Court Opinion

ID: 9473559
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:32:53.047677+00
Date Added: 2024-06-11T17:43:35.908057
License: Public Domain

BARRETT, Circuit Judge,
concurring in the result.
I respectfully disagree with that portion of the majority opinion adopting the rationale of Raley v. Commissioner, 676 F.2d 980 (3rd Cir.1982), while attempting to distinguish Raley on the facts from the case at bar. Raley, just as the instant case, involved a taxpayer who (a) was engaged in the income tax protest movement, (b) did not file income tax returns for two years, (c) filed false income tax returns for two years, and (d) supplied false W-4 withholding forms. Thus the facts in Raley are really indistinguishable from those in this case.
The Raley court held that fraud, as used in 26 U.S.C. § 6653(b), means “intentional wrongdoing on the part of a taxpayer motivated by a specific purpose to evade a tax known or believed to be owing” but where a taxpayer goes “out of his way to inform every person involved in the collecting process that he [was] not going to pay any federal income taxes” the IRS has not established the fraud requirement. Id. at 983. I disagree with this latter reasoning. It defies the purpose of the code. One who goes out of his or her way to inform the world at large that he or she will not pay federal income taxes is surely evading a tax known to be owing.
This court, in Ruidoso Racing Association, Inc. v. C.I.R., 476 F.2d 502 (10th Cir.1973), while finding affirmative acts of fraud involving willful understatement of income and active attempt to conceal the understatement through the use of false invoices and fictitious records nevertheless stated that fraud with intent to evade tax, if affirmatively established, supports the imposition of the § 6653(b) civil penalties. Id. at 506. This seems consistent with the definition of “fraud” identified in the context of § 6653(b) in Conforte v. Commissioner, 692 F.2d 587, 592 (9th Cir.1982), i.e., “fraud,” for the purposes of the statute, is demonstrated when it is shown that the taxpayer acted “with the specific intent to avoid a tax known to be owing.” Thus, I believe Raley misses the mark. It is my view that one who goes out of his or her way to proclaim that he or she shall not pay a federal income tax known to be owing is more involved in the fraud aspects of § 6653(b) that a taxpayer who intentionally under estimates the tax. Intentional failure to disclose any income from which a tax may be computed is far more serious than intentionally understating or concealing income. The intention in all such cases is to knowingly evade a tax owing.
In United States v. Thompson, 279 F.2d 165, 168-169 (10th Cir.1960), quoting Helvering v. Mitchell, 303 U.S. 391, 401, 58 S.Ct. 630, 634, 82 L.Ed. 917 (1938) we observed that given the policy underlying the civil fraud penalty provision of § 6653 that “[t]he purpose of the additional assessment of 50 percent of the amount of the tax deficiency is to reimburse the government for the heavy expense of investigation ad the loss resulting from the taxpayer’s fraud.”
In this case, petitioner, a retired Air Force colonel who regularly filed income tax returns from 1945 to 1975, affirmatively concealed his income for the years 1976 through 1979. In 1976 and 1977, he knowingly and intentionally omitted information from which his tax liability could be computed. In 1978 and 1979 he did not file income tax returns. Thus, petitioner undertook noncompliance with the voluntary self-assessment methods designed to evade the payment of taxes due. His actions frustrated the policies of the code. The purpose of the civil penalty for fraud is to discourage such noncompliance. See 10 Mertens, Law of Federal Income Taxation, §§ 55.09-55.18 (1976).
This court should decline to follow the Raley opinion. It constitutes an unwarranted departure from established law identifying “fraud” in the context of § 6653(b). In order to establish fraud under § 6653(b), it is not necessary to prove an evil motive or sinister purpose; rather, the facts need only establish an intention *1148on the part of the taxpayer to evade a tax which he or she knows to be owing.