6694 and 7202 crime

Section 7202 deals with the “willful” failure to collect or pay over tax and provides that any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax 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.

In the Hovind case, an individual was properly convicted and sentenced for willful failure to withhold and pay quarterly federal withholding taxes. The evidence established that the individual's failure to withhold taxes was willful. Therefore, the jury was entitled to find that he knew about and deliberately violated the tax laws.


Although the Hovind case does not involve a tax return preparer, all tax return preparers need to understand that the failure to file and pay payroll taxes is a crime and any tax return preparer could get charged with conspiracy involvement with the crime, although most failures to pay withholding taxes are treated as negligence. My point is only that in addition to the 6694 penalty, return preparers could get involved with a section 7202 issues. The court cited In re Jacobs, 490 F.3d 913, 925 (11th Cir. 2007) that “willful” conduct to evade taxes is satisfied where a debtor engages in affirmative acts to avoid payment or collection of taxes'" (quoting In re Fretz, 244 F.3d 1323, 1329 (11th Cir. 2001). It is my view that a return preparer can be charged with cooperating with the evasion acts if the evasion is known but not reported.





United States of America, Plaintiff-Appellee v. Kent E. Hovind, Defendant-Appellant. United States of America, Plaintiff-Appellee v. Kent E. Hovind, Jo D. Hovind, Defendants-Appellants.


U.S. Court of Appeals, 11th Circuit; 07-10090, 07-10502, December 30, 2008.



Before: Anderson, Marcus and Pryor, Circuit Judges.

PER CURIAM: Kent Hovind appeals his convictions and sentences for failing to collect and pay employment withholding taxes, obstructing tax laws, and structuring transactions to avoid financial reporting laws, 18 U.S.C. § 2; 26 U.S.C. §§ 7202, 7212(a); 31 U.S.C. § 5324(a)(3), (d); 31 C.F.R. § 103.11, and his wife, Jo Hovind, appeals her convictions and sentences for structuring transactions to avoid reporting laws, 18 U.S.C. § 2; 31 U.S.C. § 5324(a)(3), (d); 31 C.F.R. § 103.11. Kent and Jo challenge the sufficiency of their indictments and the evidence. Kent also challenges the calculation of the loss amount and the imposition of restitution, and Jo challenges the order of forfeiture. We affirm.


I. BACKGROUND


The Hovinds owned and operated Creation Science Evangelism Enterprises, which sold videos and literature, provided lecture services, and hosted live debates. Between 1999 and 2003, the Hovinds withdrew from AmSouth Bank over one and a half million dollars in increments less than $10,000 to avoid federal filing requirements. Company documents and records of the transactions established that Jo controlled the finances of Evangelism Enterprises and controlled most of the checks that were cashed. Kent, who oversaw payroll and related federal tax obligations, failed to withhold or pay quarterly federal withholding taxes or file related documents with the Internal Revenue Service between 2001 and 2003.

The Hovinds were charged in a 58-count indictment. Kent was charged in the first twelve counts of the indictment for willfully failing to deduct and pay federal income and withholding taxes for employees of Evangelism Enterprises. 26 U.S.C. § 7202. The Hovinds were charged in the next 45 counts for structuring cash withdrawals to avoid financial reporting requirements. 18 U.S.C. § 2; 31 U.S.C. §§ 5313(a), 5324(a)(3), 5324(d); 31 C.F.R. § 103.11. Kent was charged in the last count of the indictment for obstructing the administration of internal revenue laws. 26 U.S.C. § 7212(a). The indictment also included a provision for forfeiture by the Hovinds of "any and all property, real and personal, involved in" the financial reporting crimes "and any property traceable thereto" and, if that specific property could not be recovered, for "forfeiture of any other property of [the Hovinds] up to the value of the ... property." Approximately two months after the court-imposed filing deadline, the Hovinds moved to dismiss their indictments. The district court denied the motions as untimely and without merit.

After the government rested its case at trial, the Hovinds moved for an acquittal on each count of the indictment. Defense counsel argued that the government was required to prove for each count of structuring that the transaction equaled or exceeded $10,000 and, because the evidence established that each transaction was less than that threshold, the Hovinds were entitled to dismissal of those counts. The government responded that it had a "fundamental disagreement" with the Hovinds' interpretation of the structuring statutes and argued that structuring necessarily requires a transaction under $10,000. The district court "agree[d] with the government" that the Hovinds' interpretation of structuring was contrary to the statutes and denied the Hovinds' motion. The court later referred to its decision on the motion and instructed defense counsel that they would "not be permitted" to argue their interpretation of the structuring statutes. After discussion of the issue, defense counsel explained that they intended to argue that the government did not prove that the Hovinds structured each transaction to evade reporting requirements.

The Hovinds were found guilty of all charges. The jury found that $430,400 was involved in or traceable to the financial reporting crimes. The jury entered a special verdict against the Hovinds for the forfeiture of real and personal property attributable to the reporting crimes.

