Court Opinion

ID: 9563519
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:40:59.298539+00
Date Added: 2024-06-11T09:17:53.712896
License: Public Domain

MOSK, J.
J. I concur in the result.
*674I agree with the majority that former Revenue and Taxation Code section 19401 (all further unspecified statutory references are to the Revenue and Taxation Code) is necessarily included in former section 19405, subdivision (a)(1) (hereafter former section 19405(a)(1)). I further agree that failure to give such an instruction under the peculiar facts of this case was not reversible error. And I agree that former section 19405(a)(1) is not intended to punish as a felon the taxpayer who innocently or negligently makes a false statement on his tax return. But like the Attorney General, I do not agree that it is correct to incorporate into former section 19405(a)(1) the additional element that the taxpayer must commit a “voluntary, intentional violation of a known legal duty.” (Maj. opn., ante, at p. 666.) The literal terms of the statute themselves define with sufficient precision the proper mental state requirements, and there is no need to add an additional requirement that is not only without basis in the language of the statute but is contrary to well-established legal principles.
Penal Code section 7, paragraph 1 states that “unless otherwise apparent from the context: [^] . . . [t]he word ‘willfully,’ when applied to the intent with which an act is done or omitted, implies simply a purpose or willingness to commit the act, or make the omission referred to. It does not require any intent to violate the law, or to injure another, or to acquire any advantage.” The reason for this “default” interpretation of the term “willfully” is readily apparent. “ ‘It is an emphatic postulate of both civil and penal law that ignorance of a law is no excuse for a violation thereof. Of course it is based on a fiction, because no man can know all the law, but it is a maxim which the law itself does not permit anyone to gainsay. . . . The rule rests on public necessity; the welfare of society and the safety of the state depend upon its enforcement. ... [If permitted] the plea [of ignorance] would be universally made, and would lead to interminable questions incapable of solution. Was the defendant in fact ignorant of the law? Was his ignorance of the law excusable? The denser the ignorance the greater would be the exemption from liability.’ ” (Hale v. Morgan (1978) 22 Cal.3d 388, 396 [149 Cal.Rptr. 375, 584 P.2d 512].) The majority contend that the context of former section 19405(a)(1) requires a departure from the Penal Code section 7 definition of “willfully.” As explained below, I disagree that any such departure is warranted.
Former section 19405(a)(1) punished as a felon the taxpayer who “[willfully makes and subscribes any return, statement, or other document, that contains or is verified by a written declaration that it is made under the penalties of perjury, and that he or she does not believe to be true and correct as to every material matter.” (As amended by Stats. 1993, ch. 826, § 6, repealed by Stats. 1994, ch. 1243, § 58; see now § 19705, subd. (a)(1) *675[same].) Thus, former section 19405(a)(1) contains an explicit two-part mental state requirement. First, the taxpayer must act “willfully” {ibid..), which, as noted, generally means simply with a “purpose or willingness to commit the act.” (Pen. Code, § 7.) Second, the taxpayer must also make and subscribe a return or other document made under penalty of perjury that he or she “does not believe to be true and correct as to every material matter.” (Former § 19405(a)(1).) Accordingly, former section 19405(a)(1) already encompasses only those who act with bad intent—i.e., an intent to supply the government with materially false tax information. Thus, although I agree with the majority that the Legislature did not intend under former section 19405(a)(1) “ ‘ “to penalize frank difference of opinion or innocent errors made despite the exercise of reasonable care” ’ ” or “ ‘[d]egrees of negligence’ ” (maj. opn., ante, at p. 659), there is no reason to depart from Penal Code section 7’s definition of “willfully” in order to effectuate this intent. The additional mental state requirement provided explicitly by the statute— that the taxpayer must supply information that he or she “does not believe to be true and correct as to every material matter”—already accomplishes this legislative purpose.
