U.S. v. Voorhies

Decision Date08 October 1981
Docket NumberNo. 80-1725,80-1725
Citation658 F.2d 710
Parties81-2 USTC P 9710 UNITED STATES of America, Plaintiff-Appellee, v. Victor S. VOORHIES, Defendant-Appellant.
CourtU.S. Court of Appeals — Ninth Circuit

Harvey D. Tack, Hochman, Salkin & DeRoy, Beverly Hills, Cal., for defendant-appellant.

Debra A. Wright, Washington, D. C., argued, for plaintiff-appellee; Michael L. Paup, Chief App. Sec., Washington, D. C., on brief.

Appeal from the United States District Court for the District of Nevada.

Before FARRIS and NELSON, Circuit Judges, and CARROLL, * District Judge.

FARRIS, Circuit Judge:

Victor Voorhies appeals his convictions for two counts of willful evasion of the payment of income taxes for calendar years 1970 and 1972. See 26 U.S.C. § 7201 (1976). He contends that (1) a conviction for evasion of the payment of taxes cannot be based on a determination and assessment of tax liability made final only after the period of criminality alleged in the indictment; (2) even if a conviction can be so based, tax liability cannot be established solely by the opinion testimony of the examining revenue agent; and (3) his acts during the period covered by the indictment were insufficient to constitute a willful attempt to evade or defeat payment of his 1970 and 1972 income taxes. See 28 U.S.C. § 1291 (1976). We affirm.

I. FACTS

During an audit of Voorhies' 1971 federal income tax return in 1973, revenue agent Nelson discovered that Voorhies had not filed personal returns for the 1970 and 1972 calendar years. Using bank statements, cancelled checks, and wedding receipts furnished by Voorhies' accountants, Nelson prepared substitute returns for 1970 and 1972. Voorhies did not sign these returns.

On January 18, 1974, Voorhies' corporation, United Chapel Associates, closed the sale of its wedding chapel business to Smith. The corporation received, as proceeds of the sale, a $76,486.24 check from escrow 1 and a $125,000.00 note from Smith. Voorhies exchanged the escrow check at Valley Bank of Nevada for eleven cashier's checks. He sold the Smith note to Wright for gold coins and a platinum bar valued at $50,000.00.

Voorhies traveled to Europe in late January, 1974. In that same year, he returned to the United States, traveled to the South Pacific, and returned to Europe. Customs information forms indicated that Voorhies took $11,900.00 out of the United States on January 31, 1974; that he either took $8,400.00 out of or into the United States on February 17, 1974; and that he brought $7,600.00 into the United States on April 30, 1974. An IRS form signed by Voorhies, which inaccurately reported his social security number, indicated that he had exchanged $30,000.00 in United States currency for 100,000 Swiss francs in Zurich in August 1974. 2 Nine of the eleven cashier's checks were negotiated through Swiss Bank Corporation of Zurich in 1974.

A "30-day letter" proposing assessment of $12,345.00 plus penalties for 1970 and of $20,885.00 plus penalties for 1972 was mailed to Voorhies on February 12, 1974. A statutory notice of deficiency (or "90-day letter") relating to these 1970 and 1972 assessments was mailed to Voorhies on June 7, 1974. 3 Assessments of audit deficiencies and statutory penalties were made on February 3, 1975, for the 1972 tax year and on February 24, 1975, for the 1970 tax year.

Voorhies was indicted on January 16, 1980, on five counts of willfully attempting to evade payment of taxes during the period from January 18 through September 4, 1974. The indictment charged that Voorhies had removed assets from the United States, placed them beyond the reach of service of process, and concealed and attempted to conceal them and their location from the IRS. See 26 U.S.C. § 7201 (1976).

A bench trial was held in the District of Nevada on July 23-25, 1980. Voorhies testified that, when he left the country, he carried all his assets, including cash and the gold coins, as "cash on hand." He further testified that he returned to the United States with the gold coins and "sixty, seventy" thousand dollars, although no customs declaration forms filed by him reported such large amounts. Voorhies testified that he never deposited assets in a Swiss bank account and left no money in Switzerland. Voorhies also testified at trial that, when he left for Europe in January 1974, he was unaware that he owed additional federal taxes. 4

At the conclusion of the trial, the court found Voorhies guilty of willfully attempting to evade the payment of personal taxes for the 1970 and 1972 calendar years. Voorhies was sentenced by the district court on October 6, 1980.

II. AMOUNT OF TAX LIABILITY FIXED AFTER INDICTMENT PERIOD

26 U.S.C. § 7201 (1976) provides that:

Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution.