Separate presentence investigation reports were prepared for Kent and Jo. Kent's report paired the first 12 counts of the indictment into one group and the next 44 counts into a second group. United States Sentencing Guidelines § 3D1.2(d) (Nov. 2001). The report listed the offense level applicable to each group and selected the second group, which had the highest offense level of 22. Id. §§ 2B1.1(b)(1); 3D1.3(b); 2S1.3. The base offense level was increased by 2 levels because the offense was part of a pattern of unlawful activity that involved more than $100,000 in a 12-month period, id. § 2S1.3(b)(2), and increased another 6 levels for Kent's aggravating role in the crimes. Id. §§ 3B1.1(a); 3C1.1. With a criminal history of I, the report provided a sentencing range between 97 and 121 months of imprisonment. The report calculated a tax liability, under the first twelve counts of the indictment, of $604,874.87. Id. § 5E1.1(a)(2).

Jo's presentence report listed a base offense level of 22. Id. §§ 2B1.1(b)(1); 2S1.3. The report decreased the base level by 16 levels because Jo did not act with reckless disregard of the source of the funds and because the funds were the proceeds of lawful activity and were to be used for a lawful purpose, id. § 2D1.3(b)(2). With a criminal history of I, the report provided a sentencing range between 0 and 6 months of imprisonment.

Before Jo's sentencing hearing, the government moved to forfeit substitute property and requested the court substitute ten parcels of real property and a bank account belonging to Jo and Kent to satisfy the $430,400 judgment. 21 U.S.C. § 853(p). The government attached to the motion an affidavit from Special Agent Charles Evans of the Internal Revenue Service. The affidavit stated that the agency could not find the $430,400 because the Hovinds had transferred the assets to a third party, expended the assets on business-related expenses, and removed the assets from the jurisdiction of the district court.

The district court found that the Hovinds had disposed of the assets subject to forfeiture and granted the motion of the government to substitute property. The district court entered a final order of forfeiture against Jo and sentenced her to one year and one day of imprisonment. The court sentenced Kent to 120 months of imprisonment and to supervised release of 3 years, and ordered Kent to pay restitution of $604,874.87.


II. STANDARDS OF REVIEW


We apply three standards of review in this appeal. We review de novo the sufficiency of an indictment. United States v. Bobo, 344 F.3d 1076, 1082-83 (11th Cir. 2003). We review de novo challenges to the sufficiency of the evidence and view the evidence in the light most favorable to the government. United States v. Futrell, 209 F.3d 1286, 1288 (11th Cir. 2000). When an issue is not preserved for appeal, our review is for plain error. See United States v. Rubio, 317 F.3d 1240, 1241 n.1 (11th Cir. 2003). We review de novo jury instructions to determine "'whether they misstate the law or mislead the jury to the prejudice of the objecting party.'" United States v. Bender, 290 F.3d 1279, 1284 (11th Cir. 2002) (quoting United States v. Grigsby, 111 F.3d 806, 814 (11th Cir. 1997)). We review for clear error the calculation of the amount of loss. United States v. Machado, 333 F.3d 1225, 1227 (11th Cir. 2003). We review de novo the legality of the orders of restitution and of forfeiture. United States v. Foley, 508 F.3d 627, 632 (11th Cir. 2007) (citing United States v. Hasson, 333 F.3d 1264, 1275 (11th Cir. 2003)).


III. DISCUSSION


Kent and Jo Hovind raise multiple issues for our consideration. Their arguments fail. We address each argument in turn.


A. The Hovinds Indictments Were Sufficient.


It is a well-established principle that "'[t]he sufficiency of a criminal indictment is determined from its face.'" United States v. Sharpe, 438 F.3d 1257, 1263 (11th Cir. 2006) (quoting United States v. Salman, 378 F.3d 1266, 1268 (11th Cir. 2004)). "For an indictment to be valid, it must 'contain the elements of the offense intended to be charged, and sufficiently apprise the defendant of what he must be prepared to meet.'" United States v. Bobo, 344 F.3d 1076, 1083 (11th Cir. 2003) (quoting Russell v. United States, 369 U.S. 749, 763, 82 S. Ct. 1038, 1047 (1962)). When the indictment tracks the language of the statute, "'it must be accompanied with such a statement of the facts and circumstances as will inform the accused of the specific offense, coming under the general description, with which he is charged.'" Id. (quoting Russell, 369 U.S. at 765, 82 S. Ct. at 1048).

The indictment sufficiently alleged Kent's tax crimes. Kent complains that his indictment omitted what part of Title 26 required him to collect and pay federal withholding taxes for employees of Evangelism Enterprises and failed to define how he acted "willfully," but these arguments fail. Kent was adequately notified of his offenses to prepare a defense and to plead double jeopardy in any future prosecution for the same offense. The indictment alleged that Kent violated Section 7202 of Title 26 and described Kent's responsibilities under the tax laws, explained Kent's failure to withhold and pay quarterly federal withholding taxes, and stated the taxable periods in which Kent incurred a tax liability. The government was not required to include specific statutory authority for Kent's tax liability or to allege facts regarding Kent's willfulness. See United States v. Chisum, 502 F.3d 1237, 1244-45 (10th Cir. 2007) (affirming as sufficient an indictment for tax evasion that omitted "what part of Title 26 imposed the tax that was being evaded or defeated"). Cf. Huff v. United States, 273 F.2d 56, 58-59 (5th Cir. 1959) (indictment for smuggling goods into the United States without an invoice was sufficient even without a reference to the statute that required invoicing or a factual description of the crime).

