Appellee, v. Robert NEFF, Defendant-Appellant.

No. 79-1286.

United States Court of Appeals, Ninth Circuit.

Feb. 28, 1980.

Rehearing Denied April 16, 1980.

Gary Joslin, Esq., Salt Lake City, Utah, for defendant-appellant.

Nancy Simpson, Asst. U. S. Atty., San Francisco, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before WALLACE and KENNEDY, Circuit Judges, and LARSON, ^* District Judge.

WALLACE, Circuit Judge:

Neff appeals his conviction pursuant to 26 U.S.C. § 7203 for willful failure to file income tax returns. He claims that prosecution for the crime violated his Fifth Amendment privilege against self-incrimination and that the admission of certain evidence was erroneous because it was hearsay and because it denied his Sixth Amendment right to confrontation. We reject his claims and affirm the conviction.

I

During 1974 and 1975, Neff was employed as a police officer and received wages from the City of San Jose, California. During 1974 he also received capital gains from dealings in gold and silver coins. His community property share of income from employment and investments exceeded $14,000 in 1974 and $8,500 in 1975. During each of these years, Neff, who had previously filed proper returns, submitted to the IRS a standard individual income tax return form (form 1040) on which Neff provided no financial information from which his tax liabilities could be calculated. As returned by Neff, the forms contained only essential identification information and Neff's signature. In response to more than 25 questions about his financial and tax status, Neff had printed the words "Object: Self-Incrimination." Remaining questions had been answered either "None" or "Unknown." Neff also appended to the forms, in each of these years, over 100 pages of general protest material challenging, among other things, the national monetary system, government spending, and federal reserve notes.

The Internal Revenue Service (IRS) responded by letter to Neff, explaining that the forms as he filled them out were not acceptable tax returns and providing additional blank forms for proper completion. Neff refused to comply, claiming that by doing so he would waive his Fifth Amendment privilege against self-incrimination. The government filed an information charging Neff with two counts of willful failure to file income tax returns, and a jury found him guilty of both counts.

We first consider Neff's claim of denial of the privilege against self-incrimination. We then examine the alleged hearsay evidence and denial of the right to confront adverse witnesses.

II

By asserting his Fifth Amendment privilege at the time he filed the 1040 forms, Neff complied with the well-established rule that a self-incrimination objection to an income tax return must be raised at the time of filing. Garner v. United States, 424 U.S. 648, 665 & n.21, 96 S.Ct. 1178, 1187 & n.21, 47 L.Ed.2d 370 (1976); United States v. Raborn, 575 F.2d 688, 689 (9th Cir. 1978). After the jury was impaneled, and just before opening statements were to begin, Neff moved for a pretrial ruling on the validity of his Fifth Amendment claim. This motion was denied as untimely. ¹ Neff complains that he never thereafter received a judicial ruling on the validity of his asserted privilege. We disagree. An examination of the record shows that the district judge repeatedly expressed his conviction that Neff had no valid self-incrimination claim. In his instructions to the jury, the judge stated that Neff's belief to the contrary was "erroneous as a matter of law." Our responsibility on review is to determine the propriety of that ruling.

The Supreme Court has stated that the privilege against self-incrimination, if validly exercised, is an absolute defense to a section 7203 prosecution for failure to file an income tax return. Garner v. United States, supra, 424 U.S. at 662-63, 96 S.Ct. at 1186-1187. The Court has also held, however, that the privilege does not justify an outright refusal to file any income tax return at all. United States v. Sullivan, 274 U.S. 259, 263, 47 S.Ct. 607, 71 L.Ed. 1037 (1927). Furthermore, an objection may properly be raised only in response to specific questions asked in the return. Id. See Garner v. United States, 501 F.2d 228, 239 n.18 (9th Cir. 1974) (en banc), aff'd Garner v. United States, supra, 424 U.S. 648, 96 S.Ct. 1178, 47 L.Ed.2d 370.

We are here faced with a case in which the taxpayer did assert his privilege in response to specific questions in the tax return form, but did so on such a wholesale basis as to deny the IRS any useful financial or tax information. ² Other circuits, faced with similar wholesale assertions of the privilege against self-incrimination, have concluded that a tax return form which contains no information from which tax liability can be calculated does not constitute a tax return within the meaning of the IRS laws. Once these courts determine that the taxpayer has filed no return, simple application of the Sullivan precedent, which states that the Fifth Amendment will never justify a complete failure to file a return, invalidates the Fifth Amendment defense. E. g., United States v. Irwin, 561 F.2d 198, 201 (10th Cir. 1977), cert. denied, 434 U.S. 1012, 98 S.Ct. 725, 54 L.Ed.2d 755 (1978); United States v. Silkman, 543 F.2d 1218, 1219-20 (8th Cir. 1976) (per curiam), cert. denied, 431 U.S. 919, 97 S.Ct. 2185, 53 L.Ed.2d 230 (1977); United States v. Daly, 481 F.2d 28, 30 (8th Cir.) (per curiam), cert. denied, 414 U.S. 1064, 94 S.Ct. 571, 38 L.Ed.2d 469 (1973).

