Court Opinion

ID: 9490779
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:54:40.420147+00
Date Added: 2024-06-11T17:54:19.022106
License: Public Domain

COWEN, Circuit Judge,
dissenting.
The majority errs in concluding that the criminal conduct of an employer in failing to pay over taxes withheld from the wages of employees, in violation of 26 U.S.C. § 7202, falls within the fourth exception to the three-year statute of limitations for violations of the Internal Revenue Code (I.R.C.), 26 U.S.C. § 6531(4). I respectfully dissent from section IV-A of the majority’s opinion that the statute of limitations for violations of § 7202 is six years rather than the normal three years. The conviction of the defendant, Rao Gollapudi, should be vacated due *73to the expiration of the three-year statute of limitations.
I.
Gollapudi was convicted of failing to transfer funds withheld from his employees’ salaries in violation of § 7202. Section 7202 is entitled “Willful failure to collect or pay over tax” and reads 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, 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.
The statute of limitations for prosecutions under the I.R.C. in general and § 7202 in particular is contained within 26 U.S.C. § 6531. Section 6531 institutes a general, three-year statute of limitations for criminal prosecutions under the I.R.C. but lists eight exceptions qualifying for a six-year statute of limitations. Section 6531 is entitled “Periods of limitation on criminal prosecutions” and reads in relevant part: regulations----
No person shall be prosecuted, tried, or punished for any of the various offenses arising under the internal revenue laws unless the indictment is found or the information instituted within 3 years next after the commission of the offense, except that the period of limitation shall be 6 years- * * *
(4) for the offense of willfully faffing to pay any tax, or make any return
(other than a return required under authority of part III of
subchapter A of chapter 61) at the time or times required by law or
II.
The majority makes several arguments why § 7202 falls within § 6531(4). First, the majority argues that, “[ujnder a plain reading of this statute,” it is “clear” that § 7202 falls within § 6531(4). Maj. Op. at 69-70. The majority seizes on the word “any” from the language of 6531(4), “faffing to pay any tax,” and argues that, since paying over withheld funds is a type of tax, it qualifies as “any tax” under § 6531(4). The meaning of § 6531(4), according to the majority, is “plain and unambiguous[.]” Maj. Op. at 70.
The majority then attempts to confront the argument that, since the exceptions to the three-year statute of limitations which are contained in § 6531 track and explicitly mention the list of offenses in 26 U.S.C. § 7201 et seq., the failure of § 6531(4) to mention § 7202 specifically means that Congress did not intend § 7202 to be included in § 6531(4). The majority offers two responses. First, the majority argues that the exceptions in § 6531 not specifically mentioning sections of § 7201 et seq. are to be viewed expansively rather than restrictively. In other words, exceptions (5)-(8) of § 6531 refer to specific sections among § 7201 et seq. and thus apply only to the sections enumerated, while § 6531(4) does not delineate specific sections to which it applies and thus covers an array of offenses including § 7202. Second, the majority rejects Gollapudi’s claim that, since § 6531(4) refers to “offense” rather than “offenses,” § 6531(4) refers only to one offense, namely § 7203, which uses language very similar to § 6531(4) and covers the offense of faffing to “pay any estimated tax ... or make a return[.]”1 The majority points to § 6531(4)’s language of “failing to pay any *74tax, or make any return” as evincing that § 6531(4) applies to more than one type of offense and therefore encompasses § 7202 in addition to § 7203 and possibly other offenses.
The majority subsequently argues that it would be “inconsistent” for Congress to prescribe a six-year statute of limitations for § 7203, the misdemeanor of failing to file a return or pay a tax, and a three-year statute of limitations for § 7202, which is a felony offense. According to the majority, the need to prevent a disparity between the statutes of limitations for a misdemeanor and for a felony should motivate us to subsume § 7202 within § 6531(4). In addition, the majority dismisses Gollapudi’s claim that, because § 7202 talks of “paying over” taxes (referring to transferring employees’ withheld taxes to the government) while § 6531(4) covers “pay[ing]” a tax (referring to one’s own tax obligations), § 6531(4) cannot subsume § 7202.
III.
As the majority states, two circuit courts ruled that § 7202 receives a six-year statute of limitations by virtue of § 6531(4). See United States v. Porth, 426 F.2d 519, 521 (10th Cir.1970); see also United States v. Musacchia, 900 F.2d 493, 500 (2d Cir.), vacated in part on other grounds, 955 F.2d 3 (2d Cir.1991). In contrast, two district courts rejected any linkage between § 6531(4) and § 7202, therefore applying the three-year statute of limitations to § 7202. See United States v. Brennick, 908 F.Supp. 1004, 1019 (D.Mass.1995); see also United States v. Block, 497 F.Supp. 629, 632 (N.D.Ga.1980). However, the Tenth Circuit’s decision, holding that § 6531(4) covers § 7202, is conclusory and furnishes no analytical assistance or weighty precedential authority. The decision offers a string of citations, but none deals with the relationship between § 7202 and § 6531(4). See Porth, 426 F.2d at 521; see also Block, 497 F.Supp. at 631 (the cases mentioned in Porth do not support Porth’s conclusion); Brennick, 908 F.Supp. at 1018 n. 6 (none of the cases cited by Porth supports Porth’s conclusion). In addition to the lack of analysis, the Tenth Circuit in Porth also argued in the alternative, stating immediately after its § 6531(4) pronouncement that the first indictment in the case, which occurred within three years of the offenses, should be looked to for statute of limitations purposes despite the fact that the first indictment was dismissed for technical reasons. See Porth, 426 F.2d at 521. The Tenth Circuit itself appears uncertain of the strength of its own § 6531(4) conclusion, undermining the authority of its decision.
IV.