The indictment also sufficiently alleged the Hovinds' structuring crimes. The Hovinds argue that each of the structuring counts fails to state an offense because each count fails to allege that the Hovinds structured an amount that exceeded $10,000 and, without this allegation, the indictments were defective. The Hovinds contend that the language used in the financial reporting statute did not suggest that structuring could involve a cash transaction of less than $10,000. These arguments ignore the plain language of the statute and our interpretation of it. A person is prohibited from "structur[ing] ... any transaction" to "evad[e] the reporting requirements[,]" 31 U.S.C. § 5324(a)(3), of domestic financial institutions. Those reporting requirements are activated upon the "payment, receipt, or transfer of United States coins or currency[,]" 31 U.S.C. § 5313(a), "of more than $10,000." 31 C.F.R. § 103.22(b). In other words, section 5324(a)(3) forbids a person from transacting in amounts less than $10,000 to avoid detection by and reporting of the transactions by a financial institution. United States v. Phipps, 81 F.3d 1056, 1060-61 (11th Cir. 1996). That interpretation is also consistent with the intent of Congress for the structuring provision to "operate[] 'without regard for whether an individual transaction is, itself, reportable ... .'" Id. at 1061 (quoting S. Rep. No. 433, 99th Cong., 2d Sess. 22 (1986)). Because a cash transaction does not have to equal or exceed $10,000 to constitute a structuring offense, the district court did not err by denying the Hovinds' motion to dismiss.

Kent's indictment for obstructing administration of the tax laws also states an offense. Kent argues for the first time on appeal that the charge failed to state an offense because none of the acts listed, which included filing complaints against agents of the Internal Revenue Service and instituting bankruptcy and other legal proceedings against those agents, were corrupt. His argument misapprehends the definition of "corruptly." Acts that might otherwise be legal become corrupt and obstructionist when they are used to "thwart the efforts of government officers and employees in executing the laws enacted by Congress." United States v. Popkin, 943 F.2d 1535, 1540 (11th Cir. 1991). The district court did not err, much less plainly err, by denying Kent's motion to dismiss.


B. The Government Introduced Sufficient Evidence To Support the Hovinds' Convictions.


The Hovinds challenge their convictions on three grounds. First, Kent argues that his failure to withhold taxes was not willful. Second, the Hovinds argue that they did not know that section 5324(a)(3) prohibited a transaction of less than $10,000. Third, Kent argues that legal actions he instituted before and during the investigation of the Internal Revenue Service were not corrupt and cannot support his conviction for obstruction of tax laws.


1. Kent Refused To Comply With Laws To Collect And Pay Federal Withholding Taxes.


Sufficient evidence establishes that Kent failed to collect or pay withholding taxes. Kent argues that the government failed to prove that he acted willfully absent evidence that Kent knew of the specific statutes that required him to collect and pay withholding taxes, but that argument fails. In Cheek v. United States, 498 U.S. 192, 201, 111 S. Ct. 604, 610 (1991), the Supreme Court explained in a hypothetical that the government would satisfy the "knowledge component of the willfulness requirement" if it introduced evidence that the defendant knew of the "duty purportedly imposed" by the tax laws, not that he knew which specific provision created that duty. Id. at 201-02, 111 S. Ct. at 610-11. When a defendant knows of facts constituting an offense, he has "acted with the requisite willfulness to violate the law." United States v. Fields, 500 F.3d 1327, 1332 (11th Cir. 2007) (citing Bryan v. United States, 498 U.S. 184, 196, 118 S. Ct. 1939, 1947 (1998)).

The government proved that Kent knew the tax laws required the collection and payment of withholding taxes, but he refused to comply. Employees of Evangelism Enterprises, peers, and legal counsel testified that Kent disputed the authority of the Internal Revenue Service based on the separation of the church and state, debated the interpretation and application of the withholding requirements, and intentionally characterized Evangelism Enterprises as a "church" and his employees as "missionaries" to avoid tax obligations. Kent had opined to attorney David Gibbs that he was "smarter" than other church officials who had forfeited real property after they refused to collect or pay withholding taxes. Although Kent argued at trial that he was ignorant of the law and the Revenue Service failed to identify a law that required him to collect and pay withholding taxes, the jury was entitled to find that Kent knew about and deliberately violated the tax laws. See United States v. Lankford, 955 F.2d 1545, 1550 (11th Cir. 1992).


2. The Hovinds Structured Transactions To Avoid Reporting Requirements.


The government also proved that the Hovinds structured their cash withdrawals to avoid federal reporting requirements. Although the Hovinds challenge the validity of their convictions on the ground that the statute does not penalize transactions below $10,000, this interpretation does not comport with the language of the statute. Congress enacted Section 5324(a)(3) to penalize "any transaction" structured to "avoid triggering [a] bank's duty to file a [Currency Transaction Report] in the first place." Phipps, 81 F.3d at 1059-60. By its plain language, the statute prohibits transactions of less than $10,000 that are intended to evade reporting requirements. Id. at 1060-61. That reading comports with the regulations that define structuring to penalize cash transactions designed "in any manner, ... including transactions ... below $10,000 ... for the purpose of evading the reporting requirements ... ." 31 C.F.R. § 103.11(gg).

