U.S. v. Waldeck, 89-2152

• Decision Date: 04 June 1990
• Docket Number: No. 89-2152,89-2152
• Citation: 909 F.2d 555
• Parties: -5288, 90-2 USTC P 50,389 UNITED STATES, Appellee, v. Kenneth W. WALDECK, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 555

909 F.2d 555

66 A.F.T.R.2d 90-5288, 90-2 USTC P 50,389

UNITED STATES, Appellee, v. Kenneth W. WALDECK, Defendant, Appellant.

No. 89-2152.

United States Court of Appeals First Circuit.

Heard June 4, 1990.

Decided July 12, 1990.

Patrick Sampair, with whom MacPherson & McCarville, P.A., was on brief for defendant, appellant.

Brett Dignam, Atty., Tax Div., Dept. of Justice, with whom Shirley D. Peterson, Asst. Atty. Gen., Robert E. Lindsay and Alan Hechtkopf, Attys., Tax Div., Dept. of Justice, were on brief for appellee.

Before SELYA and SOUTER, Circuit Judges, and BOWNES, Senior Circuit Judge.

BOWNES, Senior Circuit Judge.

Defendant was tried under 26 U.S.C. Sec. 7201 on five counts for willfully attempting to evade and defeat the income tax due and owing for the taxable years 1982, 1983, 1984, 1985 and 1986. Defendant did not testify and presented no evidence. This appeal followed his jury conviction on all counts.

The issues raised on appeal are built around defendant's basic contention that neither the government nor the court distinguished properly the offense of evading the assessment of taxes from the offense of evading the payment of taxes. A statement of the trial evidence, which is not in dispute, is a necessary prelude to a discussion of the issues.

I. THE EVIDENCE

Defendant worked as an engineer for three different employers for the taxable years 1982 through 1986; the taxable year in each instance is the same as the calendar year. In each year, defendant received gross income from his employer in excess of the amount required to file an income tax return. For the years 1982, 1983, 1985 and 1986 defendant filed a 1040 "fifth amendment" return which contained only his name, signature, a figure for federal income tax withheld, asterisks at the numbered lines in lieu of any information and the following statement: "This means specific exception is made under the Fifth Amendment, U.S. Constitution." No return at all was filed for 1984. Defendant had filed proper and timely returns for the years 1976 through 1980.

On July 15, 1981, defendant filed an Employee's Withholding Allowance Certificate (W-4) with his employer claiming single status and 30 allowances. He had filed two prior W-4s claiming single status with one and then two allowances. On March 15, 1982, defendant's attorney, William D. Morris, wrote to defendant's employer stating that because of the employer-employee relationship, the employer should not release any information about the defendant's employment to any government agency, particularly the IRS, and that the employer should ignore any requests for information unless there was a subpoena, in which event the employer was to notify defendant. ¹ On May 2, 1982, defendant wrote to the secretary of the employer's legal division and requested that the lawyer's letter be attached to his W-4 and a copy put in his personnel file.

On March 25, 1982, the IRS asked defendant his reason for claiming 30 allowances. His reply letter stated in effect that the W-4 was accurate, that the IRS could not change it and that his constitutional rights were being violated. The IRS then directed the employer to withhold taxes from defendant on the basis of single status and one allowance. The employer complied.

Defendant went to work for a different employer on June 4, 1984. He immediately filed a W-4 claiming single status and 14 allowances. He switched jobs again on October 21, 1985; this time his W-4 claimed 13 allowances.

Defendant had filed a fifth amendment return for 1981. On September 24, 1982, the IRS wrote him stating the 1040 form he filed did not comply with the Revenue Code and enclosed two income tax returns for filing properly. Defendant responded on December 9, 1982 stating in effect that he knew he had not filed a valid tax return for 1981 and that he was not going to do so. He also referred to excerpts from various United States Supreme Court decisions and asked questions about their scope and application. On April 15, 1983, defendant wrote again to the IRS informing it that he did not pay taxes for 1981, that he filed only a fifth amendment tax return for that year, that he was filing a similar return for 1982 and that he was not going to pay taxes for 1982. The IRS responded by assessing a $500 penalty against defendant under 26 U.S.C. Sec. 6702 for filing a frivolous return (a fifth amendment return) for 1982. Defendant promptly paid 15 percent of the penalty and brought suit in the United States District Court of New Hampshire challenging the penalty under 26 U.S.C. Sec. 6703. The district court on June 7, 1984 issued summary judgment for the government. This did not deter the defendant from filing fifth amendment returns for 1985 and 1986. The government's successful criminal prosecution of defendant followed.