I respectfully disagree with the arguments raised by,the majority and by the Second Circuit in Musacchia. The majority claims that the plain meaning of § 6531(4) clearly encompasses § 7202, vitiating any need for other techniques of statutory interpretation. However, the meaning of § 6531(4) is anything but plain and unambiguous. While the majority claims that § 6531(4) is clear by stressing the importance of the word “any[,j” the majority ignores the fact that applying § 6531(4) effectively swallows the general rule of a three-year statute of limitations for tax offenses. Nearly every violation of the I.R.C. translates into an attempt not to pay taxes. Seizing on “any” to broaden the reach of § 6531(4) in order to include § 7202 has the net effect of vastly expanding § 6531(4), shrinking the applicability of the three-year statute of limitations to near oblivion and rendering the other seven exceptions to the three-year statute of limitations nugatory. The majority provides no principled rationale for delineating the contours of its expanded § 6531(4). As I argue below, the term “any” could properly refer only to tax obligations encompassed by the word “pay” but not obligations to “pay over” taxes. Accordingly, the meaning of § 6531(4) is far from plain and unambiguous. It calls for judicial interpretation.
Resolving § 6531(4)’s ambiguity activates two venerated members of the canon of statutory interpretation which the majority ignored. First, ‘excepting’ clauses are to be interpreted narrowly. See United States v. McElvain, 272 U.S. 633, 639, 47 S.Ct. 219, 220, 71 L.Ed. 451 (1926); see also United *75States v. Scharton, 285 U.S. 518, 521-2, 52 S.Ct. 416, 417, 76 L.Ed. 917 (1932). Second, criminal statutes are to be interpreted in favor of repose. See United States v. Marion, 404 U.S. 307, 322 n. 14, 92 S.Ct. 455, 464 n. 14, 30 L.Ed.2d 468 (1971). These principles provide the framework for determining the meaning and scope of § 6531(4). As a result, the excepting clause of § 6531(4) must be interpreted narrowly, especially given that the instant statute deals with criminal liability.
Moving to the text at issue here, the majority dismisses the difference between the terms “pay” and “pay over” too handily.2 Both § 7202 and its civil analogue, 26 U.S.C. § 6672, use the term “pay over” in the context of transferring employees’ withheld funds to the government, strongly implying that “pay over” is a statutory term of art referring to transferring a third-party’s taxes to the government. While the use of the term “pay over” by the United States Code does not rise to the level of a statutory term of art, the term “pay over” does have a strong tendency to refer to transferring a third-party’s taxes to the government. Accordingly, the majority misses the point by stressing the importance of “any” in § 6531(4). Even if “any” is to be interpreted expansively as referring to all taxes owed, the expansiveness is only within the category of taxes that are ‘paid,’ not the category of funds ‘paid over.’
V.
The majority argues that having different statutes of limitations for § 7202 and § 7203 would reflect inconsistent decisionmaking on the part of Congress. The answer to the inconsistency charge lies in observing the difference between the crimes of failure to transfer withheld funds and failure to pay one’s own taxes. In the case of transferring withheld funds, an employer fails to transfer the funds withheld from several if not hundreds of employees. The more employees affected, the greater the chances that the I.R.S. will discover the crime. In the case of an individual failing to pay his own taxes, such a crime is harder for the I.R.S. to detect since only one individual’s return is involved. Accordingly, it would make sense to apply the normal statute of limitations (three years) to the crime of failing to pay withheld taxes since the I.R.S. has greater potential to discover the crime; in the case of the single individual, the I.R.S. has greater difficulty in discovering the crime and needs an extended statute of limitations.3 Furthermore, even if Congress was inconsistent in authorizing a three-year statute of limitations for § 7202 and a six-year statute of limitations for § 7203, it is not our prerogative to remedy the inconsistency. To interpret a statute in a manner designed to resolve a putative policy-based inconsistency brings the court into the forbidden realm of legislative policy-making.
VI.
Finally, the majority selects the wrong inference from the fact that § 6531 tracks § 7201 et seq. While §§ 6531(5-8) specifically refer to sections in § 7201 et seq., § 6531(4) does not contain an explicit reference. The majority infers from this lack of a specific reference in § 6531(4) that it covers more than just the section it clearly parallels, § 7203, and encompasses § 7202 as well.4 *76However, the majority ignores the need to construe excepting clauses restrictively and to interpret criminal statutes in favor of repose. Indeed, § 6531’s tracking of § 7201 et seq. gives rise to an alternative inference, namely that even though § 6531(4) fails to mention § 7203, § 6531(4) still should be viewed in the context of the tracking by its sister exceptions. In other words, since exceptions (5)-(8) explicitly track sections of § 7201 et seq., Congress may have intended § 6531(4) to track § 7203 by virtue of the similarity in language between the two provisions even though § 7203 is not mentioned explicitly. In fact, the close similarity between the diction of § 7203 and § 6531(4) may have obviated the need for § 6531(4) to mention § 7203 explicitly. This argument is buttressed by the contention that § 6531(4) refers to only one “offense” rather than “offenses,” which must be § 7203 rather than § 7202 given the similarity of language between § 7203 and § 6531(4). In sum, while the majority’s inference is plausible, another possible inference exists. Our duty to construe § 6531(4) restrictively and in favor of repose requires selecting the inference that § 6531(4) tracks only § 7203, not § 7202 as well.
VII.
For the above reasons, I respectfully dissent from the majority’s conclusion that violations of § 7202 receive a six-year rather than a three-year statute of limitations. The district court’s decision should be reversed and the conviction of Gollapudi vacated due to the expiration of the three-year statute of limitations prior to the commencement of prosecution.

