U.S. v. Payne, No. 91-8073

CourtU.S. Court of Appeals — Tenth Circuit
Writing for the CourtBefore McKAY; BALDOCK
Citation978 F.2d 1177
Docket NumberNo. 91-8073
Decision Date28 October 1992
Parties-372, 92-2 USTC P 50,555 UNITED STATES of America, Plaintiff-Appellee, v. James C. PAYNE, Defendant-Appellant.

Page 1177

978 F.2d 1177
71 A.F.T.R.2d 93-372, 92-2 USTC P 50,555
UNITED STATES of America, Plaintiff-Appellee,
v.
James C. PAYNE, Defendant-Appellant.
No. 91-8073.
United States Court of Appeals,
Tenth Circuit.
Oct. 28, 1992.

Page 1178

Michael Abramovitz (Theordore H. Merriam, with him on the brief), of Abramovitz, Merriam & Shaw, Denver, Colo., for defendant-appellant.

John Barksdale, Asst. U.S. Atty. (Richard A. Stacy, U.S. Atty., and Maynard D. Grant, Sp. Asst. U.S. Atty., with him on the brief), Cheyenne, Wyo., for plaintiff-appellee.

Before McKAY, Chief Judge, BALDOCK and LAY, * Circuit Judges.

BALDOCK, Circuit Judge.

Defendant James C. Payne appeals his convictions on four counts of tax evasion, 26 U.S.C. § 7201, and three counts of false representations of social security numbers. 42 U.S.C. § 408(a)(7)(B). Defendant contends that the evidence was insufficient on all counts because the affirmative acts giving rise to the criminal charges occurred outside of the applicable statutes of limitations. Defendant also claims that the district court erroneously excluded evidence regarding his good faith belief that his conduct was legal. 1 Our jurisdiction arises under 28 U.S.C. § 1291.

During the relevant period, Defendant received interest and dividend income from savings and brokerage accounts. When Defendant opened these accounts between 1977 and 1984, he provided false social security numbers to his bank and brokerage firms (collectively "the payors"). The payors issued Internal Revenue Service ("IRS") Forms 1099 annually for the 1984-87 tax years, reporting Defendant's income to the IRS under the false social security numbers. Defendant received the 1099 forms for the 1984-87 tax years from the payors, but never filed income tax returns for these years. In March 1991, Defendant was indicted on four counts of tax evasion for the years 1984-87 respectively and three counts of false representation of social security numbers. Following a jury trial, Defendant was convicted of all counts.

The federal tax evasion statute provides that "[a]ny person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall ... be guilty of a felony...." 26 U.S.C. § 7201. The elements of a § 7201 violation are an affirmative act constituting an evasion or attempted evasion of the tax, willfullness, and the existence of a substantial tax deficiency. Sansone v. United States, 380 U.S. 343, 351, 85 S.Ct. 1004, 1010, 13 L.Ed.2d 882 (1965); United States v. Swallow, 511 F.2d 514, 519 (10th Cir.), cert. denied, 423 U.S. 845, 96 S.Ct. 82, 46 L.Ed.2d 66 (1975). The failure to file a tax return is insufficient to establish the affirmative act necessary for a § 7201 conviction. Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 368, 87 L.Ed. 418 (1943). A tax evasion prosecution must be commenced within six years

Page 1179

after the commission of the offense. 26 U.S.C. § 6531(2).

Defendant argues that the evidence is insufficient on the four tax evasion counts because the government failed to prove an affirmative act within the six year statute of limitations. Defendant concedes that he provided false social security numbers to the payors between 1977 and 1984, but argues that these affirmative acts cannot support his conviction because they occurred more than six years prior to the indictment. The government counters by arguing that Defendant's "annual reaffirmation"--i.e. failure to correct--the erroneous social security numbers on the 1099 forms that he received from the payors constitutes an affirmative act within the limitations period. See United States v. Williams, 928 F.2d 145, 149 (5th Cir.) (knowingly maintaining false W-4 form on file with employer constituted affirmative act supporting § 7201 conviction), cert. denied, --- U.S. ----, 112 S.Ct. 58, 116 L.Ed.2d 34 (1991).

We need not decide whether Defendant's failure to correct the erroneous social security numbers satisfies the "affirmative act" element of § 7201 because Defendant's argument is premised on the erroneous assumption that an affirmative act commences the running of the statute of limitations. Generally, the statute of limitations does not begin to run until the crime is complete. Toussie v. United States, 397 U.S. 112, 115, 90 S.Ct. 858, 860, 25 L.Ed.2d 156 (1970); Pendergast v. United States, 317 U.S. 412, 418, 63 S.Ct. 268, 270, 87 L.Ed. 368 (1943). "A crime is complete as soon as every element in the crime occurs." United States v. Musacchio, 968 F.2d 782, 790 (9th Cir.1991). Because a tax deficiency is an essential element of the crime of tax evasion, Sansone, 380 U.S. at 343, 85 S.Ct. at 1004; Swallow, 511 F.2d at 514, the statute of limitations did not begin to run on Defendant's § 7201 violations until Defendant incurred a tax deficiency. See United States v. Kafes, 214 F.2d 887, 890 (3d Cir.) (tax evasion offense not complete until defendant's tax payment became due), cert. denied, 348 U.S. 887, 75 S.Ct. 207, 99 L.Ed. 697 (1954). Defendant did not incur a tax deficiency until his tax liability for the years 1984-87 became due--i.e. April 15 of each succeeding year. See United States v. DiPetto, 936 F.2d 96, 97 (2d Cir.) (per curiam) (tax deficiency element satisfied after April 15 of each year defendant failed to file tax return), cert. denied, --- U.S. ----, 112 S.Ct. 193, 116 L.Ed.2d 153 (1991). Therefore, Defendant's earliest act of tax evasion was not complete until April 15, 1985. See id. at 98 ("limitations period began on the day on which the tax returns were due"). See also 85 A.L.R.Fed. Limitations Period-Tax Evasion § 3[a] at 885 (1987) (when tax evasion based on failure to file return, statute of limitations begins to run when return is due). The indictment, returned in March 1991, timely commenced the prosecution of Defendant for tax evasion within the six-year statute of limitations. 2