Evidence established that Kent and Jo Hovind structured cash transactions with knowledge of, and the intent to avoid, reporting of those transactions by AmSouth Bank. See United States v. MacPherson, 424 F.3d 183, 189 (2d Cir. 2005); United States v. Cassano, 371 F.3d 868, 878 (7th Cir. 2004). A former employee of Evangelism Enterprises, Brian Popp, testified that Kent knew of and complained about the bank reporting requirements and that Jo, often at Kent's direction, regularly obtained cash to pay employees of the organization. Other employees and associates of Kent testified that the Hovinds openly disputed the validity of the tax laws. Various documents established that Jo withdrew cash in increments of $9500 and $9600 from AmSouth Bank as often as four or five times a month, for a total of 45 transactions between July 2001 and August 2002. Viewing this evidence in a light favorable to the prosecution, the jury was entitled to find that Kent and Jo knew of the reporting requirements and structured cash transactions in amounts less than $10,000 to prevent AmSouth Bank from reporting the transactions. See United States v. Williams, 121 F.3d 615, 621 (11th Cir. 1997) (willfulness "requires proof of an intentional violation of a known legal duty"); In re Jacobs, 490 F.3d 913, 925 (11th Cir. 2007) ("'the conduct requirement is satisfied where a debtor engages in affirmative acts to avoid payment or collection of taxes'" (quoting In re Fretz, 244 F.3d 1323, 1329 (11th Cir. 2001))).


3. Kent Obstructed the Investigation of His Tax Offenses.


Substantial evidence established that Kent obstructed investigation of his tax offenses. A person is guilty of obstructing the administration of tax laws if he "corruptly" acts to "intimidate or impede any officer" or to "obstruct[], impede, or endeavors to obstruct or impede, the due administration" of the tax laws. Kent filed complaints and sued agents of the Internal Revenue Service and instituted legal proceedings to circumvent the lawful seizure of his assets. This evidence supports the finding of the jury that Kent intended to impede agents of the Revenue Service in their efforts to investigate and prosecute Kent's violations of the tax laws.


C. The District Court Did Not Err By Adding a Sentence to the Jury Instruction.


A district court is required to inform counsel before closing arguments how it intends to rule on proposed jury instructions. Fed. R. Crim. P. 30(b). We require substantial compliance with Rule 30 and reverse for a violation of the rule only if the defendant establishes that he was prejudiced by the change in a jury instruction. United States v. White, 27 F.3d 1531, 1538 (11th Cir. 1990). Prejudice exists only if the defendant establishes that the modification of the instruction was substantial and repudiated or rendered ineffective his arguments. Id.

The Hovinds were not prejudiced by the change to the jury instruction. The district court did not substantially modify the instruction on structuring. In his closing argument, Kent Hovind used the original jury instruction in a manner that suggested that the government was required to prove that structuring required a cash transaction that equaled or exceeded $10,000. That jury instruction read,
To structure a transaction means to deposit or withdraw or otherwise participate in a transfer of a total of more than $10,000 in cash or currency by or through a financial institution or bank by setting up or arranging a series of separate transactions, each involving $10,000 or less individually, thereby intentionally evading the currency reporting requirements that would have applied if the transaction had not been so structured.

The district court added the last sentence of the regulation that defines structuring: "The transaction or transactions need not exceed the $10,000 reporting threshold at any single financial institution on any single day in order to constitute structuring . ..." 31 C.F.R. § 103.11(gg). The district court was entitled to revise the jury instruction in this manner. See Bender, 290 F.3d at 1284 ("We give the district court wide discretion as to the style and wording employed in the instructions, ascertaining that the instructions accurately reflect the law.").


D. The Hovinds Were Correctly Sentenced.


The Hovinds challenge their sentences on three grounds. First, Kent challenges the calculation of the tax loss. Second, Kent challenges his restitution. Third, Jo challenges the forfeiture of substitute property. These arguments fail.

Kent argues that the district court violated his rights under the Sixth Amendment when it calculated the tax loss attributable to his tax evasion charges, but the tax loss played no role in Kent's sentence. The district court used the offense level for Kent's structuring charges instead of the offense level for his tax charges to calculate Kent's sentence. Because the guideline range and sentence was the same regardless of the amount of tax loss, any error in the calculation was harmless. See United States v. Tampas, 493 F.3d 1291, 1305 (11th Cir. 2007).

Kent challenges his restitution on two grounds both of which fail. First, Kent argues that restitution was not a penalty for his crimes, but his argument ignores that the district court ordered restitution as a condition of Kent's supervised release. See 18 U.S.C. §§ 3563, 3583(d). Second, Kent argues, without citation to any authority, that the Internal Revenue Service cannot be a victim, but Kent's argument overlooks that the Revenue Service, as the agency responsible for collecting taxes, is the only possible victim of tax evasion. Cf. Balogun v. U.S. Att'y Gen., 425 F.3d 1356, 1361 (11th Cir. 2005) (finding the government a "victim" of tax evasion under immigration law). The district court did not err by ordering Kent to pay restitution.

