7203 - Admissibility 3 p3

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Fraud Statutes 

Additional Information:

 

7203 - Accountant-Client Privilege
7203 - Accrual Basis
7203 - Admissibility 1 p1
7203 - Admissibility 1 p2
7203 - Admissibility 1 p3
7203 - Admissibility 1 p4
7203 - Admissibility 1 p5
7203 - Admissibility 1 p6
7203 - Admissibility 2 p1
7203 - Admissibility 2 p2
7203 - Admissibility 2 p3
7203 - Admissibility 2 p4
7203 - Admissibility 2 p5
7203 - Admissibility 3 p1
7203 - Admissibility 3 p2
7203 - Admissibility 3 p3
7203 - Admissibility 3 p4
7203 - Admissibility 3 p5
7203 - Admissibility 4 p1
7203 - Admissibility 4 p2
7203 - Admissions p1
7203 - Admissions p2
7203 - Advice of Counsel p1
7203 - Advice of Counsel p2
7203 - Amendment
7203 - Appeal Right to
7203 - Appeal Timeliness
7203 - Appeal Waiver
7203 - Appeal without merit
7203 - Arrest
7203 - Fraudulent Return
7203 - Defeat & Evade Income Taxes p1
7203 - Defeat & Evade Income Taxes p2
7203 - Defeat & Evade Income Taxes p3
7203 - Defeat &  Evade Income Taxes p4
7203 - Attorney Disqualified
7203 - Attorney's Testimony p1
7203 - Attorney's Testimony p2
7203 - Attorney's Testimony p3
7203 - Attorney's Testimony p4
7203 - Bail
7203 - Bank Records &  Net Worth Increases 1 p1
7203 - Bank Records &  Net Worth Increases 1 p2
7203 - Bank Records &  Net Worth Increases 1 p3
7203 - Bank Records &  Net Worth Increases 1 p4
7203 - Bank Records &  Net Worth Increases 1 p5
7203 - Bank Records &  Net Worth Increases 1 p6
7203 - Bank Records &  Net Worth Increases 2 p1
7203 - Bank Records &  Net Worth Increases 2 p2
7203 - Bank Records &  Net Worth Increases 2 p3
7203 - Bank Records &  Net Worth Increases 2 p4
7203 - Bank Records &  Net Worth Increases 2 p5
7203 - Bank Records &  Net Worth Increases 3 p1
7203 - Bank Records &  Net Worth Increases 3 p2
7203 - Bank Records &  Net Worth Increases 3 p3
7203 - Bank Records &  Net Worth Increases 3 p4
7203 - Bank Records &  Net Worth Increases 3 p5
7203 - Bank Records &  Net Worth Increases 4 p1
7203 - Bank Records &  Net Worth Increases 4 p2
7203 - Bank Records &  Net Worth Increases 4 p3
7203 - Bank Records &  Net Worth Increases 4 p4
7203 - Bank Records &  Net Worth Increases 4 p5
7203 - Bank Records &  Net Worth Increases 5 p1
7203 - Bank Records & Net Worth Increases 5 p2
7203 - Bank Records & Net Worth Increases 5 p3
7203 - Bank Records & Net Worth Increases 5 p4
7203 - Bank Records & Net Worth Increases 5 p5
7203 - Base Sentence p1
7203 - Base Sentence p2
7203 - Base Sentence p3
7203 - Base Sentence p4
I7203 - Bill of Particluar Conspiracy
7203 - Bill of Particulars
7203 - Books and Records
7203 - Burden of going forward with evidence
7203 - Burden of Proof
7203 - Carryback Offset
7203 - Changing Plea
7203 - Character witness p1
7203 - Character witness p2
7203 - Circumstanial Evidence p1
7203 - Circumstanial Evidence p2
7203 - Circumstanial Evidence p3
7203 - Circumstanial Evidence p4
7203 - Collateral Estoppel
7203 - Collection
7203 - Commitment by U.S. Commissioner
7203 - Communication to Jury
7203 - Compromise
7203 - Consolidation
7203 - Conspiracy p1
7203 - Conspiracy p2
7203 - Conspiracy 1 p1
7203 - Conspiracy 1 p2
7203 - Conspiracy 1 p3
7203 - Conspiracy 1 p4
7203 - Conspiracy 1 p5
7203 - Conspiracy 1 p6
7203 - Conspiracy 1 p7
7203 - Conspiracy 1 p8
7203 - Conspiracy 2 p1
7203 - Conspiracy 2 p2
7203 - Conspiracy 2 p3
7203 - Constitutional Grounds 1 p1
7203 - Constitutional Grounds 1 p2
7203 - Constitutional Grounds 1 p3
7203 - Constitutional Grounds 1 p4
7203 - Constitutional Grounds 1 p5
7203 - Constitutional Grounds 2 p1
7203 - Constitutional Grounds 2 p2
7203 - Constitutional Grounds 2 p3
7203 - Constitutional Grounds 2 p4
7203 - Constitutional Grounds 2 p5
7203 - Constitutional Grounds 3 p1
7203 - Constitutional Grounds 3 p2
7203 - Constitutional Grounds 3 p3
7203 - Constitutional Grounds 3 p4
7203 - Constitutional Grounds 3 p5
7203 - Constitutional Grounds 4 p1
7203 - Constitutional Grounds 4 p2
7203 - Constitutional Grounds 4 p3
7203 - Constitutional Grounds 4 p4
7203 - Constitutional Grounds 5 p1
7203 - Constitutional Grounds 5 p2
7203 - Constitutional Grounds 5 p3
7203 - Constitutional Grounds 5 p4
7203 - Constitutional Grounds 5 p5
7203 - Constitutional Grounds 6
7203 - Contempt Finding Ag. Defendant's Counsel
7203 - Continuance p1
7203 - Continuance p2
7203 - Continuance p3
7203 - Conviction Required
7203 - Copies of Records p1
7203 - Copies of Records p2
7203 - Corporation Officer
7203 - Costs
7203 - Credit for Time Served
7203 - Criminal Contempt
7203 - Cross-Examination PART 1 p1
7203 - Cross-Examination PART 1 p2
7203 - Cross-Examination PART 1 p3
7203 - Cross-Examination PART 1 p4
