Opinion ID: 583599
Heading Depth: 3
Heading Rank: 1

Heading: Evasiveness

Text: 27 McGill alleges that the charged acts--the use of the Lillie and the McGill & Seay accounts, and the opening of the PSFS account--are not affirmative acts of evasion within the meaning of 26 U.S.C. § 7201. 28 An affirmative act is anything done to mislead the government or conceal funds to avoid payment of an admitted and accurate deficiency. Cohen v. United States, 297 F.2d 760, 762 & 770 (9th Cir.), cert. denied, 369 U.S. 865, 82 S.Ct. 1029, 8 L.Ed.2d 84 (1962). The offense is complete when a single willful act of evasion has occurred. See United States v. Conley, 826 F.2d 551, 557 (7th Cir.1987). Section 7201 explicitly refers to attempts [to evade] in any manner. 26 U.S.C. § 7201. Generally, affirmative acts associated with evasion of payment involve some type of concealment of the taxpayer's ability to pay his or her taxes or the removal of assets from the reach of the Internal Revenue Service. See Joint App. at A-225. Thus, any conduct, the likely effect of which would be to mislead or to conceal is sufficient to establish an affirmative act of evasion. Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 368, 87 L.Ed. 418 (1943). 29 Section 7201 encompasses two kinds of affirmative behavior: the evasion of assessment and the evasion of payment. Evasion of assessment cases are far more common. The affirmative act requirement in such a case is satisfied, inter alia, with the filing of a false return. See, e.g., Sansone, 380 U.S. at 351-52, 85 S.Ct. at 1010-11. If the false filing is shown to be willful, the offense is complete with the filing. See id. Evasion of payment cases are rare, and the required affirmative act generally occurs after the filing, if there is a filing at all. United States v. Mal, 942 F.2d 682, 687 (9th Cir.1991) (evasion of payment involves conduct designed to place assets beyond the government's reach after a tax liability has been assessed) (emphasis added). McGill was charged with evasion of payment. 30 Affirmative acts of evasion of payment include: placing assets in the name of others; dealing in currency; causing receipts to be paid through and in the name of others; and causing debts to be paid through and in the name of others. For example, in Spies, the petitioner insisted that certain income be paid to him in cash, transferred it to his own bank by armored car, deposited it, not in his own name but in the names of others of his family, and kept inadequate and misleading records. The Supreme Court found this evidence sufficient to sustain a finding of attempted evasion. Spies, 317 U.S. at 499, 63 S.Ct. at 368 (emphasis added). In Conley, the Court of Appeals for the Seventh Circuit affirmed a § 7201 conviction where the defendant placed assets in his sons' names, deposited his assets with others, dealt in currency, and paid creditors but not the government. Conley, 826 F.2d at 557. See United States v. Voorhies, 658 F.2d 710, 714 (9th Cir.1981) (affirming § 7201 conviction where defendant travelled out of country on three occasions in one year, carrying over $80,000 in negotiable assets, did not declare these amounts to customs, and was later unable to account for use of large amount of cash and gold coins); United States v. Hook, 781 F.2d 1166 (6th Cir.) (affirming § 7201 conviction where the defendant did most of his business in cash, used credit cards belonging to others, and bought a house in his girlfriend's name), cert. denied, 479 U.S. 882, 107 S.Ct. 269, 93 L.Ed.2d 246 (1986). See also United States v. Shorter, 809 F.2d 54, 57 (D.C.Cir.) (affirming § 7201 and § 7203 convictions where defendant carried on a cash lifestyle), cert. denied, 484 U.S. 817, 108 S.Ct. 71, 98 L.Ed.2d 35 (1987). 31 Merely failing to pay assessed taxes, without more, however, does not constitute evasion of payment, though it may satisfy the requirements for the willful failure to pay taxes under § 7203. Sansone, 380 U.S. at 351, 85 S.Ct. at 1010; United States v. Romano, 938 F.2d 1569, 1573 (2d Cir.1991). Only affirmatively evasive acts--acts intending to conceal--are punishable under § 7201. 18