The majority almost concede as much. (See maj. opn., ante, at p. 665.) But they state that it is not “clear that former section 19405(a)(l)’s other mens rea requirement—lack of belief in the truth and correctness of the return— adequately serves, by itself, to identify in all cases those taxpayers whose misstatements are most blameworthy. Lack of belief in the return’s correctness may not be precisely equivalent to knowledge of its falsity; the prosecutor in a given case might at least argue that a taxpayer who recklessly failed to discover the truth regarding information demanded on a return and who, for that reason, did not know the return to be false, nonetheless did not ‘believe [the return] to be true and correct.’ [Citation.] A taxpayer, moreover, might knowingly omit information from a tax return in the mistaken belief that he or she was not required to report that information. Such a taxpayer, arguably, would not believe the return to be entirely ‘true and correct.’ He or she would also have acted ‘willfully’ under the Penal Code section 7 definition, but not under the federal tax crime definition. . . . [W]e believe applying the latter definition accords with the probable object of former section 19405(a)(1); our Legislature, like the federal Congress, most likely did not intend to treat such a taxpayer as harshly as one who, knowing of a duty to report, intentionally fails to do so.” {Ibid.)
Of the two problems the majority identify in the above paragraph in interpreting the phrase “does not believe to be true and correct as to every material matter,” I will address the second one first. If a taxpayer omits information from a tax return in the belief that he or she was not required to *676report that information, then presumably he or she would still believe the return to be “true and correct as to every material matter.” In other words, in that instance, the taxpayer would believe that the information submitted on the return was true and correct and would believe that the omitted information was legitimately omitted.
The first problem identified by the majority is of the “taxpayer who recklessly failed to discover the truth regarding information demanded on a return and who, for that reason, did not know the return to be false, [but] did not ‘believe [the return] to be true and correct.’ ” (Maj. opn., ante, at p. 665, italics added.) This problem merits more careful consideration. “Recklessness” generally signifies action in spite of subjective awareness of a grave risk. (See People v. Estrada (1995) 11 Cal.4th 568, 577 [46 Cal.Rptr.2d 586, 904 P.2d 1197] [defining “reckless indifference to human life”].) Thus a taxpayer who, for example, although unaware of any specific untrue statements in the return, nonetheless entertains general doubts as to his or her ability to file a return free of error, is nonetheless to be regarded as one who believes his or her return “to be true and correct as to every material matter.” But if on the other hand a taxpayer believes that his or her return was probably false as to some particular, material feature—that wages are “probably” income but fails to report wage income nonetheless—then, in my view, such an individual has in fact filed a return not believing his or her return “to be true and correct as to every material matter.” Thus, at least certain forms of recklessness should indeed be encompassed by former section 19405(a)(1), and it is unclear if the majority would hold otherwise. In any case, I believe that, rather than speculating about what prosecutors “might” argue about the meaning of the phrase “does not believe to be true and correct as to every material matter,” we should clarify that meaning and thereby obviate the need for importing the “voluntary and intentional violation of a known legal duty” language into a statute that does not, on its face, have such a requirement.
Moreover, when the Legislature has seen fit to criminalize a specific intent to evade the law in the tax statutes, it has done so explicitly. Thus, former section 19406 (now section 19706), part of the same statutory scheme as former section 19405(a)(1), punishes “any person [who] . . . willfully fails to file any return or to supply any information with intent to evade any tax imposed by” specified provisions. Thus the Legislature made “intent to evade the law” an element of the crime through the explicit use of that term, not through the unconventional use of the term “willfully.” Indeed, if “willfully” meant the same in former section 19406 as it did in former section 19405(a)(1), then there would have been no need to include the phrase “intent to evade any tax” in the former section 19406.
*677I recognize that in so interpreting former section 19405(a)(1), I am at variance with United States Supreme Court’s interpretation of a virtually identical federal statute. But as the majority acknowledge, the interpretation in question did not come about until 1973 in United States v. Bishop (1973) 412 U.S. 346, 360 [93 S.Ct. 2008, 2017, 36 L.Ed.2d 941]. The predecessor to former section 19405(a)(1) was enacted in 1943, and therefore the Bishop court’s interpretation had no role in the formation of the Legislature’s intent.