Jo presents two challenges to the forfeiture of substitute property both of which fail. First, Jo argues that the amount of forfeiture was excessive and unconstitutional because the money was obtained legally and expended for business obligations of Evangelism Enterprises, but we disagree. The jury was entitled to find that the Hovinds structured transactions to avoid financial reporting laws and hide assets from the Revenue Service and a forfeiture of $430,400 was warranted to punish the Hovinds for their crimes. See Hasson, 333 F.3d at 1279-80. Second, Jo argues that the district court erred by substituting property because the $430,300 could be traced to business-related expenses, but we again disagree. The district court was entitled to order the forfeiture of substitute property when the original property was "transferred ... or deposited with[] a third party." 21 U.S.C. § 853(p)(1)(B). The district court did not err by ordering a substitution of forfeiture property.


IV. CONCLUSION


The convictions and sentences of the Hovinds are AFFIRMED.


Willful Failure to File Return, Supply Information, or Pay Tax: Evidence: Intent

Direct proof of a specific intent or willfulness to evade tax is not necessary where it can be inferred from taxpayer's actions.

Hooper, CA-10, 54-1 USTC ¶9381, 216 F2d 684.

P.J. Commerford, CA-2, 1933 CCH ¶9255, 64 F2d 28. Cert. denied, 289 US 759.

Gaunt, CA-1, 50-2 USTC ¶9412, 184 F2d 284. Cert. denied, 340 US 917.

Norris, CA-2, 53-2 USTC ¶9511, 205 F2d 828.

R.H. Graves, CA-10, 51-2 USTC ¶9431, 191 F2d 579.

B.N. Litman, CA-3, 57-2 USTC ¶9820, 246 F2d 206.

L.A. Durant, CA-7, 63-2 USTC ¶9802, 324 F2d 859. Cert. denied, 84 SCt 1165.

F.T. Mackey, CA-7, 65-1 USTC ¶9328, 345 F2d 499. Cert. denied, 382 US 824.

N.H. Helms, CA-5, 65-1 USTC ¶9135, 340 F2d 15. Cert. denied, 382 US 814.

J.A. Peterson, CA-7, 64-2 USTC ¶9801, 338 F2d 595.

W.M. Canaday, CA-8, 66-1 USTC ¶9192, 354 F2d 849.

J.D. McCarty, CA-10, 69-1 USTC ¶9322, 409 F2d 793. Cert. denied, 396 US 836.

M. McCabe, CA-7, 69-2 USTC ¶9622, 416 F2d 957. Cert. denied, 396 US 1058.

B.J. Slutsky, CA-2, 73-2 USTC ¶9733, 487 F2d 832.

E. Cook, CA-5, 75-1 USTC ¶9134. Aff'd, per curiam, CA-5, 77-1 USTC ¶9165, 546 F2d 82.

An individual's tax evasion conviction for collecting fees for nonexistent loans and investments was legally sufficient based on evidence of affirmative acts of evasion. The jury could infer that his refusal to pay for jewelry in cash to avoid a currency transaction report, his use of confidentiality agreements to prevent potential victims from disclosing information, and his use of overseas bank accounts were designed to evade taxes. Further, a Form 433-A which understated a bank account was relevant as to whether the individual's later acts were intended to evade.

J. Voigt, CA-3, 96-2 USTC ¶50,633, 89 F3d 1050.

But the government has the burden of proving willfulness.

Putek, DC, 55-1 USTC ¶9243.

The appellate court, in reversing taxpayer's conviction in the district court for wilfully failing to truthfully account for and pay over withholding and social security taxes, held that the Government did not establish beyond a reasonable doubt that at the time payment was due the taxpayer possessed sufficient funds to enable him to meet his tax obligation, or that the lack of sufficient funds resulted from a voluntary and intentional act having no justification in view of the financial circumstances of the taxpayer.

S.R. Poll, CA-9, 75-2 USTC ¶9625, 521 F2d 329.

Instructions to the jury did not make clear that the specific intent must be proved by, or clearly inferred from, the evidence.

Wardlaw, CA-5, 53-1 USTC ¶9335, 203 F2d 884.

Berkovitz, CA-5, 54-1 USTC ¶9425, 213 F2d 468.

Birns, CA-6, 56-1 USTC ¶9192, 226 F2d 498.

H.J.K. Theatre Corp., CA-2, 56-2 USTC ¶9837, 236 F2d 502. Rehear. denied, and prior opinion amended, CA-2, 56-2 USTC ¶9972, 236 F2d 502. Cert denied, 352 US 969.

Conviction was sustained because of taxpayer's untruthful denial that he had any accounts receivable ledgers, his purposeful withholding of such records, the gross discrepancy between his reported income and his actual income, and his groundless excuse of financial inability to make payment of his taxes when due.

Glascott, CA-7, 54-2 USTC ¶9652, 216 F2d 487.

Similarly, where taxpayer placed all business receipts in his bank accounts, failed to keep a complete set of books, employed an attorney to make out the return who never inspected or audited his books, failed to furnish figures reporting profit on certain sales, and incorrectly stated other figures.

