COURT OF APPEALS OF VIRGINIA

Present: Judges Frank, Clements and Senior Judge Fitzpatrick Argued at Richmond, Virginia

JAMES LEONARD GIBSON OPINION BY v. Record No. 1246-06-4 JUDGE JEAN HARRISON CLEMENTS AUGUST 28, 2007 COMMONWEALTH OF VIRGINIA

FROM THE CIRCUIT COUR T OF STAFFORD COUNTY William Shore Roberts on, Judge Designate Spencer D. Ault for appellant. Eugene Murphy, Senior Assist ant Attorney Gene ral (Robert F. McDonnell, Attorney General, on brief), for appellee.

James Leonard Gibson (appellant) was convict ed in a bench trial of three counts of failure to pay tax, in violation of Code § 58.1-1815. On appeal, he contends the trial court erred in (1) concluding he was subjec t to conviction under Code § 58.1- 1815 despite the fact that he truthfully accounted for his co mpany’s tax obligations and took no affirmative action to evade the assessment or payment of t hose obligations, (2) deciding the penalties and interest imposed for delinquent filings and tax payments const ituted “tax” under Code § 58.1-1815, and (3) ruling it did not have authority to defer findings of guilt. For the reasons that follow, we affirm the trial court’s judgment and a ppellant’s convictions.

I. BACKGROUND

Taken from a written statement of facts filed in lieu of a transcript pursuant to Rule 5A:8, the facts relevant to our disposition of this appeal are not in dispute. In 2000, appellant registered his company, Leonard Gibson Excavating, Inc., with the Virginia Department of Taxation (Department) “f or sales and withholding taxes.” Appellant, the- 2 - president of the company, was listed as the pers on responsible for paying those taxes for the company, and he obtained a tax identification nu mber from the Department. Appellant made “significant tax payments” for the compa ny in 2000, 2001, and 2002 and filed “all the required forms.” The truthfulness and accuracy of those forms were not disputed. However, in 2002 and 2003, appellant submitted some of the fo rms without the requisite payment. Using the forms submitted by appellant, the Department determined that appellant failed to pay $35,314.94 in employer withholding tax for the period November 22, 2002, to May 7, 2003 (count two), and $12,464.04 in employer wit hholding tax for the period June 11, 2003, to November 24, 2003 (count three). Appellant also failed to pay $278.93 in penalties and interest assessed by the Department for late filings a nd payments for the period October 16, 2001, to August 22, 2002 (count one), although the underlying tax for that period was ultimately paid. On January 13, 2004, misdemeanor arrest wa rrants were issued against appellant, charging him with three counts of failure to pay ta x. The general district court convicted him of each count. Appellant appealed the convictions to the circuit court.

A trial de novo was conducted in the circuit cour t on August 13, 2004. Testifying on his own behalf at trial, appellant acknowledged that , while all of the company’s “tax obligations were properly reported,” some of those obligatio ns went unpaid. After hearing the evidence and argument of counsel, the trial court found the ev idence sufficient to support findings of guilt on all three counts but, by order entered August 24, 2004, “deferr[ed] final disposition” for a period of one year. Appellant maintained good behavior “during the period of his deferred finding[s].” On December 13, 2005, the judge who deferred the findings of guilt ruled that he lacked authority to defer those findings. Accordingly, he entered find ings of guilt on the thre e counts of failure to- 3 - pay tax, and subsequently sentenced appellant to twelve months’ incarceration on each count, with all but ninety days of the total sentence suspended upon certain conditions. This appeal followed.

II. NATURE OF THE OFFENSE Appellant was convicted, on each of the three counts brought against him, of violating Code § 58.1-1815 by willfully failing to pay hi s company’s tax obligations. Code § 58.1-1815 provides, in pertinent part, as follows: Any corporate . . . officer . . . or any other person required to collect, account for and pay ove r any sales, use or withholding tax, who willfully fails to collect or truthfully account for and pay over such tax, and any such officer or person who willfully evades or attempts to evade any such tax or the payment thereof, shall, in addition to any other penalties pr ovided by law, be guilty of a Class 1 misdemeanor. On appeal, appellant does not challenge the trial court’s findings that he was the individual responsible for paying over his comp any’s tax obligations to the Department under Code § 58.1-1815 and that he willfully failed to pa y over some of those obligations as required. Instead, he contends the trial cour t improperly convicted him of failu re to pay tax, in violation of Code § 58.1-1815, because it was uncontradicted that he truthfully accounted for his company’s tax obligations and that he took no affirmativ e steps to willfully evade the assessment or payment of those obligations. 1 He maintains that, pursuant to the plain language of Code