7203 - Cross-Examination PART 1 p5
7203 - Cross-Examination PART 2
7203 - DefendantHaving Facts Available p1
7203 - DefendantHaving Facts Available p2
7203 - DefendantHaving Facts Available p3
7203 - Degree of Proof p1
7203 - Degree of Proof p2
7203 - Depositions
7203 - Different Statute Cited
7203 - Discovery, Scope Of
7203 - Documentary Evidence in Jury Room
7203 - Double Jeopardy 1 p1
7203 - Double Jeopardy 1 p2
7203 - Double Jeopardy 1 p3
7203 - Double Jeopardy 1 p4
7203 - Double Jeopardy 1 p5
7203 - Double Jeopardy 2 p1
7203 - Double Jeopardy 2 p2
7203 - Double Jeopardy 2 p3
7203 - Double Jeopardy 2 p4
7203 - Enhanced Sentence Sophisticated Means p1
7203 - Enhanced Sentence Sophisticated Means p2
7203 - Enhanced Sentence p1
7203 - Enhanced Sentence p2
7203 - Entrapment
7203 - Erroneous calculation of tax
7203 - Exclusion of Oral Testimony
7203 - Exercise Privilege-Exclusion from Courtroom
7203 - Expert Witness p1
7203 - Expert Witness p2
7203 - Expert Witness p3
7203 - Expert Witness p4
7203 - Extenuating Circumstances
7203 - Fact Finding p1
7203 - Fact Finding p2
7203 - Fact Finding p3
7203 - Fact Finding p4
7203 - Fact Finding p5
7203 - Failure of IRS to File Return
7203 - Failure to Assess Tax
7203 - Failure to Prosecute p1
7203 - Failure to Prosecute p2
7203 - Failure to Prosecute p3
7203 - Failure to Prosecute p4
7203 - Failure to Prosecute p5
7203 - Failure to Report Income 1 p1
7203 - Failure to Report Income 1 p2
7203 - Failure to Report Income 1 p3
7203 - Failure to Report Income 1 p4
7203 - Failure to Report Income 1 p5
7203 - Failure to Report Income 1 p6
7203 - Failure to Report Income 2 p1
7203 - Failure to Report Income 2 p2
7203 - Failure to Supply Information
7203 - False Return
7203 - Fictitious names
7203 - Fraud Case Procedures p1
7203 - Fraud Case Procedures p2
7203 - Fraud Case Procedures p3
7203 - Fraud Case Procedures p4
7203 - General Exception
7203 - Good Faith p1
7203 - Good Faith p2
7203 - Good Faith p3
7203 - Good Faith p4
7203 - Government Agent Prosecuting Claim
7203 - Grand Jury 1 p1
7203 - Grand Jury 1 p2
7203 - Grand Jury 1 p3
7203 - Grand Jury 1 p4
7203 - Grand Jury 1 p5
7203 - Grand Jury 2 p1
7203 - Grand Jury 2 p2
7203 - Hearsay Evidence p1
7203 - Hearsay Evidence p2
7203 - Hearsay Evidence p3
7203 - Hearsay Evidence p4
7203 - Hearsay Evidence p5
7203 - Hostility of the Court p1
7203 - Hostility of the Court p2
7203 - Hostility of the Court p3
7203 - Hypnosis
7203 - Identification
7203 - Ignorance of Law
7203 - Immunity p1
7203 - Immunity p2
7203 - Immunity p3
7203 - Impeachment p1
7203 - Impeachment p2
7203 - Improper Comment PART 1 p1
7203 - Improper Comment PART 1 p2
7203 - Improper Comment PART 1 p3
7203 - Improper Comment PART 1 p4
7203 - Improper Comment PART 1 p5
7203 - Improper Comment PART 2 p1
7203 - Improper Comment PART 2 p2
7203 - Improper Comment PART 2 p3
7203 - Improper Comment PART 2 p4
7203 - Improper Comment PART 2 p5
7203 - Improper Comment PART 3
7203 - Improper Question
7203 - Incrimination 1 p1
7203 - Incrimination 1 p2
7203 - Incrimination 1 p3
7203 - Incrimination 1 p4
7203 - Incrimination 1 p5
7203 - Incrimination 2 p1
7203 - Incrimination 2 p2
7203 - Incrimination 2 p3
7203 - Incrimination 2 p4
7203 - Incrimination 2 p5
7203 - Incriminaton Before Grand Jury p1
7203 - Incriminaton Before Grand Jury p2
7203 - Instructions to Jury 1 p1
7203 - Instructions to Jury 1 p2
7203 - Instructions to Jury 1 p3
7203 - Instructions to Jury 1 p4
7203 - Instructions to Jury 1 p5
7203 - Instructions to Jury 2 p1
7203 - Instructions to Jury 2 p2
7203 - Instructions to Jury 2 p3
7203 - Instructions to Jury 2 p4
7203 - Instructions to Jury 2 p5
7203 - Instructions to Jury 3 p1
7203 - Instructions to Jury 3 p2
7203 - Instructions to Jury 3 p3
7203 - Instructions to Jury 3 p4
7203 - Instructions to Jury 3 p5
7203 - Instructions to Jury 4 p1
7203 - Instructions to Jury 4 p2
7203 - Instructions to Jury 4 p3
7203 - Instructions to Jury 4 p4
7203 - Instructions to Jury 4 p5
7203 - Instructions to Jury 5 p1
7203 - Instructions to Jury 5 p2
7203 - Instructions to Jury 5 p3
7203 - Instructions to Jury 5 p4
7203 - Instructions to Jury 5 p5
7203 - Instructions to Jury 6 p1
7203 - Instructions to Jury 6 p2
7203 - Instructions to Jury 6 p3
7203 - Instructions to Jury 6 p4
7203 - Instructions to Jury 6 p5
7203 - Instructions to Jury 7 p1
7203 - Instructions to Jury 7 p2
7203 - Instructions to Jury 7 p3
7203 - Instructions to Jury 7 p4
7203 - Instructions to Jury 7 p5
7205 Convictions p1
7205 Convictions p2
7205 Convictions p3
7205 Convictions p4
7205 Convictions p5
7205 Double Jeopardy
7205 Exemption Certificates
7205 Hostility of the Court
7205 Indictment
7205 Information
7205 Intent to Deceive Lacking
