Court Opinion

ID: 9447475
Source: CourtListenerOpinion
Date Created: 2023-08-03 22:36:06.165951+00
Date Added: 2024-06-11T17:31:03.791535
License: Public Domain

MATTHES, Circuit Judge
(dissenting).
I find myself unable to agree with the majority view insofar as it holds that § 7207 of the Internal Revenue Code of 1954 is not applicable to income tax derelictions.
Apparently, this conclusion was reached by the majority upon a consideration of the history of § 3616(a), as the antecedent of § 7207; the holding in Achilli v. United States, 353 U.S. 373, 77 S.Ct. 995, 1 L.Ed.2d 918, that § 3616(a) of the 1939 Code does not apply to income tax evasions; and the “legislative intent” expressed by Congress in enacting the 1954 section of the Code. From these factors, the majority concludes that it is “unable to detect a significant difference, which would have a bearing on Congressional intent, between § 3616(a) and § 7207,” observing that “the mere gathering of the penalty sections into one general chapter” did not evince an intent on the part of Congress “to give § 7207 a greater scope than § 3616(a) had under the 1939 Code.”
The stated legislative intent in enacting § 7207 was expressed by Congress in a single sentence: “This section * * * contains no material change from existing law.” No reference was made to § 3616 or to any other section of the 1939 Code. It is of importance that at the time the 1954 Code was enacted, the Supreme Court had not yet ruled that § 3616(a) did not apply to evasion of the income tax, and, as noted by Mr. Justice Douglas,1 it appears that the government was regularly prosecuting minor income tax violations under § 3616(a) at the time § 7207 was enacted. As late as Berra v. United States, 351 U.S. 131, 133, 76 S.Ct. 685, 687, 100 L.Ed. 1013, decided April 30, 1956, the government agreed that “§ 3616(a) was applicable to income tax returns * *."
In this situation, the presumption is certainly warranted that when Congress enacted § 7207, it recognized that its predecessor had been interpreted as applying to income tax returns, and the statement appearing in the legislative history, above quoted, properly may be regarded as evincing congressional intent to carry forward “existing law,” whereby income tax violations were being prosecuted as misdemeanors under § 3616(a), and certainly not as evidence of an intent to the contrary, to-wit, that income tax violations were to be removed from the scope of § 7207.
The next question then, apart from congressional intent in 1954, is whether § 7207 is so identical to § 3616(a) that the ruling of the Supreme Court in the Achilli case as to that section must necessarily determine the application of § 7207. Whether or not Congress actually recognized the objectionable features and deficiencies of § 3616(a), as brought to the fore in Achilli, the fact remains that a very decided change is found in the language of § 7207 when it is compared with the language of § 3616(a). *172Section 3616(a) provided: “Whenever any person * * * delivers or discloses to the collector * * * any false or fraudulent list, return, account, or statement, with intent to defeat or evade the valuation, enumeration, or assessment intended to be made * * * he shall be fined * * (Emphasis supplied.) Section 7207 provides: “Any person who willfully delivers or discloses to the Secretary * * * any list, return, account, statement, or other document, known by him to be fraudulent or to be false as to any material matter, shall be fined * * (Emphasis supplied.)
The deletion of the phrase “with intent to defeat or evade * * * " gains added significance in my mind upon a consideration that this was the very language which gave rise to the overlapping with § 145 (b) of the 1939 Code, a factor inducing the ultimate conclusion in Achilli that § 3616(a) was not applicable to income tax evasions. Furthermore, by adding the proviso that the delivery must be willful, § 7207 is not vulnerable to the attack made upon this deficiency in § 3616(a). See Dillon v. United States, 8 Cir., 218 F.2d 97, at page 103, certi-orari granted 349 U.S. 914, 75 S.Ct. 603, 99 L.Ed. 1248, and dismissed 350 U.S. 906, 76 S.Ct. 191, 100 L.Ed. 796.
This Court, and members of the Supreme Court, while occupied with the problem of applying § 3616(a) of the 1939 Code, have remarked upon the new language found in § 7207. The majority opinion concedes that in Dillon this circuit “touched upon the problem” and that “(i)t is to be acknowledged that language in the Dillon opinion, by way of dictum, indicates that this court then felt that § 3616(a) and § 7207 were different and distinguishable.” It is my view that the expressions in Dillon bearing upon § 7207 were, and are, sound and relevant, and should not be entirely disregarded as dictum on the basis that the Court there was concerned with the problem of applying the provisions of the 1939 Code. In demonstrating the inapplicability of § 3616(a) to income tax evasion, this Court recognized and commented upon the change found in § 7207, stating, at page 103 of 218 F.2d:
“§ 7207 is entirely different from § 3616. * * * Section 7207 appears in the statutory context with other offenses relating to income tax offenses. It is sufficiently broad to apply to both income tax derelictions as well as to those subjects other than income taxes with which § 3616 was in juxtaposition. The only substantive portion of § 3616 which was retained and carried forward in the 1954 revision was placed with income tax derelictions. And then the element of willfulness, absent in § 3616 but previously consistently present in offenses relating to income tax violations, was inserted.