1 Appellant’s first question presented reads, “Does the Commonwealth of Virginia maintain debtor prisons for individuals who truthf ully account for their tax obligations but fail to pay the amounts due?” Asked at oral argument to explain why we should consider such a question on appeal when no mention of “debtor pr isons” was apparently made below, appellant’s counsel argued that, although his reference to “debtor prisons” may “h ave been a colorful colloquialism on [his] part,” the first question presented did identif y an underlying issue that was addressed and ruled on at trial: whether appella nt’s admitted failure to pay his company’s tax obligations was sufficient, as a matter of law, to sustain his convictions under Code § 58.1-1815, notwithstanding the fact that he truthfully accounted for his company’s tax obligations and performed no affirmative action to evade the assessment or payment of those obligations.- 4 - § 58.1-1815, a corporate officer is subject to conviction for fail ing to pay his company’s tax obligations only if he both fa ils to pay those obligations and fails to truthfully account for those obligations. Accordingly, he further maintains, it is not criminal to simply fail to pay a tax obligation; there must be a “willful evasion of a tax obligation.” “Absent a showing of willful evasion by failing to file the accountings or willfully providing false information on a filed form, the elements of the statute are not met,” appellant asserts. Hence, he argues, his mere willful failure to pay his company’s tax obligations, w ithout more, did not amount to a crime under the plain language of the statute and he “should have been acquitted.” Thus, appellant concludes, the trial court erred, as a matter of law, in finding him criminally liable under Code § 58.1-1815. In response, the Commonwealth contends that, because Code § 58.1-1815 requires that appellant both “truthfully account for and pay over such tax,” appellant’s admitted willful failure to pay his company’s tax obligations is sufficient, by itself, to constitu te a violation of the statute. We agree with the Commonwealth. Because the issue presented is a question of law involving the interpretation of Code § 58.1-1815, we review the trial court’s judgment de novo . See Sink v. Commonwealth , 28 Va. App. 655, 658, 507 S.E. 2d 670, 671 (1998) (“Although the tr ial court’s findings of historical fact are binding on appeal unless plainly wrong, we review the tria l court’s statutor y interpretations and legal conclusions de novo .”). In interpreting the meaning of the statutory words in controversy, we are mindful of the long-standing principle that, [w]hen we know the object of a statute and are called upon to construe a phrase or a senten ce which, standing alone, may be susceptible of different interpre tations, we know of no safer rule than to take the statute by its four corners and critically examine it as a whole to ascertain the legisl ative intent, as manifested by its

Although we address the underlying issue presented, we note that counsel’s responsibility is to properly state the issues without undue embellishment.- 5 - different provisions. If, upon such an examination, an interpretation can be made, cons istent with the language used, which will carry into effect the object sought to be accomplished by the statute, that in terpretation should be adopted, in preference to one which would be equally c onsistent with the language used, standing alone, but which would defeat, or tend to defeat, the manifest intent of the legislature.

Harris v. Commonwealth , 142 Va. 620, 625, 128 S.E. 578, 579 (1925). Additionally, “‘[a]lthough [ambiguous] penal laws are to be construed strictly [against the Commonwealth], they ought not to be construed so strictly as to defeat the obvious intent of the legislature.’”

Williams v. Commonwealth , 43 Va. App. 1, 5, 595 S.E.2d 497, 499 (2004) (second and third alterations in original) (int ernal quotation marks omitted) (quoting Willis v. Commonwealth , 10 Va. App. 430, 441, 393 S.E.2d 405, 411 (1990)). Moreover, [t]he rules of statutory interpretation argue against reading any legislative enactment in a manner that will ma ke a portion of it useless, repetitious, or ab surd. On the contrary, it is well established that every act of the legislature should be read so as to give reasonable effect to every word and to promote the ability of the enactment to remedy the mischi ef at which it is directed.

Jones v. Conwell , 227 Va. 176, 181, 314 S.E.2d 61, 64 (1984). As relevant to the issue before us, the la nguage of Code § 58.1-1815 clearly manifests the legislature’s intent to ensure the proper coll ection, accounting, and paymen t of sales, use, and withholding tax by subjecting thos e responsible for such collection, accounting, and payment to criminal penalties for their failure to properly perform their responsibilities in accordance with the statute. To that end, the statute expressly provides that any such individual who “willfully fails to collect or truthfully account for and pay over any such tax” or who “willfully evades or attempts to evade any such tax or the payment thereof” is subject to a misdemeanor conviction. Relying on the fact that he truthfully accounted for his company’s tax obligations, appellant contends that, because the phrase “truth fully account for and pay over any such tax” is stated in the conjunctive, his mere willful failu re to pay some of those obligations to the- 6 - Department was not enough to subject him to conviction under Code § 58.1-1815. The willful failure to perform both duties—to account for and pay over—must be establ ished to sustain such a conviction, he argues. Conve rsely, the Commonwealth contends the phrase “truthfully account for and pay over any such tax” is phrased in the conjunctive because it requires the person responsible for collecting, accounting for, and pa ying over a company’s tax obligations to both truthfully account for and pay over those obligations. Since the statute explicitly requires the fulfillment of both duties, the Commonwealth argues, the failure to perform either one is