Holbrook, CA-5, 54-2 USTC ¶9640, 216 F2d 238.

On the basis of evidence of concealment of sales, padding expenses and fictitious purchases, convictions of willful evasion of tax are affirmed.

Lange, CA-7, 47-1 USTC ¶9249, 161 F2d 699.

Proof of the exact amount of unreported income is not required. Intent can be inferred from failure to report a substantial amount of income, failure to keep adequate books to reflect income, and concealment of property.

Remmer, CA-9, 53-1 USTC ¶9421, 205 F2d 277. For further developments in the case, see ¶41,318.197.

Failure to keep intelligible records of income, and failure to disclose large amounts of income deposited in a bank to the credit of a corporation of which the defendant was a shareholder, the corporation itself making no disclosures, were evidence of willfulness.

Buttermore, CA-6, 50-1 USTC ¶9228, 180 F2d 853.

Parker, DC, 50-1 USTC ¶9295.

Appellant complained that the jury was instructed that every person is presumed to intend the "natural consequences of his acts knowlingly committed." On appeal, it was held where proof of intent is an ingredient of the offense it must be proved and not eliminated by a presumption, but that the charge considered as a whole correctly stated the law with sufficient clarity as to be misleading.

H.V. Imholte, CA-8, 55-2 USTC ¶9727, 226 F2d 585.

Taxpayer was not guilty of tax evasion where he did not report commissions earned by him but assigned to his parents and reported by them as income.

E.L. Carleton, DC, 56-1 USTC ¶9532, 138 FSupp 510.

Upon the evidence the court found that the taxpayer, an attorney, was not guilty of wilfulness in failing to pay income taxes owed, even though he acted in careless disregard of his income tax obligations.

I. Goodman, DC, 61-1 USTC ¶9213, 190 FSupp 847.

Evidence as to evasion in prior years, such evasion not having been charged in the indictment, was admissible to show wilful intent. Evidence of like or other conduct at or near the time charged is admissible to show intent or motive.

Malone, CA-7, 38-1 USTC ¶9032, 94 F2d 281. Cert. denied, 304 US 562.

Hanson, CA-8, 51-1 USTC ¶9118, 186 F2d 61.

R.D. Leeby, CA-8, 51-2 USTC ¶9497, 192 F2d 331.

Yeoman-Henderson, Inc., CA-7, 52-1 USTC ¶9155, 193 F2d 867.

Lloyd, CA-5, 55-2 USTC ¶9665, 226 F2d 9.

Hoyer, CA-8, 55-1 USTC ¶9518, 223 F2d 134.

J.J. Gannon, CA-2, 57-2 USTC ¶9701, 244 F2d 541.

M.J. Harris, CA-5, 57-1 USTC ¶9573, 243 F2d 74.

J.F. Steele, DC, 57-1 USTC ¶9416, 148 FSupp 515.

H.L. Taylor, CA-4, 62-2 USTC ¶9590, 305 F2d 183. Cert. denied, 371 US 894. Reh'g denied, December 17, 1962. Probation revoked, DC, 63-2 USTC ¶9709, on remand from CA-4, 63-2 USTC ¶9559, 321 F2d 339.

J.C. Ausmus, Jr., CA-6, 85-2 USTC ¶9742, 774 F2d 722.

J.V. McKee, CA-8, 92-1 USTC ¶50,214.

From the fact that expenditures, together with net worth increases, exceeded the reported income, it can be inferred that defendant's income was not properly reported.

Costello, SCt, 56-1 USTC ¶9321, 350 US 354. Petition for reargument denied, CA-2, 56-1 USTC ¶9518, 232 F2d 958.

A.C. Feichtmeir, CA-9, 68-1 USTC ¶9217, 389 F2d 498.

In a prosecution for willful failure to collect and pay over tax, evidence of the alteration of documents known as "wrap-arounds" was admissible to show intent.

R.L. Scharf, CA-8, 77-2 USTC ¶9586, 558 F2d 498.

Where taxpayer had paid the tax determined to be due, it was reversible error to instruct the jury that they could consider failure to pay the tax actually due as "throwing light on the intent of the defendant."

Berkovitz, CA-5, 54-1 USTC ¶9425, 213 F2d 468.

Jury was properly instructed that defendants were entitled to acquittal if they had believed that their tax liability was discharged by their corporations.

Bruswitz, CA-2, 55-1 USTC ¶9151, 219 F2d 59.

Jury could properly have found "willfulness" despite conflicting testimony by psychiatrists.

C.L. Poschwatta, CA-9, 87-2 USTC ¶9565, 829 F2d 1477.

Criminal intent was shown notwithstanding taxpayer's claim of ignorance of requirements of law on the reporting of income under the completed contract method.

Tadio, CA-2, 55-1 USTC ¶9521, 223 F2d 759. Cert. denied, 350 US 874.

Criminal intent was shown where the defendant continued to charge personal expenses to corporate accounts after having been warned that such practices were improper.

L.A. Durant, DC, 62-2 USTC ¶9743, 208 FSupp 890.

Similarly, fraud was evidenced where the taxpayer sought to deduct some of his expenses attributable to stables he owned as part of medical practice expenses after the stable had been disallowed as a business and where he deducted the same expense twice.