7205 Right to Counsel
7205 Trial, Timeliness
7205 Variance
7205 Venue
7205 Willfulness
7206 False Returns 1 p1
7206 False Returns 1 p2
7206 False Returns 1 p3
7206 False Returns 1 p4
7206 False Returns 1 p5
7206 False Returns 2 p1
7206 False Returns 2 p2
7206 False Returns 2 p3
7206 False Returns 2 p4
7206 False Returns 2 p5
7206 False Returns 3 p1
7206 False Returns 3 p2
7206 False Returns 3 p3
7206 False Returns 3 p4
7206 Basis for Allegation of Fraud
7206 Concealment of Assets p1
7206 Concealment of Assets p2
7206 Conspiracy 1 p1
7206 Conspiracy 1 p2
7206 Conspiracy 1 p3
7206 Conspiracy 1 p4
7206 Conspiracy 2 p1
7206 Conspiracy 2 p2
7206 Constitutionality p1
7206 Constitutionality p2
7206 Constitutionality p3
7206 Costs
7206 Disclosure of Returns
7206 Estoppel p1
7206 Estoppel p2
7206 Estoppel p3
7206 Evidence 1 p1
7206 Evidence 1 p2
7206 Evidence 1 p3
7206 Evidence 1 p4
7206 Evidence 1 p5
7206 Evidence 2 p1
7206 Evidence 2 p2
7206 Evidence 2 p3
7206 Evidence 2 p4
7206 Evidence 2 p5
7206 Evidence 3 p1
7206 Evidence 3 p2
7206 Evidence 3 p3
7206 Evidence 3 p4
7206 Evidence 3 p5
7206 Evidence 4 p1
7206 Evidence 4 p2
7206 Evidence 4 p3
7206 False Claims Against U.S.
7206 False Documents p1
7206 False Documents p2
7206 False Statements in Return 1 p1
7206 False Statements in Return 1 p2
7206 False Statements in Return 1 p3
7206 False Statements in Return 1 p4
7206 False Statements in Return 1 p5
7206 False Statements in Return 2 p1
7206 False Statements in Return 2 p2
7206 False Statements in Return 2 p3
7206 False Statements in Return 2 p4
7206 False Statements in Return 3 p1
7206 False Statements in Return 3 p2
7206 False Statements in Return 3 p3
7206 False Statements in Return 3 p4
7206 False Statements in Return 3 p5
7206 False Statements in Return 4 p1
7206 False Statements in Return 4 p2
7206 False Statements in Return 4 p3
7206 False Statements in Return 4 p4
7206 False Statements in Return 4 p5
7206 False Statements in Return 5 p1
7206 False Statements in Return 5 p2
7206 False Statements in Return 5 p3
7206 False Statements in Return 5 p4
7206 False Statements to IRS Agents p1
7206 False Statements to IRS Agents p2
7206 False Statements to IRS Agents p3
7206 Forgery
7206 Grand Jury
7206 Guilty Plea p1
7206 Guilty Plea p2
7206 Immunity
7206 Indictment 1 p1
7206 Indictment 1 p2
7206 Indictment 1 p3
7206 Indictment 1 p4
7206 Indictment 1 p5
7206 Indictment 2 p1
7206 Indictment 2 p2
7206 Instructions to Jury 1 p1
7206 Instructions to Jury 1 p2
7206 Instructions to Jury 1 p3
7206 Instructions to Jury 1 p4
7206 Instructions to Jury 1 p5
7206 Instructions to Jury 2 p1
7206 Instructions to Jury 2 p2
7206 Instructions to Jury 2 p3
7206 Instructions to Jury 2 p4
7206 Instructions to Jury 2 p5
7206 Instructions to Jury 3 p1
7206 Instructions to Jury 3 p2
7206 Instructions to Jury 3 p3
7206 Instructions to Jury 3 p4
7206 Instructions to Jury 3 p5
7206 Jury Verdict Disregarded
7206 Jury p1
7206 Jury p2
7206 Jury p3
7206 Lesser Included Offense p1
7206 Lesser Included Offense p2
7206 Motion For Continuance
7206 Motion to Sever
7206 Motion to Transfer
7206 Motion to Vacate Sentence
7206 Net Worth Statement
7206 Offer in Compromise
7206 Perjury
7206 False or Fraudulent Returns p1
7206 False or Fraudulent Returns p2
7206 False or Fraudulent Returns p3
7206 False or Fraudulent Returns p4
7206 False or Fraudulent Returns p5
7206 Prior Convictions
7206 Prior Law
7206 Probation
7206 Prosecutor's Comment p1
7206 Prosecutor's Comment p2
7206 Restitution
7206 Right to Counsel p1
7206 Right to Counsel p2
7206 Sentence p1
7206 Sentence p2
7206 Sentence p3
7206 Sentence p4
7206 Sentencing Guidelines 1 p1
7206 Sentencing Guidelines 1 p2
7206 Sentencing Guidelines 1 p3
7206 Sentencing Guidelines 1 p4
7206 Sentencing Guidelines 1 p5
7206 Sentencing Guidelines 2 p1
7206 Sentencing Guidelines 2 p2
7206 Sentencing Guidelines 2 p3
7206 Statute of Limitations p1
7206 Statute of Limitations p2
7206 Venue
7206 Willfulness Defined p1
7206 Willfulness Defined p2
7206 Willfulness Defined p3
7206 Willfulness Defined p4
7207 Conviction
7207 Defenses
7207 Motion to Dismiss
7207 Sentencing
7207 Willfully Defined
7210 Willful Failure to Obey Summons
7212 Assault
7212 Bribery
7212 Constiutionality
7212 Indictment
7212 Interference p1
7212 Interference p2
7212 Interference p3
7212 Interference p4
7212 Jury Instructions
7212 Rescue of Seized, Levied Property p1
7212 Rescue of Seized, Levied Property p2
7212 Sentence p1
7212 Sentence p2
7212 Statute of Limitations
7212 Suppresion of Evidence
7215 Constitutionality
7215 Conviction
7215 Corporation
7215 Defenses
7215 Evidence
7215 Intent
7215 Speedy Trial
7216 Consent
7216 Preparer Defined
7216 Scope of Statute
7217 IRS Employees

