United States v. Bishop 8212 1698

Decision Date29 May 1973
Docket NumberNo. 71,71
Citation93 S.Ct. 2008,412 U.S. 346,36 L.Ed.2d 941
PartiesUNITED STATES, Petitioner, v. Cecil J. BISHOP. —1698
CourtU.S. Supreme Court
Syllabus

Respondent was convicted of violating 26 U.S.C. § 7206(1), which makes it a felony when one '(w)illfully makes and subscribes any return . . . which he does not believe to be true and correct as to every material matter,' after the District Court refused a lesser-in-cluded-offense jury charge under § 7207, which makes it a misdemeanor when one 'willfully delivers or discloses' to the Internal Revenue Service any return or document 'known by him to be fraudulent or to be false as to any material matter.' The Court of Appeals reversed on the ground that 'willfully' as used in § 7206 implied an evil motive and bad faith, but the same word as used in § 7207 required only a showing of unreasonable, capricious, or careless disregard for the truth. Held: The word 'willfully' has the same meaning in §§ 7206(1) and 7207, connoting the voluntary, intentional violation of a known legal duty, and the distinction between the statutes is found in the additional misconduct that is essential to the violation of the felony provision; hence, the District Court properly refused the requested lesser-included-offense instruction based on respondent's erroneous contention that the word 'willfully' in the misdemeanor statute implied less scienter than the same word in the felony statute. Pp. 2383—2018.

455 F.2d 612, reversed and remanded.

Richard B. Stone, Dept. of Justice, Washington, D.C., for petitioner.

J. Richard Johnston, Oakland, Cal., for respondent.

Mr. Justice BLACKMUN delivered the opinion of the Court.

Chapter 75, subchapter A, of the Internal Revenue Code of 1954, as amended, 26 U.S.C. §§ 7201—7241, is concerned with tax crimes. Sections 7201—7207, inclusive, which in the aggregate relate to attempts to evade or defeat tax, to failures to act, and to fraud, all include the word 'willfully' in their respective contexts. Specifically, § 7206 is a felony statute and reads:

's 7206. Fraud and false statements.

'Any person who—

'(1) Declaration under penalties of perjury.

'Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter . . ..

'shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not more than 3 years, or both, together with the costs of prosecution.'

Section 7207 is a misdemeanor statute1 and reads:

'7207. Fraudulent returns, statements, or other documents.

'Any person who willfully delivers or discloses to the Secretary or his delegate any list, return, account, statement, or other document, known by him to be fraudulent or to be false as to any material matter, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both.'

This case presents the issue of the meaning of the critical word 'willfully' as it is employed in these two successive statutes. Is its meaning the same in each, or is the willfulness specified by the misdemeanor statute, § 7207, of somewhat less degree than the felony willfulness specified by

§ 7206?

I

Respondent, Cecil J. Bishop, was convicted by a jury on all three counts of an indictment charging him with felony violations of § 7206(1) with respect to his federal income tax returns for the calendar years 1963, 1964 and 1965. The Court of Appeals, holding that a lesser-included-offense instruction directed to the misdemeanor statute, § 7207, was improperly refused by the trial judge, reversed the judgment of the District Court and remanded the case for a new trial. 455 F.2d 612 (C.A.9 1972). Since the meaning of 'willfully,' as used in the tax crime statutes, has divided the circuits,2 we granted certiorari. 409 U.S. 841, 93 S.Ct. 64, 34 L.Ed.2d 79 (1972).

We conclude that it was proper and correct for the District Court to refuse the lesser-included-offense instruction. In our view, the word 'willfully' has the same meaning in both statutes. Consequently, we reverse and remand so that the Court of Appeals may now proceed to consider the additional issues that court found it unnecessary to reach.

II

Mr. Bishop is a lawyer who has practiced his profession in Sacramento, California, since 1951. During that period, he owned an interest in a walnut ranch he and his father operated. In 1960 his secretary, Louise, married his father. The father died, and thereafter respondent's stepmother managed the ranch.

Respondent periodically sent checks to Louise. These were used to run the ranch, to pay principal on loans, and to make improvements.