J.E. Flynn, CA-1, 73-1 USTC ¶9468, 481 F2d 11.

Similarly, where taxpayer deducted many items that he should have known were nondeductible.

C.W. Lillehei, DC, 73-2 USTC ¶9598, 357 FSupp 718.

Even though the taxpayer did not sign the income tax return in question, his consistent failure to record and report his profits was ample evidence for the finding of a willful intent to evade the payment of taxes.

E.S. Canton, CA-8, 55-2 USTC ¶9705, 226 F2d 313.

A consistent pattern of underreporting large amounts of income was sufficient evidence of willfulness.

J.J. Moran, CA-2, 56-2 USTC ¶9836, 236 F2d 361. Cert. denied, 352 US 909.

E.D. Pollock, CA-7, 68-1 USTC ¶9364, 394 F2d 922.

R.J. Callahan, CA-4, 72-1 USTC ¶9111, 450 F2d 145.

The taxpayer was found guilty by a jury verdict of willfully failing to file income tax returns for 1952 and 1953. The conviction was sustained since the admissible evidence was sufficient to establish both the commission of the offenses and the intent.

L.A. Dominguez, CA-5, 57-1 USTC ¶9690, 245 F2d 284.

Jury was properly instructed on intent and willfulness.

Legatos, CA-9, 55-1 USTC ¶9443, 222 F2d 678.

Lash, CA-1, 55-1 USTC ¶9344, 221 F2d 237. Cert. denied, 350 US 826.

D.V. Yarborough, CA-4, 56-1 USTC ¶9295, 230 F2d 56. Cert. denied, 351 US 969.

R.C. Windisch, CA-5, 61-2 USTC ¶9720, 295 F2d 531.

Part of the instruction to jury on intent and willfulness.

Bloch, CA-9, 55-1 USTC ¶9364, 221 F2d 786. Govt.'s petition for rehearing denied, 55-2 USTC ¶9641, 223 F2d 297.

H. Forster, CA-9, 56-2 USTC ¶9975, 237 F2d 862.

D.L. Wilkins, CA-4, 67-2 USTC ¶9739, 385 F2d 465. Cert. denied, 390 US 951.

There is no distinction between failure to pay one's own ordinary taxes and failure to pay over "special fund" taxes. The test of whether the acts charged were prompted by tax evasion motives is to be applied in both cases.

A.K. Wilson, CA-9, 57-2 USTC ¶10,040, 250 F2d 312.

Taxpayer's conviction for willful failure to file employer's quarterly tax returns (Form 941) was upheld. It was no defense that he furnished W-2 forms to employees, which it was argued revealed his tax liability as an employer.

M. Lemlich, CA-5, 69-2 USTC ¶9669, 418 F2d 212. Cert. denied, 397 US 913.

The fact that the taxpayer was a chronic alcoholic did not prevent him from forming the requisite criminal intent to file false tax returns. Since character evidence is admissible only to show a party's general renown for honesty and lawfulness, it would not encompass his reputation as a disfunctional alcoholic.

J.T. Jalbert, CA-1, 74-2 USTC ¶9788, 504 F2d 892.

A tax accountant, who claimed his failure to file was innocently inadvertent rather than willful because of his neurological disorder, and his wife were liable for willfully failing to file their tax returns. As a tax accountant he was well aware of his duty to file; expert medical testimony indicated that his condition did not keep him from filing his taxes; and throughout the time he was ignoring his own personal income tax returns, he was filing timely returns on his clients' behalf.

M.T. McCaffrey, CA-7, 99-2 USTC ¶50,634, 181 F3d 854.

The taxpayer's practice of paying some of its foreign subsidiary's bills, thereby increasing the subsidiary's tax-free profits and decreasing the parent's taxable profits, was motivated by tax evasion.

S. Berger, CA-2, 72-1 USTC ¶9329, 456 F2d 1349. Cert. denied, 409 US 892.

The jury was entitled to infer that a bookkeeper and businessman wilfully failed to report income earned on a car and truck expense account.

F.A. Marttila, CA-8, 70-2 USTC ¶9715, 434 F2d 834.

Taxpayer's conviction for willfully failing to file income tax returns was upheld on appeal. "Willfully" failing to file a return merely means that the taxpayer voluntarily and intentionally violated the known, legal duty of filing tax returns. An intent to defraud or similar evil purpose is not required.

C.D. McCorkle, Jr., CA-7, 75-1 USTC ¶9270, 511 F2d 482. Cert. denied, 423 US 826.

Followed.

R. Sawyer, CA-7, 79-2 USTC ¶9537, 607 F2d 1190. Cert. denied, 100 SCt 1338.

The law was not so confused as to whether taxable income could be generated from the donation of blood plasma that the defendant could not have had the requisite intent to evade taxes.

D.R. Garber, CA-5, 79-1 USTC ¶9212, 589 F2d 843.

However, the entire Fifth Circuit, sitting en banc, decided that the trial judge should have admitted evidence that the taxability of funds received from such donations was a controversial issue. The cause was remanded for retrial.

D.R. Garber, CA-5, 79-2 USTC ¶9709.