 

Admissibility 3 Page3

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In proof of criminal tax evasion the defendant's intent is a necessary element. Evidence which is relevant and otherwise admissible to determine willfulness is not made inadmissible merely because the act or omission offered occurred shortly after the returns in question were filed. United States v. Northern, 329 F. 2d 794 (6th Cir. 1964), cert. den., 377 U. S. 991 (1964). On the issue of willfulness the prompt correction of errors by filing amended returns and by making tax payments is relevant. See Berkovitz v. United States [54-1 USTC ¶9425], 213 F. 2d 468, 472 (5th Cir. 1954) and Heindel v. United States [45-2 USTC ¶9372], 150 F. 2d 493, 497 (5th Cir. 1945). Conversely, where a defendant has an opportunity to correct his return, and is put on notice that such correction is necessary, his failure to take steps to file an amended return is a proper matter for a jury to consider in determining intent or lack of intent. In United States v. Alker [58-2 USTC ¶9829], 260 F. 2d 135, 157 (3rd Cir. 1958), it was said:

The law is well settled that prior and subsequent acts whether they portray criminality or not when substantially similar to the subject matter forming the basis of the indictment are probative to negate the inference that the crucial conduct was unintentional, innocent, inadvertent or the product of a mistake.

We reject this assigned error for a second and entirely different reason. When Hill testified in his own behalf, he substantially repeated the accountant's testimony which is complained about in this assignment. If there was any error in the admission of the accountant's testimony, it was cured by Hill's testimony to the same facts. See Barshop v. United States [51-2 USTC ¶9504], 192 F. 2d 699 (5th Cir. 1951), cert. den. 342 U. S. 920 (1952). Thus we find no prejudicial error in the admission of the accountant's testimony, or the trial court's refusal to withdraw it from the jury's consideration.

Admission of Minutes of Corporate Meetings

(Assignments No. 5 and 6)

Hill has assigned as separate errors the admission into evidence of the minutes of two meetings of the corporate Board of Directors, which meetings were held after the returns in question had been filed. The first meeting was held on January 22, 19 59. The second meeting took place on March 24, 19 59. The minutes show that Hill was present and participated in both meetings.

At the first meeting the corporation voted to redeem White's stock. White thereupon resigned as president. The Board then elected Hill to succeed White. At the second meeting the corporation entered into an agreement with White, whereby White was to receive a percentage of the gross amount on all future contracts entered into by the corporation until January 31, 19 62. The consideration from White therefor was his prior and future service to the corporation as a management counsellor.

We agree with Hill's contention that the minutes of both meetings were irrelevant to the charges against him. However no prejudicial error has been made to appear by the reception of these minutes.

No reversible error has been made to appear as to any of the assignments. The judgment of the district court is therefore.

