Conviction
Required
7203:
Willful Failure to File Return, Supply Information, or Pay Tax:
Conviction Required
[2 USTC
¶804]Bateman-Switzer Company, a Corporation, Plaintiff v. W. C. Whaley
as Collector of Internal Revenue of the United States for the District
of Montana, and the United States of America, Defendants
District
Court of the United States for the District of Montana, No. 26, 53 F2d
1071, Decided October 10, 1931Penalty imposed by the 1917 Act for filing
a false or fraudulent return may not be collected where there has been
no conviction of the offense for which the penalty is imposed.
Cooper,
Stephenson & Hoover, of
Great Falls
,
Mont.
, for plaintiff. W. D. Rankin, U. S. Atty., of
Helena
,
Mont.
, for defendants.
Opinion
PRAY,
J.:
This
is an action for the recovery of $1,659.46 which was assessed and
collected as a penalty, and paid under protest by plaintiff on the
ground that defendant was without authority in law to impose such a
penalty under the facts here. The only issue is upon the interpretation
of the statute involved, which reads as follows:
"That
whoever fails to make any return required by this act or the regulations
made under authority thereof within the time prescribed or who makes any
false or fraudulent return, and whoever evades or attempts to evade any
tax imposed by this act or fails to collect or truly to account for and
pay over any such tax, shall be subject to a penalty of not more than
$1000, or to imprisonment for not more than one year, or both, at the
discretion of the Court, and in addition thereto, a penalty of double
the tax evaded, or not collected, or accounted for and paid over, to be
assessed and collected in the same manner as taxes are assessed and
collected, in any case in which the punishment is not otherwise
specifically provided." (Section 1004, Title X., Revenue Act of
October 3, 1917).
Plaintiff
contends that until the person accused is convicted of one or more of
the offenses above enumerated there is no basis for the imposition of
the additional penalty. The position of the defendants is that where a
false or fraudulent return has been filed a conviction is not a
condition precedent to the assessment and collection of the penalty; in
other words, that the Commissioner may find him guilty and impose the
penalty, irrespective of the outcome of the trial of the accused in
court by a jury. The mere statement of the propositions of the
respective parties ought to enable one familiar with the interpretation
of ordinary criminal statutes to answer the question without elaborate
argument or citation of authorities. The language of the section itself
would clearly indicate that before anything can be done the person
accused must be formally charged with one or more of the offenses, and
brought to trial and convicted as in other cases of like character;
after that would follow the judgment of the court imposing a fine or
imprisonment, or both, "and in addition thereto a penalty of double
the tax evaded * * *." Here as in other criminal cases the accused
is presumed to be innocent of the charge preferred against him until he
is found guilty by a jury in the usual manner, and if he is convicted he
incurs, by operation of law, a double penalty, that is to say a penalty
of double the tax evaded, etc.
I
have carefully examined the briefs and authorities cited by counsel and
shall have to admit that the five lawyers whose names appear on the
brief for defendants have made an able and ingenious argument in support
of their views, but the language of the statute in question is so plain
that one can not fail to understand the intent of Congress in enacting
it, and no rules or regulations or custom of the Bureau heretofore
observed should prevent the Court being governed by the ordinary rules
of interpretation of statutes. Accordingly judgment will be entered for
the plaintiff herein with costs.