Section 7201 includes both the offenses of willfully attempting to evade or defeat the assessment of a tax as well as the offense of willfully attempting to evade or defeat the payment of a tax. Sansone v. United States, 380 U.S. 343, 354, 85 S.Ct. 1004, 1011, 13 L.Ed.2d 882 (1965) (citing Lawn v. United States, 355 U.S. 339, 361, 78 S.Ct. 311, 323, 2 L.Ed.2d 321 (1958)); Cohen v. United States, 297 F.2d 760, 770 (9th Cir.), cert. denied, 369 U.S. 865, 82 S.Ct. 1029, 8 L.Ed.2d 84 (1962). The elements of both section 7201 violations are (1) willfulness, (2) existence of a tax deficiency, and (3) an affirmative act constituting an evasion or attempted evasion of the tax. Sansone, 380 U.S. at 351, 85 S.Ct. at 1010; United States v. House, 524 F.2d 1035, 1038-39 (3d Cir. 1975); United States v. England, 347 F.2d 425, 438 (7th Cir. 1965).

Voorhies contends that the second element, the "existence of a tax deficiency," can be predicated only on tax liabilities which have been finally determined and assessed and that his tax liabilities had not been determined during the period covered by the indictment. He notes that the statutory language of section 7201 refers only to the payment of "any tax imposed by this title." The Supreme Court in Sansone, 380 U.S. at 351, 85 S.Ct. at 1010, referred merely to "the existence of a tax deficiency" and did not define the formalities which such a deficiency must meet. Voorhies' argument is based primarily on 26 U.S.C. § 6213 (1976), which provides in part that no deficiency assessment nor proceeding for collection of tax shall be made until the statutory deficiency notice has been mailed to the taxpayer and 90 days have elapsed. 5 He contends that, prior to a final administrative determination of tax liability, the trier of fact can only speculate as to whether a defendant's conduct constitutes evasion of payment of a tax not yet due. Accordingly, Voorhies concludes that, under the statutory scheme here, the government should not be allowed to prosecute criminally for failure to pay a tax which it cannot yet collect civilly or administratively.

We reject the argument. A tax deficiency exists from the date a return is due to be filed; that deficiency arises by operation of law under sections 6151(a) and 6072(a). See United States v. Northwestern Mutual Insurance Co., 315 F.2d 723, 725-726 (9th Cir. 1963) (under section 6151(a), a tax is due and owing on the date a return must be filed, even if ascertainment of the amount requires reference to a subsequent IRS redetermination; the statutory deficiency notice "merely reminds (the) taxpayer of (his) duty to pay a tax debt already due and does not create that liability"). Cf. United States v. Gardner, 611 F.2d 770, 775-76 (9th Cir. 1980) (amount of tax liability alleged by government in indictment was adjusted downward during course of trial). Here, Voorhies did not file timely personal returns for the 1970 and 1972 tax years; his taxes for those years were, however, due and owing on April 15, 1971, and April 15, 1973, respectively.

The record establishes that, although perhaps unclear as to the amount of Voorhies' evasion, the IRS was fully aware of the fact of that evasion. Voorhies traveled out of the country on three occasions in 1974, carrying with him over $80,000.00 in highly negotiable assets. In spite of his prior experience with customs reporting duties, he did not declare either that he took out of or returned to the United States with such large amounts of money. His previous encounter with customs agents, in late 1973, had disclosed Voorhies' deposits in Swiss banks and use of Swiss safety deposit boxes on an earlier occasion. At trial, Voorhies was unable to account for his use of the cash and gold coins on his return to Las Vegas, except to acknowledge that he did not place them in his Nevada bank account; not until February 1975 did Voorhies invest a correspondingly large amount of money in a Nevada business venture. The subsequent IRS determination of Voorhies' tax deficiencies for the two years in question totalled over $33,000.00. On these facts, the trier of fact could properly find a strong inference that Voorhies' activities during the indictment period were calculated to evade the payment of taxes due and owing.

Although not compelling it, decided cases support our conclusion. The filing of an administrative assessment record is not required before a criminal prosecution may be instituted under 26 U.S.C. §§ 7201-07 (1976) for failure to report or pay income tax. United States v. Kelley, 539 F.2d 1199, 1203 (9th Cir.), cert. denied, 429 U.S. 963, 97 S.Ct. 393, 50 L.Ed.2d 332 (1976) (dictum) (citing cases) (prosecution under 26 U.S.C. § 7205 for providing false information on withholding forms). The Seventh Circuit, while noting that proof of a "valid assessment" is requisite...

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