Opinion ID: 179049
Heading Depth: 4
Heading Rank: 6

Heading: The W-4 Forms and the Affirmative-Act Requirement

Text: 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.