AFFIRMED.

1 The Court:

"Just a moment.

"Members of the jury, the Court has been thinking about this witness' answer to the question, what did Mr. White tell him on the telephone that he answered and testified to, doesn't have any bearing whatever on the Government's case against this defendant Hill, he didn't mention Hill's name, and that is absolutely immaterial, and therefore I am going to sustain the objection made to it and instruct you to completely put it out of your mind, disregard it." (R. 198.)

 

 

[66-1 USTC ¶9265] United States of America , Appellee v. Pearl V. Williams, Appellant

(CA-4), U. S. Court of Appeals, 4th Circuit, No. 10,080, 355 F2d 516, 1/26/66

[1954 Code Sec. 7201]

Crimes: Evidence: Admissibility upheld.--The taxpayer contended that certain evidence should have been excluded because it tended to show that she had committed an offense in addition to the tax evasion of which she was convicted. Held: Since the evidence in question was highly relevant, it was not made inadmissible by its tendency to show that the taxpayer had committed an offense other than tax evasion.

Ronald T. Osborn, Assistant United States Attorney, Thomas Kenney, United States Attorney, Baltimore, Md., for appellee. R. Carleton Sharretts, Jr., Munsey Bldg., Baltimore , Md. , for appellant.

Before HAYNSWORTH, Chief Judge, and BOREMAN and BRYAN, Circuit Judges.

PER CURIAM:

Convicted of evasion of income taxes, the defendant complains of the admission of testimony tending to prove that she was the proprietress of a brothel. She had reported income from rentals and from race horses which she owned, and the testimony about her endeavors in aid of the professional activities of the young ladies who resided in her apartment house was offered to show an independent source of income in support of the net worth computations which had been introduced. As such, it was highly relevant, and it was not made inadmissible because of its tendency to prove her guilty of crimes other than tax evasion.

It is complained that the testimony does not show that patrons of the establishment remitted their fees directly to the defendant. An undercover agent testified that he was instructed by the defendant to pay the girl, who, by the defendant's prearrangement, was about to become his temporary partner. It may be inferred, however, that financial gain did attend her performance of her role as mistress of the place. Moreover, there was testimony that she had sought to explain her failure to report such income by fear that it would involve her in collateral difficulties.

We conclude that receipt of this testimony was unexceptionable. Affirmed.

 

 

[65-2 USTC ¶9532] United States of America , Plaintiff-Appellee v. Fritz M. Cox, Defendant-Appellant

(CA-6), U. S. Court of Appeals, 6th Circuit, No. 16153, 348 F2d 294, 7/6/65, Affirming and vacating unreported District Court

[1954 Code Sec. 7201]

Criminal evasion: Evidence: Instructions to jury.--In a trial for criminal evasion, it was not error for the Court to admit testimony of the taxpayer's accountant, who prepared his returns. Nor was it error for the Court to charge the jury in connection with the taxpayer's claim that he acted on advice of his accountant to make full disclosure of all pertinent facts. The Court did not err in failing to give the jury a special instruction on negligence.

[1954 Code Sec. 6531]

Statute of limitations: Criminal evasion.--Since the statute of limitations on the criminal evasion charge for 1956 in count 1 became effective on April 15, 19 63 and was not tolled by a complaint filed January 8, 19 63, the charge was barred by the limitations period. Judgment of conviction on count 1 vacated.

[1954 Code Sec. 7206]

False statements: Intent to evade tax: Understatement of income.--On counts 4 and 5, charging the taxpayer with filing false statements, the taxpayer argued that it was error for the court to instruct that intent to evade payment of taxes ws not necessary to convict. Since convictions on counts 2 and 3 were affirmed, the court deemed it unnecessary to pass on this issue.

Clyde W. Key, Key & Lee, Bank of Knoxville Bldg., Knoxville , Tenn. , for appellant. Louis F. Oberdorfer, Assistant Attorney General, Lee A. Jackson, Joseph M. Howard, John M. Brant, Department of Justice, Washington, D. C. 20530, John H. Reddy, United States Attorney, G. Wilson Horde, Assistant United States Attorney, Federal Bldg., Knoxville, Tenn., for appellee.

Before CECIL and PHILLIPS, Circuit Judges, and MATHES, Senior District Judge. *

CECIL, Circuit Judge.

This is an appeal from a judgment of conviction in the United States District Court for the Eastern District of Tennessee, Northern Division, on a five-count indictment involving income tax evasion. The first three counts charge the defendant-appellant with evading income taxes for the years 1956, 1957 and 1958, respectively, in violation of Section 7201, Title 26, U. S. C. The fourth count charges the defendant-appellant with subscribing to his tax return for the year 1957 when he did not believe it to be true as to every material matter, in violation of Section 7206 (1), Title 26, U. S. C. The fifth count charges the same offense for the year 1958. These last two counts allege an understatement of gross receipts as distinguished from an alleged understatement of taxable income in the first three counts.

