| [1] | UNITED STATES COURT OF APPEALS, TENTH CIRCUIT |
| [2] | No. 81-1541 |
| [3] | 1982.C10.40268 <http://www.versuslaw.com>; 670
F.2d 923 |
| [4] | Decided: February 12, 1982. |
| [5] | UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE, v. WILLIAM S. LAWSON, JR., DEFENDANT-APPELLANT |
| [6] | Appeal from the United States District Court For the District of
Wyoming (D.C. No. CR 81-005) |
| [7] | Richard L. Stradley, Missoula, Mont., for
defendant-appellant. |
| [8] | Richard A. Stacy, U. S. Atty., and Jeffrey C. Fisher, Asst. U. S.
Atty., Cheyenne, Wyo., for plaintiff-appellee. |
| [9] | Before Barrett, Doyle and Logan, Circuit Judges. |
| [10] | Logan |
| [11] | William S. Lawson appeals his convictions by a jury for
failing to file 1978 and 1979 federal income tax returns, violations of
I.R.C. § 7203, and for supplying a false and fraudulent withholding
certificate to his employer in 1979, a violation of I.R.C. § 7205.
Lawson contends that the trial court erred in denying
various pretrial motions and motions for acquittal, in making certain
evidentiary rulings, in instructing the jury, and in sentencing the
defendant. He also maintains that the jury's verdict was against the
weight of the evidence and contrary to law. |
| [12] | I |
| [13] | Pretrial Motions |
| [14] | Lawson asserts that the trial court erred in denying his
pretrial motions (1) to dismiss because his wages were not income within
the meaning of the Internal Revenue Code and the Constitution, (2) to hold
his trial in Casper, Wyoming, (3) to exclude federal government employees
from the jury panel, and (4) to inspect and copy jury selection
records. |
| [15] | The defendant's wages for personal services are income under the
Internal Revenue Code. Congress has specifically provided that "gross
income means all income from whatever source derived, including (but not
limited to) the following items: (1) Compensation for services, including
fees, commissions, and similar items...." I.R.C. § 61(a)(1). We must
broadly interpret the definition to include all gains not specifically
exempted. Commissioner v. Kowalski, 434 U.S. 77,
82-3, 98 S. Ct. 315, 318-319, 54 L. Ed. 2d
252 (1977). Notwithstanding Lawson's belief that
his wages are not gains or profits but merely what he has received in an
equal exchange for his services, the Internal Revenue Code clearly
includes compensation of this nature within reportable gross income. None
of the cases cited by Lawson requires a contrary result.
Lawson's constitutional argument is specious. See United
States v. Russell, 585 F.2d 368, 370 (8th Cir. 1978);
Kasey v. Commissioner, 457 F.2d 369, 370 (9th Cir.),
cert. denied, 409 U.S. 869, 93 S. Ct. 197, 34 L. Ed. 2d 120 (1972); Porth v.
Brodrick, 214 F.2d 925, 926 (10th Cir.
1954). |
| [16] | The trial judge committed no reversible error in denying
Lawson's request to hold his trial in Casper rather than
Cheyenne, both of which are in the District of Wyoming. The Sixth
Amendment provides that a defendant has the right to a trial "by an
impartial jury of the State and district wherein the crime shall have been
committed...." U.S.Const. Amend. VI. Federal Rule of Criminal Procedure 18
adds that the "court shall fix the place of trial within the district with
due regard to the convenience of the defendant and the witnesses and the
prompt administration of justice." The trial court may weigh the prejudice
alleged by defendant against the concern of providing a speedy trial.
United States v. Brown, 535 F.2d 424, 429-30 (8th
Cir. 1976); United States v. Florence, 456 F.2d 46,
50 (4th Cir. 1972). The transcript reveals that Lawson's
only justification for holding the trial in Casper was Casper's proximity
to his own residence; Lawson alleged no specific prejudice.