. Title 26, United States Code, § 7203 is entitled "Willful failure to file return, supply information, or pay tax” and reads in relevant part:
Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $26,000 ($100,000 in the case of a corporation), or be imprisoned not more than 1 year, or both, together with the cost of prosecution ....
(emphasis added).

. The Block Court rejected the argument that "pay” includes "pay over,” noting that "although a lay person would probably use this approach, the drafters of i 6531 more likely would have used the terms as are reflected in §§ 7201 et seq [sic]." Block, 497 F.Supp. at 632 n. 2.

. The majority contests this by citing the statement of the Assistant U.S. Attorney during oral argument that the I.R.S. does not routinely crosscheck employees' W-2 forms against employers’ payments of funds withheld from employees’ wages. See Maj. Op. at 71 n. 4. However, this statement by the AUSA, attributed to ”[s]omeone who worked for the Tax Division and is now a specialist in tax crimes,” is not contained in the record and reflects a litigation position taken during oral argument. This court should not adopt such a counter-intuitive notion without adequate evidentiary support.

.Section 6531(4) is closely aligned with § 7203 since § 6531(4) refers to “the offense of willfully failing to pay any tax, or make any retum[,]” § 7203 covers ”[a]ny person ... who willfully fails to pay such estimated tax or tax, make such return” and § 7202 merely adverts to ”[a]ny person required to collect, account for, and pay over any tax....”