II. THE ISSUES

A. The Indictment

Defendant argues that the indictment should have been dismissed because it was duplicitous and unconstitutionally vague and ambiguous. Except for place of residence and the year, each of the five counts in the indictment are identical. We reproduce Count II.

COUNT II

That during the calendar year 1983, the defendant,

KENNETH WILLIAM WALDECK,

a resident of Exeter, New Hampshire, had and received substantial taxable income; that upon said taxable income there was owing to the United States of America a substantial income tax; that well-knowing and believing the foregoing facts, KENNETH WILLIAM WALDECK, in the District of New Hampshire, did willfully attempt to evade and defeat the said income tax due and owing by him to the United States of America for said calendar year by failing to timely file an income tax return on or before April 15, 1984, as required by law, to any proper officer of the Internal Revenue Service, by failing to pay to the Internal Revenue Service said income tax, and by taking affirmative steps to conceal from all proper officers of the United States of America his true and correct income and tax liability.

In violation of Title 26, United States Code, Section 7201.

The crux of the duplicity claim is that the indictment could be read to mean that defendant was charged with both willfully attempting to evade and defeat the assessment of tax and the payment of tax. The defendant's basis for distinguishing between the offense of evasion of assessment of tax and the offense of evasion of payment of tax rests on a pronouncement by the United States Supreme Court as to the scope of 26 U.S.C. Sec. 7201.

The pertinent part of Sec. 7201 provides: "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...." In Sansone v. United States, 380 U.S. 343, 85 S.Ct. 1004, 13 L.Ed.2d 882 (1965), the Court held that "the elements of Sec. 7201 are willfulness; the existence of a tax deficiency; and an affirmative act constituting an evasion or attempted evasion of the tax." Id. at 351, 85 S.Ct. at 1010 (citations omitted). One of the defenses considered by the Court in Sansone was that an intent to report and pay the tax in the future constitutes a defense to Sec. 7201. In rejecting this defense the Court stated:

No defense to a Sec. 7201 evasion charge is made out by showing that the defendant willfully and fraudulently understated his tax liability for the year involved but intended to report the income and pay the tax at some later time. As this Court has recognized, Sec. 7201 includes the offense 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.

Id. at 354, 85 S.Ct. at 1011 (emphasis added).

To our knowledge, only two courts of appeals have addressed the issue of whether an indictment alleging violation of Sec. 7201 by stating that defendant did "willfully attempt to evade and defeat the income tax due and owing" has alleged the two separate crimes of evasion of assessment of tax and evasion of payment of tax and therefore is duplicitous. The issue was first addressed by the Fifth Circuit in United States v. Masat, 896 F.2d 88 (5th Cir.1990). In finding that the indictment was not duplicitous, the court held:

The charge in the indictment directly tracked the wording of Sec. 7201. The "two crimes" of which Masat contends he was charged come from one statute, indeed, from one sentence. In truth, there is one crime, the evasion of taxes, and it is of no moment that both assessment and payment might have been evaded. There was no plain error requiring reversal, for the indictment was not duplicitous.

Id. at 91. We must note that no reference at all is made to Sansone.

In an even more recent case, United States v. Dunkel, 900 F.2d 105 (7th Cir.1990), the Seventh Circuit came to the same conclusion. It did not completely ignore Sansone, but it did not let it stand in the way of its holding Dunkel insists that the charges under Sec. 7201 are duplicitous because that statute creates two crimes: evading the assessment of taxes (as by fooling the IRS about your income) and evading the payment of taxes (as by secreting assets after taxes have been assessed). To charge both in one count, Dunkel maintains, is to confuse both the defendant and the jury. Not so. Section 7201 creates only one crime: tax evasion. Section 7201 makes it a crime to "attempt in any manner to evade or defeat any tax imposed by this title or the payment thereof". Just as you can rob a bank in a dozen ways (blow the door off the vault, tunnel from next door and empty the till in the dead of night, stick up the teller, scoop money out of the cash drawer during business hours when no one is looking, and so on), so you can evade taxes in multiple ways.

Sometimes it is convenient to say that different methods are different "crimes", as the Supreme Court once said about Sec. 7201. Sansone v. United States, 380...