# Grosso v. United States/Dissent Warren

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United States Supreme Court
390 U.S. 62
Grosso v. United States
Mr. Chief Justice WARREN, dissenting in No. 2.
The Court today strikes down as unconstitutional a statutory scheme enacted by Congress to make effective and enforceable taxes imposed on wagers and the occupation of gambling. In so doing, it of necessity overrules United States v. Kahriger, 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754 (1953), and Lewis v. United States, 348 U.S. 419, 75 S.Ct. 415, 99 L.Ed. 475 (1955). I cannot agree with the Court's conclusion on the constitutional questions presented, and I would affirm the convictions in these two cases on the authority of Kahriger and Lewis.
In addition to being in disagreement with the Court on the result it reaches in these cases, I am puzzled by the reasoning process which leads it to that result. The Court professes to recognize and accept the power of Congress legitimately to impose taxes on activities which have been declared unlawful by federal or state statutes. Yet, by its sweeping declaration that the congressional scheme for enforcing and collecting the taxes imposed on wagers and gamblers is unconstitutional, the Court has stripped from Congress the power to make its taxing scheme effective. A reading of the registration requirement of 26 U.S.C. § 4412, as implemented by Internal Revenue Service Form 11-C, reveals that the information demanded of gamblers is no more than is necessary to assure that the tax-collection process will be effective. Registration of those liable for special taxes is a common and integral feature of the tax laws. See 26 U.S.C. s 7011. So also is the requirement of public disclosure. And the reach of the registration and disclosure requirements extends to both lawful and unlawful activities. Because registration and disclosure are so pervasive in the Internal Revenue Code, it is clear that such requirements have been imposed by Congress to aid in the collection of taxes legitimately levied. Because most forms of gambling have been declared illegal in this country, gamblers necessarily operate furtively in the dark shadows of the underworld. Only by requiring that such individuals come forward under pain of criminal sanctions and reveal the nature and scope of their activities can Congress confidently expect that revenue derived from that outlawed occupation will be subject to the legitimate reach of the tax laws. Indeed, it seems to me that the very secrecy which surrounds the business of gambling demands disclosure. Those legislative committees and executive commissions which have studied the problems of illicit gambling activities have found it impossible to determine with any precision the gross revenues derived from that business. For example, the President's Commission on Law Enforcement and Administration of Justice reported:
'There is no accurate way of ascertaining organized crime's gross revenue from gambling in the United States. Estimates of the annual intake have varied from $7 to $50 billion. * * * While the Commission cannot judge the accuracy of these figures, even the most conservative estimates place substantial capital in the hands of organized crime leaders.' President's Commission on Law Enforcement and Administration of Justice, Task Force Report: Organized Crime 3 (1967).
The Commission's observation is doubly revealing. It shows that the business of gambling is a lucrative revenue source. And it demonstrates the need for an enforceable disclosure device, such as the registration requirement of § 4412, if the revenue potential is to be realized. No one denies that the disclosures demanded by § 4412 can also be useful to law enforcement officials and that the very process of disclosure may have a regulatory effect on gamblers and their operations. But this Court has repeatedly recognized that 'a tax is not any the less a tax because it has a regulatory effect.' Sonzinsky v. United States, 300 U.S. 506, 513, 57 S.Ct. 554, 556, 81 L.Ed. 772 (1937). See also License Tax Cases, 5 Wall. 462, 18 L.Ed. 497 (1867).
In declaring the registration requirements of § 4412 invalid, the Court places principal reliance on Albertson v. SACB, 382 U.S. 70, 86 S.Ct. 194, 15 L.Ed.2d 165 (1965). But there is a critical distinction between that case and the cases decided today. In Albertson, the Court dealt with a registration requirement which clashed head-on with protected First Amendment rights and which could be viewed as serving no substantial governmental purpose in light of the curtailment of those rights. These elements are notably lacking in the cases decided today. The occupation of gambling can in no sense be called a 'protected' activity. The only claim that those engaged in gambling make is that they are somehow entitled to have their activities shrouded in secrecy and shielded from disclosure. Nothing in the Constitution compels such a result. And there is clearly a legitimate tax purpose in demanding that gamblers make the disclosures required by § 4412 and Form 11-C. Disclosure by means of registration is routinely required under the tax laws of those engaged in legitimate and lawful business enterprises. See, e.g., 26 U.S.C. §§ 4101, 4222, 5502, 5802. Cf. Shapiro v. United States, 335 U.S. 1, 68 S.Ct. 1375, 92 L.Ed. 1787 (1948). To relieve gamblers of the registration requirement is to create for those engaged in that occupation a special constitutional privilege of nonregistration.