Fritz M. Cox, the defendant-appellant herein, to whom we will refer as defendant, had for many years operated a wholesale distributorship for the products of Tom Huston Peanut Company. This business was started as a partnership in 1936 but after about a year the defendant bought the interest of his partner. E. C. Wynegar, a public accountant, had prepared the defendant's tax returns since the inception of the business. Mr. Wynegar prepared the returns now in question in the criminal proceeding before us. He instructed the defendant to deposit all of his gross receipts in a bank account and to pay all expenses by check. This would constitute a simple bookkeeping system from which the accountant could prepare the defendant's tax returns. This system was continued until some time in 1947. At this time, the defendant began to record his gross receipts in a sales account ledger. He testified that this was on the advice of Mr. Wynegar and that he would no longer have to deposit all of his receipts. With the use of this ledger, he could pay bills and living expenses out of the cash drawer. On his direct-examination, he claimed that he used the sales recorded in this ledger for making out his tax returns. The defendant continued to disclose his income to Mr. Wynegar through the bank-deposit-check-stub method.

[Admissibility]

One of the assignments of error is that the court erred in denying the defendant's motion for judgment at the close of all of the evidence and in denying his motion for judgment notwithstanding the verdict after the trial. In support of this assignment of error, it is claimed that the testimony of Mr. Wynegar should be disregarded as having no evidentiary value.

When the defendant first learned that his tax returns were under suspicion by the revenue agents, he employed Mr. Severance, a certified public accountant, to examine his income tax returns and ascertain whether he owed any additional tax. Amended returns were prepared by Mr. Severance and the additional taxes represented thereby were paid by the defendant. Mr. Severance went to see Mr. Wynegar and secured from him an affidavit. It is claimed that if the facts alleged in this affidavit were true, the defendant would be completely exonerated.

Upon the trial, Mr. Wynegar repudiated the facts of this affidavit and explained that he was willing to help a friend and signed it for that purpose. After signing this affidavit, Mr. Wynegar was called to the office of Special Agent Leibowitz. There Agent Leibowitz learned of the affidavit. The agent called Mr. Wynegar to his office a second time and warned him of his constitutional right to have a lawyer. He further warned him that anything he said could be used against him and that he could decline to answer any questions. With this warning, Mr. Wynegar attended a third conference with Agent Leibowitz accompanied by a lawyer. He attended a fourth conference without his lawyer, at which time he signed an affidavit which had been prepared for him by Leibowitz. Mr. Leibowitz told him then "You no longer need a lawyer." At the trial Mr. Wynegar testified that he knew nothing about the sales account ledger and that he had never changed his instructions concerning the deposit of all receipts and the payment of bills by checks. He further testified that he had continued to make the tax returns from the bank deposits and check stubs given to him by the defendant.

Counsel for the defendant concedes that if this testimony was believable the case was properly submitted to the jury. Counsel claims that without this testimony there is insufficient evidence to support a conviction. We cannot agree with this contention. There is ample evidence in the admissions of the defendant to Agent Leibowitz and in his own direct and cross-examination to warrant the submission of the case to the jury. Furthermore, much of the testimony of the defendant corroborates the testimony of Mr. Wynegar given at the trial. There is sufficient support for Mr. Wynegar's testimony that it cannot be said to be without probative value.

[Jury Instructions]

The appellant objects to the instructions of the trial judge in connection with the claim that he acted on advice of his accountant. The objection is addressed in particular to the language: ". . . but also that the taxpayer make a full disclosure to that person of all pertinent facts, . . ." It is argued that the taxpayer should only be required to disclose such facts as he believes to be pertinent or material. The full statement to which counsel for the appellant objects is taken out of the full context of the trial judge's instruction on this point. Taken as a whole, the charge on the subject is correct and not misleading. In part on this subject the court said:

"However, effectiveness of this defense requires not only that the advice be sought from a person honestly believed to be competent to give advice, but also that the taxpayer make full disclosure to that person of all pertinent facts, in order that the advice given may be in response to the true situation and not to one from which material facts have been withheld."

The pertinent part of this instruction is the withholding of material facts. There is strong evidence in this case to the effect that material facts were withheld from the accountant and it is doubtful that it was necessary to give the instruction at all. There is evidence that the appellant had bank accounts which were not disclosed to the accountant. Into one of these accounts he made weekly deposits of receipts of the business. Another one was called a reserve account into which he deposited "kick backs" on invoices from the Tom Huston Peanut Company. The appellant could not have honestly believed that this information was not pertinent and material for disclosure to one making out an income tax return.

Finally, we conclude that it is essential for one to disclose all of the facts concerning his income in order to rely on advice of his counsel or accountant. United States v. Baldwin [62-2 USTC ¶9644], 307 F. 2d 577, 579, C. A. 7, cert. den. 371 U. S. 947; Bisno v. United States , 299 F. 2d 711, 720, C. A. 9, cert. den. 370 U. S. 952, rehear. den. 371 U. S. 855; United States v. McCormick [3 USTC ¶1187], 67 F. 2d 867, 870, C. A. 2.

Another objection made by counsel for the defendant is that the court declined to give to the jury his special request concerning negligence. Willfulness and intent were very adequately defined. In defining willfulness and intent, the court said, in part:

"The attempt to evade or defeat the tax must be a willful attempt. That is to say, it must be an attempt knowingly made with the specific intent to keep from the government a tax imposed by the income tax laws which it was the duty of the taxpayers to pay to the government.

"In other words, the attempt must be knowingly made with the bad purpose of seeking to defraud the government of some substantial amount of income tax lawfully due from the taxpayers.

"Specific intent must be proved by independent evidence and cannot be inferred from the mere understatement of income. Willfulness must include an evil motive and want of justification in view of all the circumstances."

Willfulness is the very opposite of negligence and since the court charged that the act of evasion must be intentional and willful, negligence was necessarily excluded.