The taxpayer's jury conviction for two counts of willfully failing to supply information regarding gross income was affirmed. There was sufficient identification evidence and sufficient evidence of willfulness, including a letter from the IRS, to which he had replied, informing him of possible criminal penalties related to an improper return for a prior year.

L. Quimby, CA-5, 81-1 USTC ¶9196.

The taxpayers' false statement to IRS agents constituted affirmative acts evidencing a willful attempt to evade taxes. Thus, the district court's order granting the taxpayers' post-verdict motions for judgments of acquittal based on a finding that venue in the Northern District of West Virginia was improper was reversed and remanded with directions to reinstate the jury's verdict of guilty.

B.F. Goodyear, CA-4, 81-1 USTC ¶9423, 649 F2d 226.

There was sufficient evidence that the taxpayer's conduct had the effect of misleading or concealing. Although there was no evidence that the taxpayer made use of Swiss bank accounts, he was unable to account for the assets he claimed he brought back into the U.S. until at least five months after he returned from his last trip. Moreover, the certificates of assessment were sufficient evidence of the taxpayer's tax liability.

V.S. Voorhies, CA-9, 81-2 USTC ¶9710, 658 F2d 710.

The conviction of an attorney for willful failure to pay tax was affirmed. The evidence of willfulness was sufficient and he failed to demonstrate that he was selectively prosecuted for an improper reason. Alleged unavailability of liquid assets on the tax due date did not excuse the taxpayer's criminal liability.

J.G. Tucker, Jr., CA-5, 82-2 USTC ¶9590, 686 F2d 230. Cert. denied, 12/6/82.

A trial court's erroneous ruling that the admission of evidence relating to the individual's state of mind after the last filing date was irrelevant was harmless error.

R.P. Hairston, CA-10, 87-1 USTC ¶9356, 819 F2d 971.

Third-party testimony relating to the taxpayers' state of mind was inadmissible as hearsay.

G.M. House, DC Mich., 87-2 USTC ¶9560.

The convictions of twin sisters for willfully evading their tax obligations were overturned. The sisters received over half a million dollars from a wealthy widower for whom they had acted as mistresses. In regard to one mistress, the government failed to establish that the widower's intent had been to pay compensation in the amount over that which he had declared on gift tax returns for the years at issue. Without establishing the widower's intent to pay compensation rather than to make gifts, the government could not establish the mistress's obligation to pay taxes or her willful intent to evade taxes. Further, neither the code or regulations, nor the Supreme Court or appellate cases provided an answer to whether the mistresses owed any taxes or not. The closest authority lay in a series of Tax Court decisions; but these favored the position that the money received was not taxable. Under this state of the law, the mistresses could not have formed the willful intent to evade tax.

L. Harris, CA-7, 91-2 USTC ¶50,433, 942 F2d 1125.

A finding of intent was affirmed, considering the unusual nature of the transactions, business practice, experience of the parties and business records.

W. Rea, CA-2, 92-1 USTC ¶50,191, 958 F2d 1206.

Sole shareholders of a school bus company could not have their convictions for filing false income tax returns and tax evasion overturned. The trial judge did not err by refusing to allow submission of evidence of their motive for failing to report revenue from the business. Even if there were offsetting credits and deductions and no tax was owed, it did not relieve the individuals of the duty to report the income on a return.

J.A. Pittman, CA-7, 96-1 USTC ¶50,227, 82 F3d 152.

An individual who did not report as income receivership fees paid to him was properly convicted for willfully filing false income tax returns and failing to file a tax return. Although the taxpayer argued that the fees were taxable in the year the receiverships closed, the claim of right doctrine applied so that the fees were taxable in the year they were received, even though the fees were subject to possible disgorgement at the time of a final accounting. The taxpayer's good faith defense was rejected because he failed to report the receiver fees even after the receiverships were closed.

R. George, CA-9, 2005-2 USTC ¶50,546.

A federal district court did not err by admitting evidence relating to a defendant's prior noncompliance with federal tax laws for purposes of proving her intent to commit the crime of knowingly and willfully attempting to evade the payment of her corporation's payroll tax liability by directing its clients to pay their outstanding balances to a successor corporation. The evidence of prior misconduct was properly admissible under Federal Rule of Evidence 404(b) to establish the requisite intent to commit the charged crime and did not amount to a constructive amendment of the terms of the indictment or a prejudicial variance from the allegations in the indictment. The district court's repeated and precise instructions to consider this evidence solely for purposes of determining intent ensured that the jury could convict her only for a crime based on the wrongful conduct charged in the indictment.

D. Daraio, CA-3, 2006-2 USTC ¶50,544.

An individual's prior act of opening an offshore bank account under a false name was properly admitted into evidence because it demonstrated that the individual had previously attempted to hide money offshore. Therefore, the evidence was probative of his intent to hide assets from the IRS when he submitted his OIC. Finally, no Brady violation occurred when a criminal referral letter containing references to the government's possession of financial records belonging to the individual's financial advisor was not disclosed. The individual failed to establish a reasonable probability that the outcome of the trial would have been different had the suppressed evidence been disclosed.

S.P. Miller, CA-5, 2008-1 USTC ¶50,237.