Louise maintained a record of ranch expenditures and submitted an itemized list of these disbursements to respondent at the end of each calendar year. In his 1963 return respondent asserted as business deductions all amounts paid to Louise and, in addition, all the expenses Louise listed. This necessarily resulted in a double deduction for all ranch expenditures in 1963. Moreover, some of these expenditures were for repayment of loans and for other personal items that did not qualify as income tax deductions. In his 1964 and 1965 returns respondent similarly included nondeductible amounts among the ranch figures that were deducted.

The aggregate amount of improper deductions taken by respondent for the three taxable years exceeded $45,000. He enjoyed aggregate gross income for those years of about $70,000.

The incorrectness of the returns as filed for the three years was not disputed at trial. Transcript of Trial 869—872, 1148. Neither is it disputed here. Brief for Respondent 4.

III

Section 7206(1), the felony statute, is violated when one '(w)illfully makes and subscribes any return,' under penalties of perjury, 'which he does not believe to be true and correct as to every material matter.' Respondent based his defense at trial on the ground that he was not aware of the double deductions asserted in 1963 or of the improper deductions taken in the three taxable years. He claimed that his law office secretary prepared the return schedules from his records and from the information furnished by Louise; he merely failed to check the returns for accuracy.

Respondent requested lesser-included-offense instructions based on the misdemeanor statute, § 7207. This tax misdemeanor is committed by one 'who willfully delivers or discloses' to the Internal Revenue Service any return or document 'known by him to be fraudulent or to be false as to any material matter.' Respondent argued that the word 'willfully' in the misdemeanor statute should be construed to require less scienter than the same word in the felony statute. App. 28. With the state of respondent's guilty knowledge in dispute, his proposed instructions would have allowed the jury to choose between a misdemeanor based on caprice or careless disregard and a felony requiring evil purpose. The trial judge declined to give the requested instructions and, instead, gave an instruction only on the felony, requiring a finding by the jury that the defendant intended 'with evil motive or bad purpose either to disobey or to disregard the law.' App. 24.

After the guilty verdict on all counts was returned, respondent was sentenced to two years' imprisonment on each count, the sentences to run concurrently. The court, however, suspended all but 90 days of each sentence and placed respondent on probation for five years on condition that he pay a fine of $5,000. App. 31.

IV

The Court of Appeals relied upon and followed, 455 F.2d, at 614, a series of its own cases,3 particularly Abdul v. United States, 9 Cir., 254 F.2d 292 (1958), enunciating the proposition that the word 'willfully' has a meaning in tax felony statutes that is more stringent than its meaning in tax misdemeanor statutes.4 Our examination of these Ninth Circuit precedents in the light of this Court's decisions leads us to conclude that the Court of Appeals' opinion cannot be sustained by this asserted distinction between § 7206(1) and § 7207.

A. The Ninth Circuit rule appears to have been evolved from language in this Court's opinion in Spies v. United States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418 (1943). In Spies the defendant requested an instruction to the effect that an affirmative act was necessary to constitute a willful attempt to evade or defeat a tax, within the meaning of § 145(b) of the Revenue Act of 1936, 49 Stat. 1703. The trial court refused the request. The Second Circuit affirmed. This Court reversed. We were concerned in Spies with a felony statute, § 145(b), applying to one 'who willfully attempts in any manner to evade or defeat any tax,' and with a companion misdemeanor statute, § 145(a), applying to one who 'willfully fails to pay such tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations.' These statutes were the predecessors of the current §§ 7201 and 7203, respectively of the 1954 Code. In distinguishing between the two offenses, the Court said:

'The difference between willful failure to pay a tax when due, which is made a misdemeanor, and willful attempt to defeat and evade one, which is made a felony, is not easy to detect or define. Both must be willful, and willful, as we have said, is a word of many meanings, its construction often being influenced by its context. United States v. Murdock, 290 U.S. 389, 54 S.Ct. 223, 78 L.Ed. 381. It may well mean something more as applied to nonpayment of a tax than when applied to failure to make a return. Mere voluntary and purposeful, as distinguished from accidental, omission to make a timely return might meet the test of willfulness. But in view of our traditional aversion to imprisonment for debt, we would not without the clearest manifestation of Congressional intent...

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