Opinion ID: 179049
Heading Depth: 3
Heading Rank: 1

Heading: Attempt-To-Evade-Tax Convictions

Text: On appeal, Gross challenges only his three convictions pursuant to 26 U.S.C. § 7201 for attempt to evade or defeat tax. Under § 7201, [1] the government must prove willfulness, the existence of a tax deficiency, ... and an affirmative act constituting an evasion or attempted evasion of the tax. Boulware v. United States, 552 U.S. 421, 424 n. 2, 128 S.Ct. 1168, 170 L.Ed.2d 34 (2008) (internal quotation marks and alteration omitted). This offense is distinct from the willful failure to file misdemeanor under § 7203, [2] which requires the Government to prove only that the defendant willfully failed to pay income tax or perform one of the other requirements specified under that section. Sansone v. United States, 380 U.S. 343, 351, 85 S.Ct. 1004, 13 L.Ed.2d 882 (1965).
Taking Gross's arguments in a logical order, we first address his claim that the district court lacked jurisdiction... for purposes of venue, Appellant Br. at 34. We are unclear as to what precisely Gross is arguing. As best we understand it, Gross claims that [s]ince October 2000, no internal revenue districts ... existed which included the eastern District of Michigan or elsewhere. Id. at 35. As a result, Gross asserts that there was no place to which Gross could submit his tax returns, so that he never incurred a tax deficiency as required by § 7201. As the Government correctly observes, however, Gross never challenged venue prior to trial, [3] despite the fact that the alleged defect was readily apparent on the face of the indictment. As a result, Gross has waived any objections. See United States v. Grenoble, 413 F.3d 569, 573 (6th Cir.2005). [4]
Gross also argues that, because the Internal Revenue Service (IRS) obtained copies of Gross's W-2 forms from Highgate, Gross was not required to submit a tax return. It is unclear, however, which district court order he is challenging or whether he ever even raised this issue below. In any event, under any standard of review, Gross's argument is without merit. We first note that Gross was not convicted of failing to file under § 7203, but rather was convicted of affirmatively attempting to evade payment of his taxes by filing false W-4 forms. Therefore, it is not entirely clear what Gross achieves by proving that he was not required to file a tax return. Even under § 7203, however, a W-2 form obtained from an employer is not a substitute for a tax return. Gross is correct that something short of a 1040 form may be adequate for a taxpayer to escape criminal liability. See United States v. Patridge, 507 F.3d 1092, 1095 (7th Cir.2007), cert. denied, 552 U.S. 1280, 128 S.Ct. 1721, 170 L.Ed.2d 514 (2008) ([Section] 7203 requires a `return' but does not define that word or require anyone to use Form 1040, or any `official' form at all.); In Re Hindenlang, 164 F.3d 1029, 1033 (6th Cir.), cert. denied, 528 U.S. 810, 120 S.Ct. 41, 145 L.Ed.2d 37 (1999) (applying a four-part test in determining whether a document constitutes a tax return). Nonetheless, a return must still contain sufficient information given from which the IRS can calculate tax liability based on the circumstances of the taxpayer's income year. United States v. Grabinski, 727 F.2d 681, 686 (8th Cir.1984); Hindenlang, 164 F.3d at 1033; see also United States v. Saussy, 802 F.2d 849, 854 (6th Cir.1986), cert. denied, 480 U.S. 907, 107 S.Ct. 1352, 94 L.Ed.2d 522 (1987) (approving jury instructions containing similar language). As the Government correctly observes, a W-2 form merely lists income derived from an employer and provides no information regarding other sources of income, possible deductions, or other information that might be relevant to the calculation of an individual's tax liability. See Bachner v. Comm'r, 81 F.3d 1274, 1280-81 (3d Cir.1996). Furthermore, even if his employer's W-2 forms supplied sufficient information from which tax liability could be determined, Gross never actually submitted this form to the IRS. See United States v. Stillhammer, 706 F.2d 1072, 1075 (10th Cir.1983) ([T]he test is whether the defendants' returns themselves furnished the required information for the I.R.S. to make the computation and assessment, not whether the information was available elsewhere.). Therefore, we conclude that, under either § 7201 or § 7203, a taxpayer is not excused from filing a tax return simply because the IRS obtained that taxpayer's W-2 form from his employer. Indeed, to our knowledge, every court to have addressed this issue, including our own in an unpublished decision, has reached a similar conclusion. See, e.g., United States v. Boling, No. 87-5051, 1988 WL 3477, at -2 (6th Cir. Jan.19, 1988) (unpublished decision), cert. denied, 488 U.S. 893, 109 S.Ct. 230, 102 L.Ed.2d 220 (1988); United States v. Bennett, 341 Fed. Appx. 776, 778 (3d Cir.2009) (unpublished decision); Stillhammer, 706 F.2d at 1074-75.
