U.S. v. Wisenbaker, 93-2190
| Citation | 14 F.3d 1022 |
| Decision Date | 09 February 1994 |
| Docket Number | No. 93-2190,93-2190 |
| Parties | -1309 UNITED STATES of America, Plaintiff-Appellee, v. Houston M. WISENBAKER, Jr., Defendant-Appellant. Summary Calendar. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Richard B. Kuniansky, Houston, TX, Court-appointed, for defendant-appellant.
Paula C. Offenhauser, Jeffery A. Babcock, Asst. U.S. Attys., Lawrence D. Finder, U.S. Atty., Houston, TX, Robert E. Lindsay, Chief, Crim. Appeals & Tax Enforcement Policy Sect., Tax Div., Dept. of Justice, Scott A. Schumacher, Alan Hechtkopf, Washington, DC, for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Texas.
Before WISDOM, JOLLY, and JONES, Circuit Judges.
Excise: A hateful tax levied upon commodities, and adjudged not by the common judges of property, but wretches hired by those to whom excise is paid.
Samuel Johnson's Dictionary (1755)
A jury found Houston M. Wisenbaker, Jr., a purveyor of diesel fuels, guilty of two counts of attempting to evade federal excise taxes in violation of I.R.C. Sec. 7201. On this direct appeal, he challenges the sufficiency of the evidence to support his convictions and some of the district court's evidentiary rulings and jury instructions. He also complains that the district court improperly allowed an amendment to or variance from the terms of the indictment. Because we find no merit to Wisenbaker's challenges, we AFFIRM.
Houston M. Wisenbaker, Jr., bought diesel fuel tax-free and resold it through four companies he owned or controlled. He sold the fuel to several different retailers at prices the buyers found surprisingly cheap. 1 Perhaps influenced by Johnson's low opinion of excise taxes, Wisenbaker had devised a scheme to reduce his costs of doing business. Unfortunately for him, an IRS investigation revealed that Wisenbaker's lower prices stemmed not from superior efficiency or economies of scale, but from the simple expedient of failing to render unto Caesar those things due unto him. Wisenbaker's invoices to some of the retailers represented that the price he charged them included the required federal and state excise taxes on diesel fuel. In fact, however, neither Wisenbaker nor any of his businesses paid the required federal excise taxes for the second and third quarters of 1986. Many of the companies who purchased fuel from Wisenbaker also failed to file federal excise tax returns.
Wisenbaker was charged with two counts of attempted tax evasion. 2 In the district court, he admitted failing to file the required tax returns, but raised as a defense his good faith belief that he was not responsible for filing them because he was not a retailer. The district court instructed the jury that Wisenbaker's belief that he was not responsible, even if unreasonable, was a defense to the charges against him if held in good faith. 3 The jury found Wisenbaker guilty of both counts of attempted tax evasion, and the district court sentenced him to five years on each count, to run concurrently. Wisenbaker appealed.
Wisenbaker first challenges the sufficiency of the evidence to support his convictions. When reviewing a jury verdict for sufficiency of the evidence, we ask whether a reasonable jury could have found each element of the offense beyond a reasonable doubt, viewing the evidence in the light most favorable to the verdict. 4 Tax evasion is a felony of three elements: (1) a tax deficiency; (2) an affirmative act constituting an evasion or attempted evasion of the tax; and (3) willfulness. 5 Wisenbaker challenges the sufficiency of the evidence on the second and third elements. We shall address each element in turn.
Wisenbaker contends on this appeal that "there was not a scintilla of evidence that Houston M. Wisenbaker, Jr. didn't pay all of the federal excise taxes in question". 6 That is not precisely the issue in this case: Wisenbaker is charged not only with evading his own taxes but also those of his customers. 7 We shall deal with Wisenbaker's objection, though, on his own terms.
We begin by noting that Wisenbaker conceded at trial that he had failed to file quarterly excise tax returns. 8 There is also evidence in the record that Wisenbaker took great pains to conceal his financial dealings. He conducted his business affairs mostly in cash. He hired Rebecca Morgan as secretary-treasurer of one of his companies but would not allow her to set up accounting records for the company. When Morgan attempted to set up accounts-receivable records, Wisenbaker destroyed them. 9 When state authorities asked Wisenbaker about state fuels taxes he owed, he began shredding boxes of documents. 10 There is ample evidence from which a reasonable jury could have concluded beyond a reasonable doubt that Wisenbaker took affirmative acts to attempt to evade payment of federal excise taxes.
