Opinion ID: 393922
Heading Depth: 1
Heading Rank: 2

Heading: amount of tax liability fixed after indictment period

Text: 26 U.S.C. § 7201 (1976) provides that: 10 Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution. 11 Section 7201 includes both the offenses of willfully attempting to evade or defeat the assessment of a tax as well as the offense of willfully attempting to evade or defeat the payment of a tax. Sansone v. United States, 380 U.S. 343, 354, 85 S.Ct. 1004, 1011, 13 L.Ed.2d 882 (1965) (citing Lawn v. United States, 355 U.S. 339, 361, 78 S.Ct. 311, 323, 2 L.Ed.2d 321 (1958)); Cohen v. United States, 297 F.2d 760, 770 (9th Cir.), cert. denied, 369 U.S. 865, 82 S.Ct. 1029, 8 L.Ed.2d 84 (1962). The elements of both section 7201 violations are (1) willfulness, (2) existence of a tax deficiency, and (3) an affirmative act constituting an evasion or attempted evasion of the tax. Sansone, 380 U.S. at 351, 85 S.Ct. at 1010; United States v. House, 524 F.2d 1035, 1038-39 (3d Cir. 1975); United States v. England, 347 F.2d 425, 438 (7th Cir. 1965). 12 Voorhies contends that the second element, the existence of a tax deficiency, can be predicated only on tax liabilities which have been finally determined and assessed and that his tax liabilities had not been determined during the period covered by the indictment. He notes that the statutory language of section 7201 refers only to the payment of any tax imposed by this title. The Supreme Court in Sansone, 380 U.S. at 351, 85 S.Ct. at 1010, referred merely to the existence of a tax deficiency and did not define the formalities which such a deficiency must meet. Voorhies' argument is based primarily on 26 U.S.C. § 6213 (1976), which provides in part that no deficiency assessment nor proceeding for collection of tax shall be made until the statutory deficiency notice has been mailed to the taxpayer and 90 days have elapsed. 5 He contends that, prior to a final administrative determination of tax liability, the trier of fact can only speculate as to whether a defendant's conduct constitutes evasion of payment of a tax not yet due. Accordingly, Voorhies concludes that, under the statutory scheme here, the government should not be allowed to prosecute criminally for failure to pay a tax which it cannot yet collect civilly or administratively. 13 We reject the argument. A tax deficiency exists from the date a return is due to be filed; that deficiency arises by operation of law under sections 6151(a) and 6072(a). See United States v. Northwestern Mutual Insurance Co., 315 F.2d 723, 725-726 (9th Cir. 1963) (under section 6151(a), a tax is due and owing on the date a return must be filed, even if ascertainment of the amount requires reference to a subsequent IRS redetermination; the statutory deficiency notice merely reminds (the) taxpayer of (his) duty to pay a tax debt already due and does not create that liability). Cf. United States v. Gardner, 611 F.2d 770, 775-76 (9th Cir. 1980) (amount of tax liability alleged by government in indictment was adjusted downward during course of trial). Here, Voorhies did not file timely personal returns for the 1970 and 1972 tax years; his taxes for those years were, however, due and owing on April 15, 1971, and April 15, 1973, respectively. 14 The record establishes that, although perhaps unclear as to the amount of Voorhies' evasion, the IRS was fully aware of the fact of that evasion. Voorhies traveled out of the country on three occasions in 1974, carrying with him over $80,000.00 in highly negotiable assets. In spite of his prior experience with customs reporting duties, he did not declare either that he took out of or returned to the United States with such large amounts of money. His previous encounter with customs agents, in late 1973, had disclosed Voorhies' deposits in Swiss banks and use of Swiss safety deposit boxes on an earlier occasion. At trial, Voorhies was unable to account for his use of the cash and gold coins on his return to Las Vegas, except to acknowledge that he did not place them in his Nevada bank account; not until February 1975 did Voorhies invest a correspondingly large amount of money in a Nevada business venture. The subsequent IRS determination of Voorhies' tax deficiencies for the two years in question totalled over $33,000.00. On these facts, the trier of fact could properly find a strong inference that Voorhies' activities during the indictment period were calculated to evade the payment of taxes due and owing. 15 Although not compelling it, decided cases support our conclusion. The filing of an administrative assessment record is not required before a criminal prosecution may be instituted under 26 U.S.C. §§ 7201-07 (1976) for failure to report or pay income tax. United States v. Kelley, 539 F.2d 1199, 1203 (9th Cir.), cert. denied, 429 U.S. 963, 97 S.Ct. 393, 50 L.Ed.2d 332 (1976) (dictum) (citing cases) (prosecution under 26 U.S.C. § 7205 for providing false information on withholding forms). The Seventh Circuit, while noting that proof of a valid assessment is requisite to finding a section 7201 violation for evasion of payment of taxes, has held that there is no real distinction to be drawn between 'a tax due and owing' and a tax validly assessed. United States v. England, 347 F.2d 425, 430 & n.10 (7th Cir. 1965). 6 We agree. Although a prior valid assessment may be used to show a tax deficiency under section 7201, see id., Cohen v. United States, 297 F.2d 760 (9th Cir.), cert. denied, 369 U.S. 865, 82 S.Ct. 1029, 8 L.Ed.2d 84 (1962), it is not required to show that deficiency.