In connection with the instructions on counts four and five, the court made a distinction between willfulness and negligence:

"The word 'willfully' as used in this statute means deliberately and with knowledge, as distinguished from something which is merely careless, inadvertent or negligent."

This distinction would apply equally to the statute involved in counts one, two and three.

The defendants' explanation was that he did not know that he did not report all of his income to Mr. Wynegar. He did not claim that there was a failure to report income as a result of negligence. The evidence would tend to show a studied plan of evasion of income tax rather than a failure as a result of negligence of either the defendant or Mr. Wynegar.

We find no error in the assignments hereinabove discussed. The judgment of conviction on counts two and three is affirmed.

[Statute of Limitations]

It is claimed on behalf of the defendant that the charge of income tax evasion for the year 1956, as alleged in the first count of the indictment, is barred by the six-year statute of limitations. (Section 6531, Title 26, U. S. C.) The statutory bar became effective on April 15, 19 63, unless the statute was tolled by a complaint filed before the United States Commissioner, on January 8, 19 63.

The complaint reads, in part: ". . . that on or about the 15th day of January, 1956, . . . Fritz M. Cox did unlawfully and willfully attempt to evade and defeat the income taxes due and owing by him to the United States of America for the calendar year 1956, . . ." This does not clearly state the offense charged in the first count of the indictment. The judgment of conviction is vacated and the District Court is instructed to enter judgment for the defendant on this count.

[False Statements]

Counsel for the defendant objects to the instruction of the court that intent to evade the payment of tax was not necessary for a conviction under counts four and five of the indictment. Section 7206(1), Title 26, U. S. C., upon which the charges are based, provides in part: "Any person who . . . (w)illfully makes and subscribes any return . . . which he does not believe to be true and correct as to every material matter . . . shall be guilty of a felony. . . ."

Counsel argues that since the false statement charged in these counts is an understatement of gross income, in order to convict, the government must prove that the defendant willfully and knowingly made a false statement in his income tax return which defrauded the government of income tax revenue.

No clear authority decisive of this question has been cited to us nor have we found any. The sentence of one year and one day is concurrent on all counts. Since the convictions on counts two and three are affirmed, we find it unnecessary to pass on the validity of the convictions on counts four and five. United States v. Cardillo, 316 F. 2d 606, C. A. 2, cert. den. 375 U. S. 822, rehear. den. 375 U. S. 926; Moore v. United States , 330 F. 2d 842, C. A. D. C.; Carroll v. United States , 326 F. 2d 72, C. A. 9; United States v. Thomas, 303 F. 2d 561, C. A. 6. The sentence being short, it is apparent that no prejudice will result to the defendant in his consideration for parole as may result in some cases. See United States v. Leather, 271 F. 2d 80, C. A. 7, cert. den. 363 U. S. 831; Audett v. United States , 265 F. 2d 837, 848, C. A. 9, cert. den. 361 U. S. 815, rehear. den. 361 U. S. 926; and Hibdon v. United States , 204 F. 2d 834, 839, C. A. 6.

[Judgment of Court]

Judgment will be entered in conformity with this opinion.

* Sitting by designation from the Southern District of California.

 

 

[64-1 USTC ¶9261]Herbert F. Lessmann and Mildred Lessmann, Petitioners v. Commissioner of Internal Revenue, Respondent Herbert F. Lessmann, Petitioner v. Commissioner of Internal Revenue Respondent

(CA-8), U. S. Court of Appeals, 8th Circuit, Nos. 17,384, 17,385, 327 F2d 990, 2/19/64, Affirming Tax Court, 21 TCM 1339, CCH Dec. 25,727(M)

[1939 Code Secs. 41 and 293(b)--similar to 1954 Code Secs. 441, 446(b) and 6653(b)]

Reconstruction of income: Bank deposits and expenditures method: Inadequate records: Substantial understatements of income: Fraud.--In a case where the taxpayer underestimated large amounts of income, kept wholly inadequate books, and gave false information to his bookkeeper, the Court of Appeals upheld the Tax Court's holding assessing penalties for fraud against the taxpayer for the taxable years 1945-1949 and 1952-1953, based on the Commissioner's reconstruction of the taxpayer's income under the bank deposits and expenditures method. In addition, there was substantial evidence to support the determination of a deficiency in income tax for the year 1954.

[Tax Court Rule 27]

Tax Court Rules: Rule 27: Denial of a motion for a continuance: No abuse of discretion.--The Court of Appeals held that there was no abuse of discretion where the Tax Court denied the taxpayer's motion for another continuance since the case had been pending for more than two years and the taxpayer already had been granted two previous continuances.

[1954 Code Sec. 7605(b)]

Examination of books: Time and place: Failure to raise objections in Tax Court.--Where the taxpayer failed to object at his trial in the Tax Court that the Commissioner had inspected his books a second time without first giving notice as required by Code Sec. 7605(b), the court held that the taxpayer could not raise this issue for the first time on appeal.

[1954 Code Sec. 7203]

Admissibility of evidence: Nonprejudicial error.--The admission of evidence was not prejudicial to the taxpayer where the Court of Appeal found that none of the evidence objected to had any decisive bearing on the Tax Court's ultimate findings.

