Opinion ID: 3066256
Heading Depth: 2
Heading Rank: 2

Heading: other tax code sections

Text: The majority’s response to the plain meaning of the statute is to “examin[e] that language in light of its place in the statutory scheme.” Majority Op. at 11. Of course, the context in which a phrase appears adds to its meaning. See Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997) (“The plainness or ambiguity of statutory language 4 BASR PARTNERSHIP v. US is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole.”). I have already considered the context of “intent to evade tax” above in discussing the surrounding language in § 6501(c)(1) and in § 6501 generally. The majority goes further, and searches the entire tax code for other mentions of “the intent to evade tax.” In fact, the sections cited by the majority for “context” are not even in the same chapter as § 6501. This is not analogous to the three cases cited by the majority for the importance of analyzing statutory language in context. In all three cases, the Supreme Court considered only closely proximate statutory provisions. Even so, a review of the other Code sections discussed by the majority reveals only that Congress knows how to explicitly limit the intent to evade tax to the taxpayer. Adopting my interpretation of “the intent to evade tax” does not cause the phrase to be used inconsistently. For example, take I.R.C. § 7454(a), on which the majority relies. Section 7454(a) states that “[i]n any proceeding involving the issue whether the petitioner has been guilty of fraud with intent to evade tax, the burden of proof in respect of such issue shall be upon the Secretary.” I.R.C. § 7454(a) (emphasis added). Unlike § 6501(c)(1), § 7454(a) is expressly limited to cases where the government alleges that the taxpayer had fraudulent intent. The reason for this limitation is simple: before § 7454(a) was enacted in 1928, the taxpayer had to prove that he did not act with intent to evade tax. Congress shifted the burden of proof on taxpayer fraud to the government because “[p]roceedings before the board involving that issue in some respects resemble penal suits.” S. Rep. 960, 70th Cong., 1st Sess., at 38 (May 1, 1928). This concern does not apply if another’s alleged intent to evade tax is at issue. Therefore, if anything, § 7454(a) demonstrates that Congress only limits the intent to evade tax to the taxBASR PARTNERSHIP v. US 5 payer’s intent in specific circumstances. Without such express limitation, the intent to evade tax encompasses others who cause a return to be fraudulent. Consider also § 6229(c)(1), which involves the statute of limitations for assessing tax to partnerships. Section 6229(c)(1) applies “[i]f any partner has, with the intent to evade tax, signed or participated directly or indirectly in the preparation of a partnership return which includes a false or fraudulent item . . . .” (Emphasis added). As in § 7454(a), Congress expressly restricted the intent to evade tax to a specific individual—in the case of § 6229(c)(1), a “partner.” Again, this shows that Congress can limit “the intent to evade tax” to the taxpayer’s intent if it so wishes. If “the intent to evade tax” encompasses only the taxpayer’s intent—as advocated by the majority—the restrictions to “the petitioner” in § 7454(a) and to “any partner” in § 6229(c)(1) would be superfluous. The majority’s construction thus violates the “cardinal principle of statutory construction that courts must give effect, if possible, to every clause and word of a statute . . . .” See Williams v. Taylor, 529 U.S. 362, 364 (2000). The majority also places heavy reliance on § 250 of the Revenue Act of 1918. Majority Op. at 19–23. First, the import of a nearly 100 year old statute on the meaning of a different statute today is slight. Second, § 250 falls into the same pattern outlined above—when Congress wants to limit intent elements to the taxpayer’s intent, it does so expressly. Section 250(b), which outlined penalties applicable to erroneous returns, stated in part: “In such case if the return is made in good faith and the understatement of the amount in the return is not due to any fault of the taxpayer, there shall be no penalty because of such understatement.” Revenue Act of 1918 § 250(b), Pub. L. No. 54-254, 40 Stat. 1057 (emphasis added). Section 250(b) went on to provide a five percent penalty “[i]f the understatement is due to negligence on the part of the taxpayer, but without intent to defraud,” 6 BASR PARTNERSHIP v. US and a fifty percent penalty “[i]f the understatement is false or fraudulent with intent to evade the tax . . . .” Id. (emphasis added). This section, which referenced the taxpayer twice, assigned tax penalties to the taxpayer based only on the taxpayer’s intent. On the other hand, the statute of limitations, § 250(d), did not mention the taxpayer. Section 250(d) stated, “[e]xcept in the case of false or fraudulent returns with intent to evade the tax, the amount of tax due under any return shall be determined and assessed by the Commissioner within five years after the return was due or was made . . . .” Id. (emphasis added). Therefore, because § 250(d) did not limit the intent to evade tax to the taxpayer’s intent as in § 250(b), the statute of limitations did not apply to fraudulent returns involving the intent to evade tax generally. The majority interprets § 250 differently. According to the majority, because only the taxpayer’s intent is at issue in § 250(b), the general reference to “intent to evade the tax” in § 250(d) must also be limited to the taxpayer’s intent. However, I do not find this conclusion to be “abundantly clear.” Majority Op. at 22. It is equally reasonable—if not more reasonable—to assume that the intent inquiry is restricted to the taxpayer’s intent only where the statutory subsection explicitly refers to the taxpayer’s intent, as in § 250(b). Granted, § 250(b) is certainly relevant context for construing § 250(d). But given that Congress did not restrict the intent element in § 250(d) to the taxpayer’s intent—as it did in § 250(b)— the requisite intent to evade the tax could be found in others, such as tax professionals hired by the taxpayer. Finally, if there is any remaining doubt, we must turn to the standard for construction, which requires that we strictly construe § 6501(c)(1) in favor of the government. See Badaracco, 464 U.S. at 392. BASR PARTNERSHIP v. US 7