The judge explained that he sat in Casper only one week per month, he had
a heavy docket, and his primary consideration was to try
Lawson's case within the requirements of the Speedy Trial
Act. Under these circumstances we cannot find that the trial court abused
its discretion in holding the trial in Cheyenne. |
| [17] | The trial court did not commit error in failing to exclude from the
jury for cause all government employees. Lawson asserts that
because their pay is dependent upon taxes, government employees are
inherently biased in cases involving failure to file income tax returns.
Alternatively, Lawson argues that the trial court failed to
inquire adequately into any actual bias of prospective jurors who were
government employees. The courts have long rejected contentions that
government employees must automatically be stricken from juries
considering violations of federal laws. See Dennis v. United States, 339 U.S. 162, 70 S. Ct. 519, 94 L. Ed. 734 (1950); United States v. Wood, 299 U.S. 123, 57 S. Ct. 177, 81 L. Ed. 78 (1936); Marshall v. United States, 293 F.2d 561, 563 (10th Cir.), cert. denied, 368 U.S. 898, 82 S. Ct. 175, 7 L. Ed. 2d 94 (1961). We also reject
Lawson's alternative contention. Lawson never
requested that the trial court inquire into bias of potential jurors who
were government employees. Lawson did file a pretrial motion
requesting that the parties be permitted to so inquire, but when the judge
postponed ruling on that issue, Lawson never raised it
again; in fact, when asked at the end of the court's voir dire whether the
parties had any additional questions, Lawson's only question
did not address bias. Not having himself questioned the prospective jurors
about bias, and not having requested the trial court to ask such
questions, Lawson cannot complain that the judge failed to
initiate such questioning on his own. |
| [18] | We must agree with Lawson, however, that the trial court
improperly denied his motion to inspect and copy jury selection materials
pursuant to 28 U.S.C. § 1867(f). That subsection expressly permits a party
in preparing a motion to dismiss for failure to comply with the statutory
provisions for selecting a jury, to inspect, reproduce, and copy records
or papers used by the jury commission or clerk in connection with the jury
selection process. The Supreme Court characterizes a litigant's right to
inspect jury lists as essentially unqualified. Test v. United States, 420 U.S. 28, 30, 95 S. Ct. 749,
750, 42 L. Ed. 2d 786 (1975). In Test the Court
stated: "(Without) inspection, a party almost invariably would be unable
to determine whether he has a potentially meritorious jury challenge." Id.
Although the trial judge improperly denied Lawson's motion,
reversal of Lawson's convictions is not necessary at this
juncture. We will remand this case to the district court to allow
appellant's counsel to inspect the relevant documents as permitted by 28
U.S.C. § 1867(f). Counsel may then file an appropriate motion pursuant to
28 U.S.C. § 1867(a) and (d). See Test v. United States, 420 U.S.
28, 30, 95 S. Ct. 749, 750, 42
L. Ed. 2d 786 (1975); United States v. Marcano-Garcia, 622 F.2d 12, 18 (1st Cir. 1980). If
Lawson establishes that the method of selecting the jury
violated the law, the court shall then set aside the
convictions. |
| [19] | II |
| [20] | Motions for Acquittal |
| [21] | Lawson claims the trial court erred in denying his
motions for acquittal at the end of the government's case and at the close
of all evidence. Specifically, Lawson contends that the
motions should have been granted because the government failed to
establish jurisdiction, and his Fifth Amendment privilege against
self-incrimination protected him from having to provide information on the
tax returns; Lawson also argues the government failed to
prove that he willfully failed to file returns, that he had a tax
liability for the year in which he filed a withholding certificate
claiming ninety-nine exemptions, and that in filing the withholding
certificate he acted with specific intent to deceive his
employer. |
| [22] | Lawson's "jurisdictional" claim, more accurately a
constitutional claim, is based on an argument that the Sixteenth Amendment
only authorizes excise-type taxes on income derived from activities that
are government-licensed or otherwise specially protected.
Lawson says the government offered no proof that his income
came from such activities and therefore failed to establish jurisdiction.
