Opinion ID: 507221
Heading Depth: 2
Heading Rank: 1

Heading: Availability of Entrapment Defense

Text: 9 Zwak's position with respect to the availability of the defense of entrapment in this civil context rests essentially on two alternative theories: (1) that the taxes imposed under 26 U.S.C. Secs. 5811 3 and 5821 4 --the former a transfer tax and the latter a making tax--are really punitive and, therefore, criminal in nature; and (2) that, even if the taxes are civil in nature, the Government ought not to be permitted to collect such taxes from him since the Government induced him to do the very acts for which the taxes were assessed. The Government takes the position, as did the district court, that the entrapment defense is a defense to criminal culpability and, therefore, applies only in criminal cases, not in civil tax proceedings which do not require mens rea. 10 Zwak's theory that the taxes here imposed are punitive in nature is predicated solely upon the distinction contained in Sec. 5811 between the $200 tax assessed for each firearm transferred and the $5 tax assessed for any other weapon (as defined in Sec. 5845(e)) transferred. Zwak contends that the distinction between firearm and any other weapon is equivalent to a distinction between illegal and legal firearms and that the difference of $195 is, therefore, intended as a penalty for transferring illegal firearms. 11 Despite the Government's protestations to the contrary, it does appear that a distinction is drawn in the Internal Revenue Code between illegal and legal firearms for purposes of the rate of tax assessed upon their transfer. This apparent distinction, however, does not support Zwak's contention that both the transfer tax and the making tax here imposed are punitive in nature. In the first instance, no such distinction between illegal and legal firearms is drawn for purposes of assessing the tax upon their making. In addition, it is evident that any such distinction with respect to the transfer tax would not necessitate a conclusion either that the tax is punitive rather than remedial in nature or that the tax constitutes an impermissible exercise of Congress' broad taxing powers. As the Supreme Court long ago recognized in Sonzinsky v. United States, 300 U.S. 506, 57 S.Ct. 554, 81 L.Ed. 772 (1937): 12 Every tax is in some measure regulatory. To some extent it interposes an economic impediment to the activity taxed as compared with others not taxed. But a tax is not any the less a tax because it has a regulatory effect ... and it has long been established that an Act of Congress which on its face purports to be an exercise of the taxing power is not any the less so because the tax is burdensome or tends to restrict or suppress the thing taxed. 13 300 U.S. at 513, 57 S.Ct. at 555-56. The Supreme Court later reaffirmed its interpretation of the breadth of Congress' taxing power in a case which challenged the levy of an occupational tax on persons engaged in the business of accepting wagers, and held that: 14 [A] federal excise tax does not cease to be valid merely because it discourages or deters the activities taxed. Nor is the tax invalid because the revenue obtained is negligible.... It is axiomatic that the power of Congress to tax is extensive and sometimes falls with crushing effect on businesses deemed unessential or inimical to the public welfare, or where, as in dealings with narcotics, the collection of the tax also is difficult. As is well known, the constitutional restraints on taxing are few. 15 United States v. Kahriger, 345 U.S. 22, 28, 73 S.Ct. 510, 513, 97 L.Ed. 754, 760-61 (1953). 16 The Fifth Circuit Court of Appeals relied upon both Sonzinsky and Kahriger to reject an argument that certain criminal provisions of the Federal Gun Control Act of 1968 were invalid because the tax provisions of the Act imposed a confiscatory tax on the transfer of a firearm. United States v. Ross, 458 F.2d 1144 (5th Cir.1972). The Fifth Circuit held, in pertinent part: 17 The motives that move Congress to impose a tax are no concern of the Courts. Sonzinsky, supra. Furthermore, that an act accomplishes another purpose than raising revenue does not invalidate it. [Citation omitted]. Section 5861(d) making possession of an unregistered weapon unlawful is part of the web of regulation aiding enforcement of the transfer tax provision in Sec. 5811. Having required payment of a transfer tax and registration as an aid in collection of that tax, Congress under the taxing power may reasonably impose a penalty on possession of unregistered weapons. Such a penalty imposed on transferees ultimately discourages the transferor on whom the tax is levied from transferring a firearm without paying the tax. 18 458 F.2d at 1145. The Sixth Circuit Court of Appeals has also determined that the excise taxes imposed by the 1968 amendments to the National Firearms Act, 26 U.S.C. Secs. 5801 et seq., are reasonable and within the taxing power of Congress. See e.g., United States v. Black, 472 F.2d 130 (6th Cir.1972), cert. denied, sub nom Leach v. United States, 411 U.S. 969, 93 S.Ct. 2161, 36 L.Ed.2d 691 (1973); United States v. Wilson, 440 F.2d 1068 (6th Cir.1971). 19 Based upon the above precedent, we too conclude that the taxes assessed pursuant to 26 U.S.C. Secs. 5811 and 5821 are civil in nature and within the taxing discretion of Congress. We find no merit in Zwak's contention that these taxes are punitive and therefore criminal in nature. 20 We do, however, find merit in Zwak's alternative contention that, even if these taxes are civil in nature, the Government ought not to be permitted to collect such taxes if the Government induced him to do the very illegal acts for which the taxes were assessed. The Government's position on this point, a position adopted by the district court as the basis for its decision, is inapposite. The Government argues that the entrapment defense has only been addressed by the Courts in the context of criminal actions and that no authority exists to support Zwak's contention that the entrapment defense is applicable to a civil action. We agree that the courts who have to date addressed the entrapment defense have done so only in the criminal context. We disagree, however, with the proposition that no authority exists to support the applicability of this defense in the present civil context. At issue is not whether any other court has addressed the entrapment defense in a civil context, but rather whether the principles supporting application of this defense in a criminal context are equally applicable in a civil context. 