“ * * * We conclude that Congress did not intend by § 3616(a) that a nonwillful inaccurate and ip-so facto false statement in an income tax return, frequently very complicated, should constitute a crime. It only made such a false statement a misdemeanor when, by § 7207, it required that the statement be willfully made and known to be fraudulent or false as to a material matter.” (Emphasis supplied.)
In Berra v. United States, 1956, 351 U.S. 131, 134, 76 S.Ct. 685, 688, 100 L.Ed. 1013, Mr. Justice Harlan, in speaking for the majority, ruled that § 145(b) and § 3616(a) covered precisely the same ground, and then, by footnote, observed: “Compare § 7207 of the Internal Revenue Code of 1954, under which the wilful filing of a false return no longer requires the element of an ‘intent to defeat or evade’ taxes, as was so under the former § 3616(a).”
While the majority opinion in Achilli v. United States, 353 U.S. 373, 77 S.Ct. 995, 1 L.Ed.2d 918, was confined to a discussion of the applicability of § 3616 (a) to income tax evasion, Mr. Justice Douglas, in dissenting in part upon the ground that through administrative construction of the section, numerous in*173come tax convictions had been obtained under § 3616, observed, at page 381 of 353 U.S., at page 999 of 77 S.Ct.:
“I would adhere to the administrative construction that § 3616(a) applied to the income tax. Congress apparently was of that view. For when it came to the Internal Revenue Code of 1954, [26 U.S.C.A.] it re-enacted § 3616(a) as § 7207, eliminating the words ‘with intent to defeat or evade’ which had caused the overlap with § 145(b). Congress acted, of course, prospectively.
“The fact that Congress acted in 1954 to remove the ambiguity with which we deal today indicates that what we do is not within the judicial competence.”
Whether or not it can be said that Congress recognized the overlapping of § 3616(a) and § 145(b), and intended to correct the objectionable features of § 3616(a) at the time the 1954 Code was enacted, the fact remains that § 7207 is distinguished by the absence of features which were accorded great weight by the courts in their conclusions that § 3616 (a) was not applicable to income tax matters.
It is the willful attempt “to evade or defeat” a tax which calls for a felony penalty under § 7201. As observed in Spies v. United States, 317 U.S. 492, 495, 496, 63 S.Ct. 364, 367, 87 L.Ed. 418, various sanctions are required to insure collection of all taxes due the government, and various duties properly may be required of all taxpayers, “without regard to existence of a tax liability.”
In my view, it is the failure to consider this precise factor which tends to confuse, for under § 7207 the proscribed conduct is not limited to acts done for the purpose of evading taxes. Certainly the government has the right to insist that no person may willfully deliver a fraudulent or false list, return, account, or statement, regardless of whether or not an income tax is actually due, and regardless of whether that person intended to evade a tax. I can visualize that the majority’s view may well work to the detriment of the government in its attempt to administer the income tax laws of the United States, for in any case where the taxpayer has actually filed a return or document which is false or fraudulent in some material respect, the government may often find itself in a position where it has no alternative but to seek a felony conviction, with its corresponding burden of establishing an intent to evade taxes. The 1954 return filed by defendant here presents “a case in point,” so to speak. For that year defendant did not falsely understate his income, he did not falsely state amounts withheld, he did not falsely claim nonexistent children, he did not falsely compute or state the tax due and owing. But under the evidence, and with proper instructions, the jury could have found that the listing of his children as “dependents,” within the meaning of the Internal Revenue Code, was a false statement as to a material matter. Of course, the government could choose to allege that such false statement was a willful attempt to evade a tax, and so seek a felony conviction under § 7201, but if the prosecution so elected, the defendant would, under proper evidence, be entitled to have the lesser offense of § 7207 submitted to the jury.
If Congress intended to except income tax violations from § 7207, such intent is not manifest to me, and if § 7207 is to be so interpreted, I feel that, in view of the statutory change of language, the comment of the court in Berra v. United States, supra, and the absence of comment in Achilli v. United States, supra, the Supreme Court should, in the first instance, make that pronouncement.

. The majority opinion in Achilli v. United States, supra, recognized that cases involving the filing of false returns had been prosecuted as misdemeanors under § 3616(a). Mr. Justice Douglas, in his dissent, 353 U.S. at page 380, 77 S.Ct. at page 999, pointed out that between October, 1952 and March, 1957, the government prosecuted 175 cases of alleged income tax evasion under § 3616(a).