The contention is totally without merit. Congressional power to tax rests
in Article 1, Section 8, clause 1 of the Constitution and embraces all
conceivable powers of taxation including the power to lay and collect
income taxes. Brushaber v. Union Pac. R. R., 240 U.S. 1, 12-13, 36 S. Ct. 236, 239-240, 60 L. Ed. 493 (1916). The Sixteenth Amendment removed
any need to apportion income taxes among the states that otherwise would
have been required by Article 1, Section 9, clause 4. Consistent with
these provisions, Congress has taxed compensation for services, without
any regard for whether that compensation is derived from
government-licensed or specially protected activities, I.R.C. § 61, and
this has been construed to cover earnings from labor. E.g., United States
v. Russell, 585 F.2d 368, 370 (8th Cir.
1978). |
| [23] | Lawson filed facsimiles of 1978 and 1979 form 1040 tax
returns that were blank except for his signature, printed asterisks, and
materials claiming a Fifth Amendment privilege against disclosure. He
thereby provided no information from which the IRS could assess his tax
liability. These protest 1040 forms are not returns within the meaning of
the Internal Revenue Code or the tax regulations. United States v. Porth, 426 F.2d 519, 523 (10th Cir.), cert. denied, 400 U.S. 824, 91 S. Ct. 47, 27 L. Ed. 2d 53 (1970). There is no blanket Fifth
Amendment protection for a taxpayer filing a protest form. E.g., United
States v. Brown, 600 F.2d 248, 251-52 (10th Cir.),
cert. denied, 444 U.S. 917, 100 S. Ct. 233, 62 L. Ed. 2d 172 (1979); United
States v. Johnson, 577 F.2d 1304, 1310-11 (5th Cir.
1978); United States v. Irwin, 561 F.2d 198, 201
(10th Cir. 1977), cert. denied, 434 U.S. 1012, 98 S. Ct. 725, 54 L. Ed. 2d 755
(1978). On appeal, Lawson asserts that the Fifth Amendment
protects him from completing a 1040 form because any information supplied
could have been used to incriminate him under I.R.C. § 7205 for filing a
false withholding certificate with his employer. This contention has also
been rejected in similar tax protestor cases. E.g., United States v.
Carlson, 617 F.2d 518, 520-23 (9th Cir.), cert.
denied, 449 U.S. 1010, 101 S. Ct. 564, 66 L. Ed. 2d 468
(1980). |
| [24] | Lawson asserts that the government failed to prove
willfulness in not filing returns and in claiming ninety-nine exemptions
on the withholding certificate he gave his employer in January 1979. In
the context of the tax statutes, willfulness means a voluntary,
intentional violation of a known legal duty. United States v. Pomponio, 429 U.S. 10, 12, 97 S. Ct. 22,
23, 50 L. Ed. 2d 12 (1976). The government need not
establish that the defendant acted with an evil motive or in bad faith.
United States v. Hinderman, 625 F.2d 994, 995 (10th
Cir. 1980); United States v. Dillon, 566 F.2d 702
(10th Cir. 1977), cert. denied, 435 U.S. 971, 98 S. Ct. 1613, 56 L. Ed. 2d 63
(1978). While the evidence indicates that Lawson may have
acted with a personal belief that the tax laws are unconstitutional, it
well supports that Lawson voluntarily and intentionally
violated known legal duties. The trial judge properly denied the motions
for acquittal on this ground. |
| [25] | As to the charge of filing a false withholding certificate,
Lawson contends the government failed to establish that
Lawson had incurred any tax liability for the year in
question and thus failed to prove he had deceived his employer into
underwithholding his taxes. Section 7205 merely forbids the willful
furnishing of false or fraudulent withholding information to an employer;
the criterion is not whether the employer and the government were, or
could have been, deceived. United States v. Hudler, 605 F.2d
488, 490 (10th Cir. 1979), cert. denied, 445 U.S.
961, 100 S. Ct. 1647, 64 L. Ed.