Although we recognize the ease with which the logic used in these cases would resolve the issue before us, we conclude that such reliance upon the definition of a tax return is inappropriate, because it lacks independent Fifth Amendment analysis. Moreover, the usefulness of this definitional approach is too limited because it is confined to facts such as those presented here: the wholesale assertion, albeit in response to specific questions, of the privilege against self-incrimination. In settings in which the Fifth Amendment right has been more discretely asserted, it would be difficult to conclude that no return has been filed, and, therefore, inappropriate to apply this definitional analysis. ³ We therefore choose not to follow the lead of the cited cases. We believe that the better approach to this and future Fifth Amendment tax return cases is to apply more traditional Fifth Amendment analysis. ⁴

The requirement that citizens file a yearly income tax return does not, of itself, violate their privilege against self-incrimination. This conclusion is implicit in the Supreme Court ruling that taxpayers cannot rely upon the Fifth Amendment to justify a complete failure to file. See Sullivan v. United States, supra, 274 U.S. at 263, 47 S.Ct. at 607. Other statutory reporting requirements have been found to violate the privilege, but the reporting schemes in these cases were "directed at a highly selective group inherently suspect of criminal activities . . . in an area permeated with criminal statutes . . . ." Albertson v. SACB, 382 U.S. 70, 79, 86 S.Ct. 194, 199, 15 L.Ed.2d 165 (1965). Questions on income tax returns, in contrast, are "neutral on their face and directed at the public at large . . . ." Id. See also California v. Byers, 402 U.S. 424, 429, 91 S.Ct. 1535, 1538, 29 L.Ed.2d 9 (1971); Marchetti v. United States, 390 U.S. 39, 57, 88 S.Ct. 697, 707, 19 L.Ed.2d 889 (1968); Grosso v. United States, 390 U.S. 62, 64, 88 S.Ct. 709, 711, 19 L.Ed.2d 906 (1968). Therefore, in order for Neff to escape prosecution under section 7203, there must be something peculiarly incriminating about his circumstances that justifies his reliance on the Fifth Amendment. Before examining that circumstance, we will set forth pertinent Fifth Amendment principles.

To claim the privilege validly a defendant must be faced with " 'substantial hazards of self incrimination,' " California v. Byers, supra, 402 U.S. at 429, 90 S.Ct. at 1538, that are " 'real and appreciable' and not merely 'imaginary and unsubstantial.' " Marchetti v. United States, supra, 390 U.S. at 48, 88 S.Ct. at 702, quoting in part Rogers v. United States, 340 U.S. 367, 374-75, 71 S.Ct. 438, 442, 95 L.Ed. 344 (1951). Moreover, he must have "reasonable cause to apprehend (such) danger from a direct answer" to questions posed to him. Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951). The information that would be revealed by direct answer need not be such as would itself support a criminal conviction, however, but must simply "furnish a link in the chain of evidence needed to prosecute the claimant for a federal crime." Id. See also Hashagen v. United States, 283 F.2d 345, 348 (9th Cir. 1960). Indeed, it is enough if the responses would merely "provide a lead or clue" to evidence having a tendency to incriminate. Id. at 348.

In determining whether such a real and appreciable danger of incrimination exists, a trial judge must examine the "implications of the question(s) in the setting in which (they are) asked . . . ." Hoffman v. United States, supra, 341 U.S. at 486, 71 S.Ct. at 818; United States v. Pierce, 561 F.2d 735, 741 (9th Cir. 1977), cert. denied, 435 U.S. 923, 98 S.Ct. 1486, 55 L.Ed.2d 516 (1978); Hashagen v. United States, supra, 283 F.2d at 350. He " '(m)ust be governed as much by his personal perception of the peculiarities of the case as by the facts actually in evidence.' " Hoffman v. United States, supra, 341 U.S. at 487, 71 S.Ct. at 818, quoting Ex parte Irvine, 74 F. 954, 960 (C.C.Ohio, 1896); United States v. Pierce, supra, 561 F.2d at 741. If the trial judge decides from this examination of the questions, their setting, and the peculiarities of the case, that no threat of...