Ennis McCall, Newton Home Savings & Loan Bldg., Newton, Iowa (Brierly, McCall & Girdner, Newton Home Savings & Loan Bldg., Newton, Iowa, on brief) for petitioners. Norman H. Wolfe, Department of Justice, Washington, D. C. 20530 (Louis F. Oberdorfer, Assistant Attorney General, Lee A. Jackson, Harry Baum, J. Edward Shillingburg, Tax Division, Department of Justice, Washington, D. C. 20530, on brief) for respondent.

Before VAN OOSTERHOUT, MATTHES and MEHAFFY, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge:

In the two cases here before us upon timely petitions for review, the Tax Court [CCH Dec. 25,727(M)] (opinion not reported) upheld the Commissioner's determination of income tax deficiencies, fraud penalties and certain other penalties. Case No. 17385 relates to individual tax returns filed by Herbert F. Lessmann for the fiscal years ending January 31, 19 45, 1946, 1947, and 1948. Case No. 17384 covers joint returns filed by Herbert F. Lessmann and his wife Mildred covering the fiscal years ending January 31, 19 49, 1952, 1953 and 1954. 1

Herbert F. Lessmann, whom we shall refer to as taxpayer, conducted a business as sole proprietor under the name of Lessmann Manufacturing Company in Des Moines , Iowa . He invented, developed, manufactured and sold power loaders and has been so engaged for many years. He assembled the loader on an Oliver tractor, but since 1947 he has assembled the complete unit--tractor and loader. The employees in the business numbered from 16 to 30. Some of the loader units were sold direct to customers by the taxpayer and in such instances the list price was usually charged and collected. Other units were sold through distributors who were usually allowed a 22% commission which ordinarily was deducted from the purchase price. The taxpayer sold his business in December, 1952, for $259,200.

It would serve little purpose to set out in detail the vast volume of conflicting evidene contained in this record. Much of the pertinent evidence is set forth in the Tax Court's opinion. We have carefully examined and considered the record and will refer to some of the evidence during the course of this opinion.

The Tax Court determined deficiencies in income and additions 2 to tax as follows:

"Deficiency Additions to tax.

                                            Section
Fiscal                  Income             293(b)
Year                       Tax          1939 Code
1945 ......         $26,051.91         $13,025.96
1946 ......          30,254.51          15,127.26
1947 ......           9,030.56           4,515.28
1948 ......           3,780.26           4,694.61
1949 ......           1,942.88             971.44
1952 ......           6,873.85           3,436.93
1953 ......          18,776.96           8,988.48
1954 ......           2,882.10             None"

 

Taxpayer relies upon the following points for reversal:

I. The Government failed to meet its burden of proving by clear and convincing evidence that part of the deficiencies in each of the fiscal years 1945, 1946, 1947, 1948, 1949, 1952 and 1953, was due to fraud with intent to evade tax.

II. There is no substantial evidence to support the determination of a deficiency in income tax for the fiscal year 1954.

III. The Tax Court absued its discretion in denying taxpayer's motion for a continuance.

IV. The Tax Court erred in permitting the Government to audit the 1949 return which had been previously audited.

V. The Tax Court erred in ruling upon the admissibility of certain evidence.

I. Taxpayer insists the Government has failed to establish fraud by clear and convincing evidence. The issue of fraud on the part of the taxpayer is of importance in this case in two respects: 1. The returns for the fiscal years 1945 through 1949 and 1951 are barred by §275 I. R. C. 1939 unless fraud is shown as provided by §276(A). 2. Under §293(b) I. R. C. 1939, the 50% fraud penalty is imposed "If any part of any deficiency is due to fraud with intent to evade tax. . . ."

It is clear that the burden is upon the Government to establish fraud both for the purpose of avoiding the bar of the statute of limitations and for justifying the imposition of fraud penalty with respect to each taxable year. §1112 I. R. C. 1939; §7454(a) I. R. C. 1954; Kisting v. Commissioner, 8 Cir., [62-1 USTC ¶9209] 298 F. 2d 264, 269; Klassie v. United States, 8 Cir., [61-1 USTC ¶9389] 289 F. 2d 96, 99.

Courts have often stated that the Government must establish fraud by clear and convincing evidence. Klassie v. United States, supra; Gunn v. Commissioner, 8 Cir., [57-2 USTC ¶9888] 24 F. 2d 359, 365; 10 Mertens, Law of Federal Income Taxation, §55.16.

The question of whether a substantial understatement of income is due to fraud ordinarily presents an issue of fact. Fraud is never presumed. Fraud may be established by direct or circumstantial evidence. Taxpayer's failure to overcome the presumption of correctness of the Commissioner's determination of a tax deficiency will not, standing alone, support a finding of fraud. However, a consistent pattern of underreporting large amounts of income over a period of years is substantial evidence bearing upon an intent to defraud, particularly in situations where no satisfactory explanation for such understatement is forthcoming. Holland v. United States [54-2 USTC ¶9714], 348 U. S. 121, 139; Klassie v. United States , supra; Schwarzkopf v. Commissioner, 3 Cir., [57-2 USTC ¶9816] 246 F. 2d 731, 734; Owens v. United States, 8 Cir., [52-2 USTC ¶9376] 197 F. 2d 450, 451.

The clearly erroneous standard applies to findings made by the Tax Court. Findings supported by substantial evidence on the record as a whole which are not against the clear weight of the evidence or induced by an erroneous view of the law will not be disturbed upon appeal. Probative evidence, direct as well as circumstantial, shall be considered in applying the clearly erroneous standa