2d 236 (1980). The jury reasonably could infer from the
evidence that Lawson was not entitled to ninety-nine
exemptions, the number he stated on his withholding certificate to attain
zero withholding. Therefore, the trial court properly denied
Lawson's motions for acquittal. |
| [26] | III |
| [27] | Sufficiency of the Evidence |
| [28] | Based on the same arguments he made that the court should have granted
his motions for acquittal, Lawson seeks to overturn the
jury's verdict because it is against the weight of the evidence and
contrary to law. We have reviewed the transcript and exhibits and find
substantial support for the jury's verdict. |
| [29] | Anyone who is required to file an income tax return is prohibited from
willfully failing to file. I.R.C. § 7203. The evidence established that an
individual who had a gross income exceeding $2,950 in 1978 and $3,300 in
1979 must file returns. Lawson's employer paid him wages of
$29,219.36 in 1978 and $33,414.25 in 1979. The IRS center in Ogden, Utah,
where Lawson should have sent his returns, received from
Lawson for those years only the protest 1040 forms. The
protest 1040 forms contained no information from which the IRS could
determine Lawson's tax liability. The government adequately
supported the willfulness element by showing that Lawson had
filed returns with income information in 1974 and 1975; he filed protest
1040 forms for 1978, 1979, and 1980, although the IRS informed him by two
registered letters that his substantially identical forms for 1976 and
1977 lacked sufficient information to permit the IRS to assess tax
liability. |
| [30] | I.R.C. § 7205 prohibits any employee required to supply tax
withholding information to his or her employer from willfully supplying
false or fraudulent information. The jury found that in January 1979
Lawson willfully gave his employer a certificate claiming
ninety-nine exemptions. The government adequately supported the element of
willfulness by introducing Lawson's 1976 certificate showing
two exemptions, the insurance enrollment card Lawson
submitted to his employer in 1976 listing only one dependent child, and
Lawson's 1977, 1978, and February 1979 certificates claiming
total exemption from withholding. In 1977 Lawson's employer
had informed him in writing that he was responsible for filing an accurate
withholding certificate. In 1979 the employer informed
Lawson that the IRS had determined his January 1979
certificate was inaccurate and had ordered withholding to continue on the
basis of two exemptions. In spite of this, Lawson
subsequently filed a 1980 certificate claiming total exemption from
withholding. |
| [31] | IV |
| [32] | Admission of Evidence; Jury Instructions |
| [33] | Lawson challenges the court's admission of certain of
the government's exhibits and refusal to admit one of his exhibits. He
also claims many of the jury instructions were wrong. |
| [34] | Admission of evidence falls within the trial court's discretion and
will not be disturbed on appeal unless clearly erroneous. Keen v. Detroit
Diesel Allison, 569 F.2d 547, 549 (10th Cir. 1978).
We have reviewed the government's exhibits that Lawson
challenges as well as the portions of the transcript where the trial judge
ruled upon their admission; we find no error. |
| [35] | The trial court did not err in excluding Lawson's
exhibit of a tape of a tax protestor meeting on which he relied in
deciding to file his protest 1040 forms. Since evil motive or bad faith is
not required for a finding that the taxpayer willfully failed to file a
return, the trial court may exclude defendant's evidence of good purpose
or good faith. See United States v. Dillon, 566 F.2d 702, 704 (10th Cir. 1977), cert. denied, 435 U.S.
971, 98 S. Ct. 1613, 56 L. Ed.
2d 63 (1978). |
| [36] | We have carefully examined the instructions to the jury that
Lawson challenges. In light of the analysis of the law set
forth above in this opinion, we find no error in any of those
instructions. |
| [37] | V |
| [38] | Resentencing and Probation Conditions |
| [39] | Lawson states that the court erred in resentencing him
and in setting special conditions of probation. The trial court originally
sentenced Lawson to four months imprisonment for failing to
file a 1978 return, assessed Lawson the costs of prosecution
but suspended imposition of sentence for failing to file a 1979 return,
and imposed a fine of $2,000 for the false withholding certificate. In
addition, the judge placed Lawson on three years probation.