sufficient to sustain a conviction. Although neither party’s interpre tation of the phrase at issu e is inconsistent with the language used, we reject appellan t’s interpretation as inconsistent with the manifest purpose of the statute. Indeed, if the phrase were given a ppellant’s interpretation, an individual “required to collect, account for and pay over any sales, use or withholding tax” who willfully fails to pay over any such tax could escape criminal liability for that failure by simply truthfully accounting

for that tax. Such a result would plainly defeat the manifest intent of the legislature to ensure compliance by such individuals with their obligation to pay the requisite amount of taxes to the Department. Our conclusion that this result wa s not intended by the legislature is buttressed by the fact that the same phrase in 26 U.S.C. § 7202, 2 one of Code § 58.1-1815’s federal counterparts, has been similarly assessed. See United States v. Gilbert , 266 F.3d 1180, 1183-85 (9th Cir. 2001) (holding that, because Congre ss did not intend a conj unctive reading of the

2 26 U.S.C. § 7202 provides, in relevant part, as follows: Any person required under this t itle 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 shall be fined not more than $ 10,000, or imprisoned not more than five years, or both, together with the costs of prosecution.- 7 - phrase “truthfully account for and pay over,” a person who truthfully accounts for but does not pay over the required taxes is subject to convi ction under 26 U.S.C. § 7202); United States v. Thayer , 201 F.3d 214, 220-21 (3d Cir. 1999) (same); United States v. Evangelista , 122 F.3d 112, 120-22 (2d Cir. 1997) (same). The interpretation urged by the Commonwealth, on the other hand, is en tirely consistent with the statute’s manifest purpose. Accordi ngly, we accept the Common wealth’s interpretation

and hold that the willful failure to either “truth fully account for” or “pay over” the required taxes

is sufficient to sustain a conviction under Code § 58.1-1815. Appellant’s further argument that the Commonwealth had to prove he took affirmative steps to willfully evade the assessment or paymen t of his company’s tax obligations to sustain his convictions is equally unavailing. Code § 58.1-1815 clearly sets forth tw o separate subsets of crimes: (1) the willful failure to “collect or tr uthfully account for and pay over any such tax” and (2) the willful evasion of or attempt to evade “any such tax or the payment thereof.” To read the statute otherwise would impermissibly render a mate rial portion of it “useless, repetitious, [and]

absurd.” Jones , 227 Va. at 180-81, 314 S.E. 2d at 64 (“It would be ab surd to conclude that the legislature would say the same thing twice in one statutory provision.”). In arguing that there had to be a “willful evasion of a tax obligation” to sustain his convic tions under Code § 58.1-1815, appellant improperly conflates offenses from thes e two separate subsets of crimes into a single offense, the conviction of which, he argues, requir es proof that he took some affirmative act to evade his company’s tax obligation or the paymen t thereof. However, the only act for which appellant was charged and convicted was willful failure to pay tax, not willful evasion of tax or willful evasion of the payment of tax. Accordingl y, “willful evasion of a tax obligation” is not

an element of the instant failure-to-pay-tax offenses.- 8 - Hence, we conclude the trial court did not e rr in finding appellant cr iminally liable under Code § 58.1-1815.

III. FAILURE TO PAY PENALTIES AND INTEREST Appellant further contends the trial court er red in ruling his willful failure to pay the penalties and interest as sessed by the Department for late fi lings and payments amounted to a crime under Code § 58.1-1815. In support of that contention, he argues ex clusively that such penalties and interest do not c onstitute “sales, use or withhold ing tax” within the meaning of Code § 58.1-1815. As the Commonwealth points out , however, nothing in the record shows that appellant raised any objection be fore the trial court with resp ect to this claim of error. Rule 5A:18 provides, in pertinent part, that “[n]o ruling of the trial court . . . will be