Gross next argues that, because of the Paperwork Reduction Act (PRA), 44 U.S.C. § 3501 et seq., he was not required to submit a tax return. Presumably, Gross is challenging either the district court's denial of his motion for a judgment of acquittal or its denial of his motion for dismissal. In either case, this court reviews the decision de novo. United States v. Utesch, 596 F.3d 302, 306 (6th Cir.2010) (district court's legal conclusions in denying a motion to dismiss are reviewed de novo); United States v. Burchard, 580 F.3d 341, 352 (6th Cir.2009) (denial of a motion for acquittal reviewed de novo with evidence considered in the light most favorable to the government). The PRA was passed in an effort to reduce the burden that administrative agencies place upon the public by requesting information. See Dole v. United Steelworkers of Am., 494 U.S. 26, 32, 110 S.Ct. 929, 108 L.Ed.2d 23 (1990). In particular, 44 U.S.C. § 3512 states that: (a) Notwithstanding any other provision of law, no person shall be subject to any penalty for failing to comply with a collection of information that is subject to [the PRA] if (1) the collection of information does not display a valid control number assigned by the Director [of the Office of Management and Budget (OMB)] in accordance with this subchapter; or (2) the agency fails to inform the person who is to respond to the collection of information that such person is not required to respond to the collection of information unless it displays a valid control number. (b) The protection provided by this section may be raised in the form of a complete defense, bar, or otherwise at any time during the agency administrative process or judicial action applicable thereto. 44 U.S.C. § 3512. Gross argues that the IRS falsely certified that the 1040 forms contained all of the information required under the PRA, and as a result, the OMB number on the form is invalid so that Gross cannot be liable for failing to submit it. Putting aside the question of whether the 1040 form's OMB number is valid, we conclude that Gross's argument still encounters two obstacles. First, we again note that Gross was not convicted of failing to file a 1040 form, but rather was convicted of affirmatively attempting to evade payment of his taxes. Therefore, even if 44 U.S.C. § 3512 excused Gross's failure to file a 1040 form, we do not think that this excuse would be relevant to his conviction. See Patridge, 507 F.3d at 1094 (How [the PRA] could block a conviction for tax evasion is a mystery.... Evading one's taxes is illegal independent of the information one does or does not supply.). Second, as the Government points out, in United States v. Wunder, 919 F.2d 34 (6th Cir.1990), a panel of this court explained that [t]he Paperwork Reduction Act ... does not apply to the statutory requirement [that individuals file tax returns], but only to the [1040] forms themselves. Wunder, 919 F.2d at 38; see also United States v. Ouwenga, 173 Fed.Appx. 411, 417 (6th Cir.2006) (unpublished decision). Although Wunder's statement in this regard is arguably dicta, several other circuits have agreed. See, e.g., Patridge, 507 F.3d at 1094-95; United States v. Neff, 954 F.2d 698, 699-700 (11th Cir.1992) (citing Wunder ); United States v. Kerwin, 945 F.2d 92, 92 (5th Cir.1991) (same); United States v. Hicks, 947 F.2d 1356, 1359 (9th Cir.1991). [5] We take this opportunity to reaffirm Wunder and hold that a defendant charged with either attempting to evade tax or failing to file a tax return cannot rely on 44 U.S.C. § 3512 as a defense. Title 26, § 6012(a), the provision which requires taxpayers to submit an income tax return, and § 7203, the provision which criminalizes a failure to do so, represent statutory mandates. See also 26 U.S.C. § 6011(a). The 1040 form itself is not what imposes the mandate to file a return and the form itself is not absolutely essential to satisfy this obligation. [6] See supra Section II.A; Hindenlang, 164 F.3d at 1033; see also, e.g., Patridge, 507 F.3d at 1094-95; Hicks, 947 F.2d at 1359. [7] Furthermore, as the Government correctly observes, the legislative history surrounding the 1995 amendments to the PRA states that § 3512 was intended as a defense only during a[n] agency administrative process or any subsequent judicial review as opposed to criminal proceedings in district court. H.R. Conf. Rep. 104-99, at 36, reprinted in 1995 U.S.C.C.A.N. 239, 248 (emphasis added). Therefore, regardless of whether the 1040 form complies with the PRA, Gross's convictions for attempt to evade the payment of tax are still valid.