Wisenbaker asserts that his good faith belief that he was not responsible for paying the taxes negates the element of willfulness the government must prove to convict him. To obtain a felony conviction for tax evasion the government must prove the defendant's specific intent to defeat or evade payment of a tax; a mere showing of willful failure to file a return is insufficient. 11 The government must prove "that the law imposed a duty on the defendant, that the defendant knew of this duty, and that he voluntarily and intentionally violated that duty". 12 A defendant's belief that he is not liable for a tax, if held in good faith, is a defense to a finding of willfulness even if the belief is unreasonable. 13
Many of the actions listed above under "Affirmative Evasive Acts" also constitute evidence of Wisenbaker's willfulness. To defend against the abundance of proof of willfulness in the record, Wisenbaker interposes his alleged good faith belief that the retailers to whom he sold were liable for payment of all federal excise taxes and he was not liable. He bases this on his interpretation of the applicable Treasury regulation at the time of his offenses. At that time, the regulation read, in part, as follows:
The sale of diesel fuel to an owner, lessee, or other operator of a diesel-powered highway vehicle, ... is considered a taxable sale of the liquid fuel if--
(i) The liquid fuel is delivered by the seller into a bulk supply tank (or other container) that is not the fuel supply tank of a vehicle ...; and
(ii) The purchaser furnishes a written statement to the seller before or at the time of the sale stating that the entire quantity of the liquid fuel covered by the sale is for a taxable purpose as a fuel in such a vehicle....
If the purchaser fails to provide the written statement required by paragraph (a)(2)(ii) of this section, the purchaser is liable for the tax on the later taxable sale or use. 14
The tax that would otherwise have fallen on the seller of the diesel fuel (i.e. Wisenbaker), therefore, falls instead on the bulk purchaser unless the purchaser furnishes a written statement to the seller. The government proved at trial that some of the retailers who bought fuel from Wisenbaker furnished him with written statements of their desire to purchase the fuel with taxes included. Nevertheless, Wisenbaker contends that the regulation implicitly requires the government to prove also that he (1) received the statements, and (2) accepted the tax liability after receiving the statements. We shall dispatch his second proposed element first because it is the more frivolous and worthy of decisive rejection. Tax liability is not imposed by contract between the seller and buyer of diesel fuel; there is no "offer" the taxpayer must "accept" before liability attaches. Tax liability attaches by operation of law whether the taxpayer "accepts" it or not.
As to Wisenbaker's first purported element, we need not decide whether the government must prove Wisenbaker received the statement because there is ample evidence in the record from which a reasonable jury could have concluded that he did. Several of the companies to whom Wisenbaker sold diesel fuel provided his companies with written statements clearly stating their desire that Wisenbaker pay the applicable tax and include it in the selling price of his fuel. 15 Wisenbaker's companies responded by sending some of the buyers letters assuring the buyers that taxes on the diesel fuel had already been paid. 16 The acknowledgements by Wisenbaker's companies are consistent with his having received the written statements required by the regulation. There is also evidence in the record of written statements being mailed and hand delivered to Wisenbaker's businesses. We conclude that a reasonable jury could have found that Wisenbaker received written statements from his customers instructing him to pay the applicable federal excise taxes. Accordingly, we need not decide whether that additional requirement is implied in the regulation Wisenbaker relies on.
Wisenbaker next urges that the district court permitted the prosecution to amend constructively the indictment during the trial, a per se reversible error. 17 Alternatively, he contends that the proof adduced at trial varied from the allegations in the indictment, which would constitute reversible error if he was prejudiced by the variance. 18 We reject both of Wisenbaker's theories because both are based on the same misreading of the indictment.
Wisenbaker contends that the indictment charged him only with evading his own taxes, and that the proof that he assisted others (i.e. his customers) in evading their taxes constituted an amendment or variance. 19 We do not find the language of the indictment susceptible to the restrictive reading Wisenbaker wishes to impose on it. The relevant portion of both counts of the indictment charges that:
[T]he defendant HOUSTON M....
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