21 In a seminal decision on the applicability of the entrapment defense, the Supreme Court rejected arguments that Congress is the arbiter of public policy and that, where conduct is expressly forbidden and penalized by a valid statute, the courts are not at liberty to disregard the law and to bar a prosecution for its violation because they are of the opinion that the crime has been instigated by government officials. Sorrells v. United States, 287 U.S. 435, 445-46, 53 S.Ct. 210, 214, 77 L.Ed. 413, 419 (1932) (challenging conviction for possessing and selling intoxicating liquor in violation of the National Prohibition Act). The Supreme Court recognized that these arguments were predicated upon a literal interpretation of the statute, but concluded that: 22 They take no account of the fact that [the statute's] application in the circumstances under consideration is foreign to its purpose; that such an application is so shocking to the sense of justice that it has been urged that it is the duty of the court to stop the prosecution in the interest of the Government itself, to protect it from the illegal conduct of its officers and to preserve the purity of its courts. 23 287 U.S. at 446, 53 S.Ct. at 214. Consequently, an important principle regarding statutory construction was reaffirmed: 24 All laws should receive a sensible construction. General terms should be so limited in their application as not to lead to injustice, oppression, or an absurd consequence. It will always, therefore, be presumed that the legislature intended exceptions to its language which would avoid results of this character. The reason of the law in such cases should prevail over its letter. 25 287 U.S. at 447, 53 S.Ct. at 214, quoting United States v. Kirby, 7 Wall. 482, 19 L.Ed. 278 (1868). Based upon this established principle of statutory construction, the Supreme Court ultimately held: 26 We are unable to conclude that it was the intention of the Congress in enacting this statute that its processes of detection and enforcement should be abused by the instigation by government officials of an act on the part of persons otherwise innocent in order to lure them to its commission and to punish them. We are not forced by the letter to do violence to the spirit and purpose of the statute. This, we think, has been the underlying and controlling thought in the suggestions in judicial opinions that the Government in such a case is estopped to prosecute or that the courts should bar the prosecution. If the requirements of the highest public policy in the maintenance of the integrity of administration would preclude the enforcement of the statute in such circumstances as are present here, the same considerations justify the conclusion that the case lies outside the purview of the Act and that its general words should not be construed to demand a proceeding at once inconsistent with that policy and abhorrent to the sense of justice. 27 287 U.S. at 448-49, 53 S.Ct. at 215. See also, Sherman v. United States, 356 U.S. 369, 78 S.Ct. 819, 2 L.Ed.2d 848 (1958). 28 In more recent years, the Supreme Court has again addressed the applicability of the entrapment defense, albeit once again in the criminal context. See, United States v. Russell, 411 U.S. 423, 93 S.Ct. 1637, 36 L.Ed.2d 366 (1973) (challenging conviction for manufacturing and selling methamphetamine). Although called upon specifically to address what has been held to be the principal element in the defense of entrapment, that of the defendant's predisposition to commit the crime, the Supreme Court reaffirmed the basis for this defense, the principle of implied intent of Congress established in the Sorrells and Sherman cases, and emphasized that: 29 [E]ntrapment is a relatively limited defense. It is rooted not in any authority of the Judicial Branch to dismiss prosecutions for what it feels to have been overzealous law enforcement, but instead in the notion that Congress could not have intended criminal punishment for a defendant who has committed all the elements of a prescribed offense but was induced to commit them by the government. 30 411 U.S. at 435, 93 S.Ct. at 1644. 31 Although the taxing powers of Congress are undisputedly extensive, we must conclude that a literal interpretation of [26 U.S.C. Secs. 5811 and 5821] at the expense of the reason of the law and producing absurd consequences or flagrant injustice is to be condemned. Sorrells, 287 U.S. at 446, 53 S.Ct. at 214. It would seem that the principle of implied intent of Congress, which forms the basis for the entrapment defense in the criminal context, is equally applicable to circumstances in which an act, itself taxable in a strictly civil context, is committed by an otherwise innocent person at the instigation of government officials. As in the criminal context, entrapment in this civil context must be rooted in the notion that Congress could not have intended to impose an excise tax upon a taxpayer who has committed the act subject to taxation, here the making and transfer of a firearm, but was induced to commit the illegal act by the government. Russell, 411 U.S. at 435, 93 S.Ct. at 1644. To allow government officials to instigate an illegal act and lure an otherwise innocent person to commit the illegal act in order to assess and collect taxes thereupon would do violence to the spirit and purpose of the revenue statutes, in this instance 26 U.S.C. Secs. 5811 and 5821. Consequently, we reverse that portion of the district court's decision in this case which granted summary judgment to the Government on grounds of inapplicability of the entrapment defense.