In view of these considerations, I cannot understand why the Court today finds it necessary to strike down the registration requirement of § 4412 directed at those who derive their income from gambling. What seems to trouble the Court is not that registration is required but that the information obtained through the registration requirement is turned over by federal officials, under the statutory compulsion of 26 U.S.C. § 6107, to state prosecutors to aid them in the enforcement of state gambling laws. If that is the source of the Court's Fifth Amendment concern, then constitutional adjudication demands that the provisions of § 6107 be the focus of the Court's decision. It does not seem reasonable to me to rule that, because information derived from the registration provisions of § 4412 must be made available to state prosecutors under § 6107, the registration requirements suffer from a fatal constitutional infirmity, even though § 4412 is a necessary and proper means of assuring that the occupational tax on gamblers will be enforceable. Certainly no Fifth Amendment issue arises from the fact of registration until an effort is made to use the registration procedure in aid of criminal prosecution. To the extent that the disclosure requirements of § 6107 would raise a Fifth Amendment problem because some of the names on the public list have admitted unlawful activities, that statutory provision is severable for purposes of constitutional adjudication. In fact, in the Internal Revenue Code itself, Congress has specifically enacted a severability clause. Section 7852(a) of Title 26 provides: 'If any provision of this title, or the application thereof to any person or circumstances, is held invalid, the remainder of the title, and the application of such provision to other persons or circumstances, shall not be affected thereby.' That clause represents a clear statutory command to this Court to wield its constitutional knife surgically, concentrating on the suspect provisions of § 6107 rather than bludgeoning the entire taxing scheme. The Court cannot evade this constitutional and statutory duty, as it seems to do, by labeling every provision of the wagering tax statutes as 'interrelated' or 'integral.'
There is no such narrow focus to the Court's approach to these two cases. In fact, the Court impliedly rejects such an approach in dealing with the Government's suggestion that the taxing scheme at issue be saved from constitutional interment by imposing a use restriction on the information derived from registration under § 4412. Cf. Murphy v. Waterfront Commission of New York Harbor, 378 U.S. 52, 84 S.Ct. 1594, 12 L.Ed.2d 678 (1964). The Court finds such a limitation unacceptable because the legislative history of the wagering tax system reveals a congressional purpose to make available to state and local law enforcement officials the disclosures made through registration. The Court reasons that to impose the use restriction would be to defeat the congressional purpose, and it finds the suggested saving device unacceptable. But realistically the Court's sweeping constitutional ruling has the effect of frustrating two congressional purposes-the disclosure purpose and the revenue purpose. Such a result can hardly be justified on the ground of according a congressional purpose the deference due it by this Court. Conceding that the statutory scheme is intended to assist law enforcement, the fact that taxes in the sum of $115,000,000 have flowed from the wagering tax scheme to the Treasury in the past several years is convincing evidence of a legitimate tax purpose. The congressional intent to assist law enforcement should not be the excuse for frustrating the revenue purpose of the statutes before the Court. Regardless of legislative intent, this Court has in the past refused 'to formulate a rule of constitutional law broader than is required.' Garner v. State of Louisiana, 368 U.S. 157, 163, 82 S.Ct. 248, 251, 7 L.Ed.2d 207 (1961); cf. Kennedy v. Mendoza-Martinez, 372 U.S. 144, 186, n. 43, 83 S.Ct. 554, 576, 9 L.Ed.2d 644 (1963). This principle should prevail in this case where the Act has the wholesome objective of devising workable procedures to assure that gamblers will pay the same taxes on their profits as other citizens are compelled to pay.
I apprehend that the Court, by unnecessarily sweeping within its constitutional holding the registration requirements of § 4412, is opening the door to a new wave of attacks on a number of federal registration statutes whenever the registration requirement touches upon allegedly illegal activities. As I noted above, registration is a common feature attached to a number of special taxes imposed by Title 26. For example, the following provisions impose special registration requirements: § 4101 (those subject to the tax on petroleum products); § 4222 (registration regarding certain tax-free sales by manufacturers); § 4722 (those engaged in dealing in narcotic drugs); § 4753 (those who deal in marihuana); § 4804(d) (manufacturers of white phosphorous matches); §§ 5171-5172 (registration of distilleries); § 5179 (registration of stills); § 5502 (manufacturers of vinegar); § 5802 (importers, manufacturers, and dealers in firearms). And § 7011 imposes a general registration requirement on all those liable for other special taxes. Heretofore this Court has consistently upheld the validity of such registration requirements, without regard to the legality of the activity being taxed. United States v. Sanchez, 340 U.S. 42, 71 S.Ct. 108, 95 L.Ed. 47 (1950) (26 U.S.C. § 4753); Sonzinsky v. United States, 300 U.S. 506, 57 S.Ct. 554, 81 L.Ed. 772 (1937) (26 U.S.C. § 5841); Nigro v. United States, 276 U.S. 332, 48 S.Ct. 388, 72 L.Ed. 600 (1928) (26 U.S.C. § 4722). The implications of the Court's decisions today also extend beyond the tax statutes. For example, the statute requiring narcotics addicts and violators to register whenever they enter or leave the country, 18 U.S.C. § 1407, can now be expected to come under attack. My concern that such registration requirements will now come under attack is not imaginary. This very day the Court, adhering to its decisions in Marchetti and Grosso, declares unconstitutional in Haynes v. United States, 390 U.S. 85, 88 S.Ct. 722, 26 U.S.C. § 5851, which makes unlawful the possession of a firearm not registered under § 5841. The impact of that decision on the efforts of Congress to enact much-needed federal gun control laws is not consistent with national safety. In my view, the Court has failed to take account of these relevant implications in the very broad holdings of today's decisions.