Gross next argues that, even if his employer's W-2 forms and the PRA did not excuse his failure to file a 1040 form, the district court erred in not letting him present a defense based upon the theory that he had a good-faith belief that they did. Gross's brief, however, does not identify (nor have we found) any instance in which the district court prevented Gross from raising a good-faith defense. Indeed, the only time that the district court placed any restriction upon the evidence that Gross could present was when it cautioned him against presenting expert legal testimony, Doc. 67 (Trial Tr. Vol. I (7/09/2007) at 50-51), a limitation which would in no way impede a good-faith defense. At oral argument, Gross claimed that the district court essentially barred him from presenting a good-faith defense when it denied his motion to dismiss based upon the PRA. Gross did not file a motion to dismiss, however, until after the trial. Furthermore, the district court gave the jury an instruction on the good-faith defense. Therefore, as the government aptly notes, the premise upon which defendant bases [his] argument is entirely false. Appellee Br. at 20. Thus, Gross's argument regarding a good-faith defense is wholly without merit, if not outright frivolous.
Gross next argues that the mere submission of false W-4 forms is not sufficient to satisfy § 7201's affirmative act requirement. In particular, he argues that a W-4 form could never amount to an affirmative act of evasion because a W-4 form is concerned only with the amount of money withheld by an employer. Under Gross's theory, prior to April 15 of each year, he was not obligated to pay any income taxes to the IRS for the previous year, and his decision not to permit regular withholdings did nothing more than deprive the IRS of an interest-free loan. Appellant Br. at 33. Presumably, Gross is appealing the district court's denial of his motion for a judgment of acquittal, which we review de novo. In Spies v. United States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418 (1943), the Supreme Court elaborated upon the types of actions that would qualify as affirmative acts of tax evasion. Spies, 317 U.S. at 499, 63 S.Ct. 364. In doing so, the Court cautioned that Congress did not define or limit the methods by which a willful attempt to defeat and evade might be accomplished and perhaps did not define lest its effort to do so result in some unexpected limitation. Id. By way of illustration, however, the Court offered some examples, which included: keeping a double set of books, making false entries or alterations, or false invoices or documents, destruction of books or records, concealment of assets or covering up sources of income, handling of one's affairs to avoid making the records usual in transactions of the kind, and any conduct, the likely effect of which would be to mislead or to conceal. Id. The filing of false W-4 forms falls comfortably within the broad parameters established in Spies. Indeed, in United States v. Spine, 945 F.2d 143 (6th Cir. 1991), a panel of this circuit concluded that the government proved specific acts of evasion on the part of [the defendant], such as filing a false W-4 form with his employer or depositing monies in a bank account in [another person's name]. Spine, 945 F.2d at 149 (emphasis added); see also, e.g., United States v. King, 126 F.3d 987, 990 (7th Cir.1997); United States v. Doyle, 956 F.2d 73, 75 (5th Cir.1992). Gross has made no serious effort at distinguishing the panel's holding in Spine. [8] Therefore, as we are bound by prior published cases, Spine is controlling. Additional reasons beyond Spine support our conclusion that the filing of a false W-4 form constitutes an affirmative act of evasion because the likely effect of such a form would be to mislead or to conceal. Spies, 317 U.S. at 499, 63 S.Ct. 364. As the Government correctly points out, when a W-4 form bearing false information is on file, it is possible that the IRS might rely upon that information while investigating a taxpayer's failure to file a return, in which case the W-4 form would facilitate the taxpayer's attempts to evade payment of tax. See United States v. Overton, 617 F.Supp. 5, 7 (W.D.Mich.1985). Similarly, filing false W-4 forms allowed Gross to ensure that the IRS would not receive, through the withholding process, any of the taxes which it was owed. See id. Indeed, if Gross had not claimed that he was exempt from withholding, Highgate would have withheld taxes from his paycheck, which would have thwarted Gross's attempts to evade paying his taxes by not filing a return. In other words, even if no taxes were due when Gross completed the fraudulent W-4 forms, the W-4 forms still played an integral part in his attempt to evade his taxes. [9] Gross responds in a number of ways, none of which is convincing. First, Gross notes that he gave the W-4 forms to his employer, not the IRS. Nonetheless, this does not mean that the IRS might not obtain and review the form during the course of its investigation, nor does it change the fact that the W-4 forms prevented Highgate from withholding federal income tax from Gross's paycheck and transferring those funds to the IRS. Gross also argues that it is unlikely that the W-4 forms would have misled the IRS because the IRS already knew how much Gross made in wages due to the W-2 forms. Even if the IRS was likely eventually to uncover Gross's fraud, however, this does not change the fact that the W-4 forms themselves could initially mislead the IRS. Section § 7201 merely requires attempted evasion, and nothing within it requires that a tax evader's overall scheme must be likely to succeed. Finally, Gross argues that the W-4 forms were not false with respect to a material matter. Appellant Reply Br. at 4. Gross, however, cites no authority stating that materiality is an element of § 7201, and instead appears to have confused that provision with § 7206. In any event, under these facts, his materiality argument is meritless.