considered as a basis for reversal unless the ob jection was stated toge ther with the grounds therefor at the time of the ruling.” Thus, we w ill not consider a claim of trial court error as a ground for reversal “where no timely obj ection was made.” Ma rshall v. Commonwealth , 26 Va. App. 627, 636, 496 S.E.2d 120, 125 (1998); see also Ohree v. Commonwealth , 26 Va. App. 299, 308, 494 S.E. 2d 484, 488 (1998) (“The Court of Appeals will not consider an argument on appeal [that] was not pres ented to the trial court.”) . In other words, “a litigant must object to a ruling of the circuit court if that litigant desires to challenge the ruling on appeal.” Commonwealth v. Washington , 263 Va. 298, 304, 559 S.E.2d 636, 639 (2002) . The purpose of the rule is to ensure that any perceived error by the tria l court is “promptly brou ght to the attention of the trial court [and opposing party] with sufficient specificity that the alleged error can be dealt with and timely

addressed and corrected wh en necessary. . . . Errors can usuall y be corrected in the trial court, particularly in a bench trial, without the necessity of appeal.” Brown v. Commonwealth , 8 Va. App. 126, 131, 380 S.E. 2d 8, 10 (1989). Hence, we will not “notice error for which there has been no timely objection,” unless an exception to Rule 5A:18 applies. Id.- 9 - Furthermore, our review on appeal “is limite d to the record.” Turner v. Commonwealth , 2 Va. App. 96, 99, 341 S.E.2d 400, 401 (1986). Where the record fails to establish that the issues appealed by [the] appellant were raised in the trial court by an objection with a statement of the reasons therefor[, w]e cannot a ssume that [the] appellant’s objection and reasons were proffered but not made a part of the record. Rule 5A:8 requires [the] appellant to present a complete transcript for this Court to cons ider his or her issues on appeal.

Lee v. Lee , 12 Va. App. 512, 516, 404 S. E.2d 736, 738 (1991) (en banc). Thus, the burden is on the appellant to present a sufficient record from which we may determine that he or she preserved the issues presented on appeal. Here, nothing in the record before us shows that appellant preserve d the instant claim of error for appeal. Although the written statement of facts filed by appellant in lieu of a transcript sets out some arguments ma de by appellant at trial, 3 nothing in that document indicates appellant made any objection or argument to the trial co urt relating to his conten tion on appeal that the penalties and interest imposed by the Depa rtment do not constitute “tax” under Code § 58.1-1815. Indeed, the record is devoid of a nything even remotely suggesting appellant challenged any aspect of his wa rrant, prosecution, or conviction for count one on that basis. Moreover, the record does not reveal any re ason to apply the “end s of justice” or “good cause” exceptions to Rule 5A:18. See Edwards v. Commonwealth , 41 Va. App. 752, 761, 589 S.E.2d 444, 448 (2003) (en banc) (“We will not consider, sua sponte , a ‘miscarriage of justice’

3 Those arguments, in their entirety, read as follows:

The Defendant moved to strike the case since there was no showing that there was any willful failure on the part of the Defendant, or any showing that th e [D]efendant had not truthfully accounted for the taxes, or willfully evaded or attempted to evade the tax. Defense counsel argued that it was not criminal not to pay the tax, that failure to pay created a civil liability, but not criminal culpability so long as the forms were appropriately filed and the liability properly reported.- 10 - argument under Rule 5A:18.”); M. Morgan Cherry & Assocs. v. Cherry , 38 Va. App. 693, 702, 568 S.E.2d 391, 396 (2002) (en banc) (holding that the “good cause” excep tion to Rule 5A:18 will not be invoked where appellant had the opportuni ty to raise the issue at trial but did not do so). We conclude, therefore, that, having failed to preserve this claim of error, appellant is procedurally barred by Rule 5A:18 from raising it for the first time on appeal.

IV. AUTHORITY TO DEFER FINDINGS OF GUILT Appellant also contends the tr ial court erred in concluding it lacked authority to defer the findings of guilt on the three counts of failure to pay tax. We disagree. It is axiomatic that “‘[d]efining crimes and fixing penalties are legi slative, not judicial,