Sometime after sentencing the trial court apparently realized that a fine
for filing a false withholding certificate could not exceed $500.*fn1 Before Lawson had paid the
fine or begun to serve his sentence the trial court modified the sentence
by eliminating the fine on the false certificate count but imposing a
$2,000 fine for failing to file a 1979 return. |
| [40] | Lawson asserts that because the original sentence for
failure to file a 1979 return was proper, the judge could not modify it
upward. The assertion is without merit. At least so long as a defendant
has not yet begun to serve the sentence, the sentencing judge may recall
the defendant and increase the sentence. United States v. DiFrancesco, 449 U.S. 117, 134, 101 S. Ct. 426, 436, 66 L. Ed. 2d 328
(1980). |
| [41] | The court also imposed a special condition of probation: "Defendant
shall disassociate himself with any organization that has (as) its purpose
defeating the Internal Revenue Service laws, including an organization
known as the Wyoming Patriots and shall not encourage other individuals to
disobey the laws of the United States." According to Lawson,
the sentencing judge's special condition of probation infringes upon his
First Amendment freedom of association. See In re Mannino, 14 Cal.App.3d
953, 92 Cal.Rptr. 880 (Ct.App.1971). |
| [42] | A sentencing judge has broad discretion to impose conditions of
probation that are reasonably related to protecting the public and
rehabilitating the defendant. Porth v. Templar, 453 F.2d 330, 333 (10th Cir. 1971). In Porth we approved a condition
prohibiting probationer from inducing others through speeches or other
means to violate the law and indicated that the sentencing court may
"restrict the probationer's association with groups that would palpably
encourage him to repeat his criminal conduct." Id. at 334. In a tax
protest case similar to the one before us, the Fifth Circuit disapproved a
condition that the tax violator "divorce (himself) from any organization
advocating the willful disobedience of any local, state or federal law"
but modified the order and approved a condition prohibiting the defendant
from associating with any organization advocating disobedience of the
Internal Revenue Service laws. See United States v. Smith, 618
F.2d 280, 282 (5th Cir.), cert denied, 449 U.S. 868, 101 S. Ct. 203, 66 L. Ed.
2d 87 (1980). |
| [43] | In Porth we held a condition imposed upon a tax violator that
"prohibits the expression of opinion as to invalidity or
unconstitutionality" of the tax laws was too broad. 453 F.2d at
334. We think prohibiting Lawson from associating
with organizations may stand only if the organization advocates violation
of the tax laws. Many of these tax protestor groups not only urge change
in the tax laws but disobedience through encouraging failure to file tax
returns, filing of essentially blank returns, and claiming unlawful
exemptions from withholding. See United States v. Amon, 669 F.2d
1351 (10th Cir. 1981) (Logan, J., concurring). We construe the
court's reference to an organization having as its purpose "defeating" the
Internal Revenue laws to mean only organizations advocating disobedience,
and so construed, the condition is valid. |
| [44] | With respect to the prohibition against associating with the "Wyoming
Patriots," the record indicates that organization held meetings and
presented speakers encouraging the filing of the protest 1040 forms. The
presentence report also indicates that Lawson received from
that organization much of the advice he relied upon in filing the protest
1040 forms and his false withholding certificate. Therefore, while
probation conditions that restrict constitutional rights merit "special
scrutiny," see United States v. Consuelo-Gonzalez, 521 F.2d 259, 265 (9th Cir. 1975) (en banc ), we cannot find the
sentencing judge acted improperly in prohibiting association with the
"Wyoming Patriots." |
| [45] | We remand this case to the district court to permit
Lawson to inspect the jury selection records to which he is
entitled pursuant to 28 U.S.C. § 1867(f), and to hold an evidentiary
hearing upon any contentions that arise out of that examination. In all
other respects we affirm the judgment of the trial court. |
|
| |
| Opinion Footnotes | |
|
| |
| [46] | *fn1 I.R.C. § 7205 was later amended to permit a
fine of up to $1,000 commencing with tax years beginning after December
31, 1981. |