There were two United States Supreme Court decisions prior to 1945 that interpreted “willfully” in the context of federal tax statutes to require a bad purpose. In United States v. Murdock (1933) 290 U.S. 389, 392 [54 S.Ct. 223, 224, 78 L.Ed. 381], the court considered a statute that punished as a misdemeanor a failure “ ‘to pay any tax, or . . .to make a return, keep any records, or supply any information, for the purposes of the computation, assessment, or collection of any tax imposed by’ ” specified provisions. The court recognized that “[a]id in arriving at the meaning of the word ‘willfully’ may be afforded by the context in which it is used . . . .” (Id. at p. 395 [54 S.Ct. at p. 226].) In arriving at the conclusion that “willfully” signified “evil motive,” the court focused on the fact that the statute punished omissions as well as affirmative acts. (Ibid.) “Congress did not intend that a person, by reason of a bona fide misunderstanding as to his liability for the tax, as to his duty to make a return, or as to the adequacy of the records he maintained, should become a criminal by his mere failure to measure up to the prescribed standard of conduct.” (Id. at p. 396 [54 S.Ct. at p. 226].)
In Spies v. United States (1943) 317 U.S. 492 [63 S.Ct. 364, 87 L.Ed. 418], the court considered a statute that made it a felony for a person who “ ‘willfully attempts in any manner to evade or defeat any tax imposed by’ ” specified provisions. (Id. at p. 494, fn. 2 [63 S.Ct. at p. 366].) This was in contrast to a misdemeanor statute that punished simply the “willful failure to pay” income tax or supply the proper information. (Id. at p. 493 [63 S.Ct. at p. 365].) The court again acknowledged that “willful. . . is a word of many meanings, its construction often being influenced by context.” (Id. at p. 497 [63 S.Ct. at p. 367].) The court derived the differing meanings of “willful” in the two statutes not so much from the word itself, but from the “attempt to evade” language in the felony statute. (Id. at pp. 498-499 [63 S.Ct. at pp. 367-368].) Contrasting the felony and misdemeanor statutes, the court stated: “Willful but passive neglect of the statutory duty may constitute the lesser offense, but to combine with it a willful and positive attempt to evade tax in any manner or to defeat it by any means lifts the offense to the degree of felony.” (Id. at p. 499 [63 S.Ct. at p. 368].)
Thus, both Murdock and Spies concern statutes that sanctioned omissions and failures to perform statutory duty, and the court was concerned to make *678clear that it was not the intent of Congress to make felonious those omissions and failures because of inadvertence and negligence. Both cases acknowledged that the meaning of “willful” depended on the context of the statute. Neither case dictates that the term must be understood in other than its usual sense when the statute in question criminalizes affirmative acts of material deception in sworn legal documents. Therefore, there is no reason to believe that the Legislature in 1945, when adopting the predecessor to former section 19405(a)(1), was influenced by the United States Supreme Court’s interpretation of the term “willful” in quite different contexts.
It is true that there is a virtue to having our tax law consistent with federal law. As the majority state, quoting Holmes v. McColgan (1941) 17 Cal.2d 426, 430 [110 P.2d 428]: “ ‘A departure from federal practice . . . might easily create myriad administrative difficulties inimical to the interests of both the state and the taxpayers.’ ” (Maj. opn., ante, at p. 661.) In Holmes, the court was concerned that a state law method of computing capital gains different from the federal one would cause confusion. (Holmes, supra, 17 Cal.2d at p. 430.) But in the present case, we would not be creating a discrepancy between what federal and state law requires of a taxpayer, but would rather be recognizing a difference, perhaps, in the consequences of failing to meet federal and state statutory obligations. It is difficult to fathom how this departure from federal law in enforcing the felony tax reporting statute will create “myriad administrative difficulties.” Thus, the fact that the most sensible interpretation of former section 19405(a)(1) is somewhat at variance with federal law does not persuade me that federal law should be followed.
Because I conclude there was no instructional error, I, like the majority, would affirm the judgment of the Court of Appeal.