## Notes

* ↑ It is true that the Internal Revenue Code also imposes special registration requirements in connection with some of the special taxes. See the registration sections collected in 26 U.S.C. § 7012. However, the special registration requirements differ only in degree, and not in kind, from the provisions of § 7011.
* ↑ Among the more general public disclosure provisions of the Revenue Code are § 6103(f) (list of taxpayers); § 6104 (returns of certain tax-exempt organizations); and § 6105 (lists of those who have been granted excess profit relief).
* ↑ Other reports are similarly indefinite concerning the precise amount of revenue realized by organized crime from illicit gambling operations. Thus, a Senate report could be no more exact than to describe unlawful gambling activities as 'a multibillion dollar racket.' Permanent Subcommittee on Investigations of the Senate Committee on Government Operations, Gambling and Organized Crime, S.Rep. No. 1310, 87th Cong., 2d Sess., 43 (1962). The President's Commission on Crime in the District of Columbia reported that 'over 100 million dollars is bet annually on 'numbers' and sports events' in the Washington metropolitan area. The Commission relied for its figurs on information supplied by Sheldon S.C.ohen, Commissioner of Internal Revenue. Report of the President's Commission on Crime in the District of Columbia 112 (1966).
* ↑ Investigations by congressional committees have established that gambling revenue provides a principal source of revenue for organized crime in this country. See S.Rep. No. 1310, 87th Cong., 2d Sess., 43 (1962); S.Rep. No. 141, 82d Cong., 1st Sess., 11 (1951). Some congressmen may well have been motivated by a desire to control and curtail organized crime in enacting the tax laws challenged in these cases. However, it is not the task of this Court to examine such motives in ruling on the constitutionality of such laws, and the Court today has wisely declined to engage in any motive-searching inquiries.
* ↑ I recognize that Albertson was decided on Fifth Amendment grounds without reaching the petitioners' First Amendment claims. 382 U.S., at 73-74 and n. 6, 86 S.Ct., at 196. However, in applying the Albertson holding to the facts of these cases, it cannot be overlooked that the registration requirement in Albertson was directed at the petitioners' organizational affiliations which were arguably protected by the First Amendment. See United States v. Robel, 389 U.S. 258, 88 S.Ct. 419, 19 L.Ed.2d 508 (1967). There is no such First Amendment issue lurking in the cases decided today. The operative fact upon which the registration requirement of § 4412 depends is an individual's status as a gambler.
* ↑ The Court points out in Grosso v. United States that the disclosure requirements of § 6107 do not extend to the excise tax provisions of § 4401. But, by administrative practice, the identity of those who pay the excise tax on wagers is made known to state prosecuting officials. 390 U.S., at 66, 88 S.Ct., at 712.
* ↑ For example, the following sections impose occupational taxes and subject the taxpayer to the registration requirements of § 7011: § 4461 (those who maintain for use or permit use of coin-operated amusement or gaming devices); §§ 4721 and 4702(a)(2)(C) (those who deal in narcotic drugs); § 4751 (dealers in marihuana); § 4821 (manufacturers or dealers in renovated or adulterated butter); § 4841 (manufacturers or dealers in filled cheese); § 5081 (those who rectify distilled spirits or wines); § 5091 (brewers of beer); § 5101 (manufacturers of stills); and § 5111 (wholesale dealers in liquors, wines, and beer); § 5121 (retail dealers in liquors, wines, and beer); and § 5801 (dealers in certain firearms). The registration requirement applies uniformly to those engaged in such occupations lawfully and those whose activities would make them liable to criminal penalties.
* ↑ The petition for a writ of certiorari in Haynes was filed on March 11, 1967, almost a year after this Court granted a writ of certiorari in Costello v. United States (the companion case to Marchetti). In granting the writ, the Court stipulated as the sole question in Costello whether Kahriger and Lewis should be overruled. 383 U.S. 942, 86 S.Ct. 1195, 16 L.Ed.2d 205. There can be little doubt that the Court's specification of the question for argument in Costello prompted the Fifth Amendment challenge in Haynes.
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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