Opinion ID: 813692
Heading Depth: 2
Heading Rank: 3

Heading: Failure to dismiss the indictment

Text: In her third issue on appeal, Farr asserts that the district court erred by denying her pretrial motion to dismiss the indictment for failure to charge the offense under the appropriate statute. In assessing the denial of a motion to dismiss an indictment on legal grounds, we review the district court’s decision de novo. United States v. Ambort, 405 F.3d 1109, 1116 (10th Cir. 2005). Farr argues, as she did in her motion to dismiss, that the Internal Revenue Code (IRC) “provides a specific criminal penalty for those responsible for collecting and paying trust fund taxes who willfully fail to do so under § 7202.” App. at 29-30. She argues that the indictment should therefore have charged her with violating § 7202 rather than § 7201. In support, she asserts that “[w]hile ordinarily the government is free to charge under whatever statute it deems appropriate under the facts in question, when Congress sets forth provisions governing the duties, penalties, and procedures with respect to specific conduct or individuals as it did in Section[] 7202 . . . , the government may not ignore th[at] provision[] specifically deemed by Congress to be the appropriate vehicle under which to impose prosecution, simply because it favors another better.” Id. at 31. In addressing Farr’s arguments, we begin by revisiting our explanation in Farr I of how quarterly employment taxes are collected and paid. The IRC “requires ‘employer[s]’ to deduct from their employees’ wages the employees’ share of FICA and individual income taxes.” Farr I, 536 F.3d at 1176 (quoting 26 21 U.S.C. § 3102(a)). “The employer is liable for the withheld portion of the employees’ payroll taxes and must pay over the full amount to the government each quarter.” Id. (citing 26 U.S.C. § 3403). “These withheld amounts are considered to be held in a ‘special fund in trust for the United States’ after collection each pay period until they are remitted to the government.” Id. (citing 26 U.S.C. § 7501). “After the employer pays net wages to its employees, the withheld taxes are credited to the employees regardless of whether they are paid by the employer, so that the IRS has recourse only against the employer for their payment.” Id. (internal quotation marks and italics omitted). If an employer fails to pay the withheld employment taxes as required by the IRC, the IRS can “pierce the corporate veil and proceed against individual officers or employees responsible for collecting the offending [employer]’s quarterly employment taxes.” Id. at 1177. In particular, the IRS can, under 26 U.S.C. § 6672, assess against such persons “a civil penalty equal to the amount of the delinquent taxes,” i.e., a Trust Fund Recovery Penalty. Id. The IRS can also seek criminal penalties against such persons under 26 U.S.C. § 7202, which provides as follows: Any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall . . . 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. 22 26 U.S.C. § 7202. Or the IRS can, as it did in this case, first assess trust fund recovery penalties and then, if the persons against whom those penalties are assessed willfully fail to pay those penalties, proceed criminally against those persons under the generic tax evasion provision, 26 U.S.C. § 7201, which provides as follows: 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 $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution. 26 U.S.C. § 7201. In light of this framework, it is apparent that Farr’s attack on the indictment lacks merit. While the government undoubtedly could have charged Farr with violating § 7202, the focus of such a charge would have been different than the § 7201 charge alleged in the indictment. Given the clear language of § 7202, charging Farr thereunder would necessarily have had to focus on her obligation “to collect, account for, and pay over” the medical clinic’s quarterly employment taxes for the 1999 tax year. In contrast, the § 7201 violation actually charged in the indictment focused on a related, but different obligation, i.e., Farr’s obligation to pay the trust fund recovery penalty that was assessed against her under 26 U.S.C. § 6672 for failing to pay the medical clinic’s quarterly employment taxes for the 1999 tax year. 23 Moreover, case law fully supports, rather than undercuts, the government’s decision to indict Farr under § 7201 rather than § 7202. To begin with, it is well established that “[c]harging decisions are primarily a matter of discretion for the prosecution,” United States v. Robertson, 45 F.3d 1423, 1437 (10th Cir. 1995), and such “discretion is nearly absolute,” id. at 1438. Consequently, “[w]hen a defendant’s conduct violates more than one criminal statute, the government may prosecute under either (or both, for that matter, subject to limitations on conviction and punishment).” United States v. Bradshaw, 580 F.3d 1129, 1136 (10th Cir. 2009). And, “[a]bsent certain allegations of impropriety, it is not the role of the jury (or the judge) to decide whether the government has charged the correct crime, but only to decide if the government has proved the crime it charged.” Id. Finally, Farr cites to no statutory provision or case law that would have, notwithstanding these general rules, required the government in this case to have charged her under § 7202 rather than § 7201. Thus, in sum, we conclude that the district court properly denied Farr’s motion to dismiss the indictment.