Page 1180

Defendant raises a similar statute of limitations argument relating to his convictions for false representations of social security numbers. 42 U.S.C. § 408(a)(7)(B). The statute under which Defendant was convicted provides, in relevant part,

[w]hoever, ... for any ... purpose, ... with intent to deceive, falsely represents a number to be the social security account number assigned by the Secretary to him or to another person, when in fact such number is not the social security account number assigned by the Secretary to him or to such other person, ... shall be guilty of a felony....

Id. As § 408(a)(7)(B) does not contain its own statute of limitations, the general five year statute of limitations for non-capital offenses applies. 18 U.S.C. § 3282. Despite the undisputed evidence that Defendant's last false representation of a social security number to a payor occurred in 1984, more than five years prior to the return of the indictment, the government contends that a violation of § 408(a)(7)(B) is a continuing offense that is not completed until Defendant corrects the false numbers, and that Defendant committed new acts of false representation when he reaffirmed the social security numbers by failing to correct the 1099 forms he received from the payors.

The continuing offense doctrine "should be applied in only limited circumstances ... [in which] the explicit language of the substantive criminal statute compels such a conclusion, or the nature of the crime involved is such that Congress must assuredly have intended that it be treated as a continuing one." Toussie, 397 U.S. at 115, 90 S.Ct. at 860. See also 18 U.S.C. § 3282 (statute of limitations should not be extended "[e]xcept as otherwise provided by law"). In Toussie, the defendant was prosecuted for failing to register for the draft and moved to dismissed on statute of limitations grounds because the prosecution was initiated more than five years after he was initially required to register. The lower courts had interpreted the statute, which required...

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35 practice notes
  • U.S. v. Reitmeyer, No. 02-5151.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • February 4, 2004
    ...412, 418, 63 S.Ct. 268, 87 L.Ed. 368 (1943). "A crime is complete as soon as every element in the crime occurs." United States v. Payne, 978 F.2d 1177, 1179 (10th Cir.1992) (quotation marks and citation Under the principles discussed above, the statute of limitations began running in this c......
  • United States v. Melot, No. 14-cv-0865 MCA/SMV
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • April 20, 2015
    ...begins to run from the latter of the due date of the tax return or the last affirmative act of evasion. See United States v. Payne, 978 F.2d 1177, 1179 n.2 (10th Cir. 1992). In cases in which the defendant commits an affirmative act of evasion after the statutory due date, the limitations p......
  • United States v. Yurek, No. 18-1134
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • May 21, 2019
    ...willfully. To satisfy the willfulness requirement, the government had to prove a specific intent to evade taxes. United States v. Payne , 978 F.2d 1177, 1182 (10th Cir. 1992) ; see Hoskins , 654 F.3d at 1090 ("Under § 7201, ‘willfulness’ means the ‘voluntary, intentional violation of a know......
  • U.S. v. Schiff, No. CV-S-03-0281-LDG RJJ.
    • United States
    • U.S. District Court — District of Nevada
    • June 16, 2003
    ...Anyone Can Stop Paying Taxes that the filing of a tax return was voluntary, and that his wages were not taxable); United States v. Payne, 978 F.2d 1177 (10th Cir.1992) (same), cert. denied, 508 U.S. 950, 113 S.Ct. 2441, 124 L.Ed.2d 659 (1993); United States v. Middleton, 246 F.3d 825 (6th C......
  • Request a trial to view additional results
35 cases
  • U.S. v. Reitmeyer, No. 02-5151.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • February 4, 2004
    ...412, 418, 63 S.Ct. 268, 87 L.Ed. 368 (1943). "A crime is complete as soon as every element in the crime occurs." United States v. Payne, 978 F.2d 1177, 1179 (10th Cir.1992) (quotation marks and citation Under the principles discussed above, the statute of limitations began running in this c......
  • United States v. Melot, No. 14-cv-0865 MCA/SMV
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • April 20, 2015
    ...begins to run from the latter of the due date of the tax return or the last affirmative act of evasion. See United States v. Payne, 978 F.2d 1177, 1179 n.2 (10th Cir. 1992). In cases in which the defendant commits an affirmative act of evasion after the statutory due date, the limitations p......
  • United States v. Yurek, No. 18-1134
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • May 21, 2019
    ...willfully. To satisfy the willfulness requirement, the government had to prove a specific intent to evade taxes. United States v. Payne , 978 F.2d 1177, 1182 (10th Cir. 1992) ; see Hoskins , 654 F.3d at 1090 ("Under § 7201, ‘willfulness’ means the ‘voluntary, intentional violation of a know......
  • U.S. v. Schiff, No. CV-S-03-0281-LDG RJJ.
    • United States
    • U.S. District Court — District of Nevada
    • June 16, 2003
    ...Anyone Can Stop Paying Taxes that the filing of a tax return was voluntary, and that his wages were not taxable); United States v. Payne, 978 F.2d 1177 (10th Cir.1992) (same), cert. denied, 508 U.S. 950, 113 S.Ct. 2441, 124 L.Ed.2d 659 (1993); United States v. Middleton, 246 F.3d 825 (6th C......
  • Request a trial to view additional results

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