functions.’” Cook v. Commonwealth , 20 Va. App. 510, 513, 458 S.E.2d 317, 319 (1995) (quoting United States v. Evans , 333 U.S. 483, 486 (1948)). Accord ingly, we have held that, “absent an express statutory gran t, trial courts may not dismiss criminal charges on grounds other than the legal or factual me rits.” Holden v. Commonwealth , 26 Va. App. 403, 407, 494 S.E.2d 892, 895 (1998). In other words, the authority of trial courts to dismiss criminal charges on grounds other than the legal or factual merits stems exclusively from legislative enactment. The General Assembly, for instance, has expres sly allowed trial courts to defer findings of guilt with regard to certain criminal offenses, including assault and battery against a family or household member, see Code § 18.2-57.3, marital rape, see Code § 18.2-61(C), marital forcible sodomy, see Code § 18.2-67.1(C), marital ob ject sexual penetration, see Code § 18.2-67.2(C), possession of controlled subs tances or marijuana, see Code § 18.2-251, and certain property crimes constituting misdemeanors, see Code §§ 15.2-1812.2(B) and 19.2 -303.2. It is clear, therefore, that, when the General Assembly intends to allow the deferral of findings of guilt with- 11 - respect to a particular offense, it knows how to grant such aut hority to the trial courts and, indeed, does so explicitly. Thus, had the General Assembly intended to grant trial courts the authority to defer findings of guilt in connection with the offens e set forth in Code § 58.1-1815, it would have included language to that effect in the Code, and the absence of such language plainly manifests a contrary intent. Cf. Grigg v. Commonwealth , 224 Va. 356, 364, 297 S.E.2d 799, 803 (1982) (“When a legislative enactment limits the manner in which something may be done, the

enactment also evinces the intent that it should not be done another way.”). Indeed, to construe Code § 58.1-1815 as allowing the trial court to defe r a finding of guilt “would require this Court to add language to the statute the General Assembly has not seen fit to include, an exercise in which the Court is not free to engage.” Holsapple v. Commonwealth , 266 Va. 593, 599, 587 S.E.2d 561, 564-65 (2003) (construing Code § 18.2-200.1). Nevertheless, appellant claims that trial courts have the “inherent power” to defer findings of guilt “unless there is express statutor y direction otherwise.” Consequently, appellant argues, even though Code § 58.1-1815 does not specifi cally authorize the deferral of a finding of guilt, the trial court had the inherent power to defe r the findings of guilt in this case because the statute does not “specifically proscr ibe the exercise of that power.” 4 We find appellant’s claim

meritless.

4 Appellant further argues that the trial court should have dismissed the three counts of failure to pay tax because he complied with the court’s directive to be of good behavior for the one-year deferral period. To hold otherwise, he asserts, would damage “the integrity of the court.” Alternatively, he argues, his sentences, at least, should be dismissed because “the trial court had already sentenced [h im] by placing him on a one-year unsupervised probation.” “To sentence him twice for the same offense,” he argues, “is improper.” Because these arguments are not encompassed within the scope of the th ird question presented that was designated for appeal—namely, “[w]hether a circuit court has aut hority to defer a finding of guilt for a violation of a criminal statute when the statute in quest ion does not specifically confer that authority?”— and were not presented to the trial court, we will not c onsider them on appeal. See Cirrito v. Cirrito , 44 Va. App. 287, 309, 605 S.E.2d 268, 278 (2004) ( holding that we will not consider an- 12 - In expressly defining the instances in which trial courts have the authority to defer a finding of guilt, the General Assembly has evinced its intent to grant such authority to trial courts with regard to only certain offenses. To hold as appellant urges—that trial courts have the inherent power to defer findings of guilt—w ould render the General Assembly’s specific granting of such authority meaningless and unnece ssary. “We will not cons true legislative action

in a manner that would ascribe to the Gene ral Assembly a futile gesture.” Shaw v.

Commonwealth , 9 Va. App. 331, 334, 387 S.E.2d 792, 794 (1990); see also Jones , 227 Va. at 181, 314 S.E.2d at 64 (“The rules of statutory interp retation argue against re ading any legislative enactment in a manner that will make a portion of it useless . . . .”). Because Code § 58.1-1815 contains no language authorizing deferral of a finding of guilt, we hold the trial court lacked authority to defer the findings of guilt in this case. 5 Accordingly, the trial court did not err in so ruling and in entering findings of guilt on the three counts of failure to pay tax.

V. CONCLUSION For these reasons, we affirm the trial cour t’s judgment and appellant’s convictions.

Affirmed.

“argument [that] is not part of the questions pr esented that were designated for appeal”); Ohree , 26 Va. App. at 308, 494 S.E.2d at 488 (“The Court of Appeals will not consider an argument on appeal [that] was not presented to the trial court.”).

5 Examining a different criminal statute, J udge Humphreys reached a similar conclusion in his concurring opinion in Powell v. Commonwealth , 36 Va. App. 231, 548 S.E.2d 926 (2001) (en banc), wherein he stated as follows: Except in those instances wher e the General Assembly has expressly authorized a trial court to defer a finding of guilt even though the proof has established the guilt of the defendant beyond a reasonable doubt, trial courts ma y not defer a factual finding of guilt or acquittal or a judg ment of guilt or acquittal. 36 Va. App. at 235, 548 S.E.2d at 928 (Humphreys, J., concurring).