Petition — Carlson v. United States

Supreme Court, U. S.

FILED

AUG 6 1980

IN THE SUPREME COURT OF THE UNSSOEMSL ROOMS JR, CLERK |

80-191

October Term, 19806.

No.

Brian A. Carlson,

Petitioner,

Vv.

United States of America.

KREKKKKKEKEKEKKKKEKEKEKERKEKKKKKKEKKKKKKKKKKEE

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

KEKKKKKEKKEKEKEKEKEKKEKKKEEKKKKEKKKKKEKKKEKKEE

PETITION FOR WRIT OF CERTIORARI

KEKKEKEKKEKKKKKEKEKEKKKEKKEKEKKKEKKKKKKEKKER

Peter R. Stromer

904 Community Bank Bldg.

111 W. St. John Street

San Jose, CA 95113

QUESTIONS PRESENTED

1. In light of the decisions of this

Court in United States v. Sullivan, 274

U.S. 259 (1927), and Garner v. United

States, 424 U.S. 648 (1976), can the

Petitioner, who filed a tax return and

claimed the fifth amendment privilege

against compulsory self-incrimination with

regard to questions on the return, be de-

nied the benefit of the privilege where

the court of appeals found that the ques-

tions he refused to answer produced a

substantial threat of self-incrimination?

2. Was the court of appeals, in re-

liance on this Court's decision in

California v. Byers, 402 U.S. 424 (1971),

correct in balancing the need for public

revenue collection by a system of self-

reporting against the Petitioner's fifth

amendment privilege and denying the

Petitioner the benefit of the privilege?

-j-

<

TABLE OF CONTENTS

Questions Presented .....-««.-.

Table of Authorities . * . . . * ° .

Pn [PEAry 80 «6 «© ee 0 8 6 8 @

arta a fl lw fle

Constitutional and Statutory

peewaemnone Inwolved .<«.<«-«+e¢e.

Statement of the Case ...... .

Reasons for Granting the Writ...

I. One of the issues raised by

this case, to wit, what ques-

tions on a tax return may a

taxpayer refuse to answer by

claiming the fifth amendment

privilege against compulsory

self-incrimination when he

actually files a return, was

specifically reserved by this

Court in United States v.

Sullivan, 274 U.S. 259, 263

. The Petitioner

claimed the privilege on his

return in the manner speci-

fied by the dictum of this

Court in Sullivan, supra.

Nevertheless, the court of

appeals held that he was

not entitled to claim the

oe SE ee ee ee ee ee ee

oli a

II. The court of appeals, in

holding that the Petitioner

was not entitled to claim

the fifth amendment privi-

lege on his tax return, /

balanced the need for public

revenue collection by a

system of self-reporting

against the Petitioner's

privilege against compulsory

self-incrimination. Such

a balancing approach has

never been applied by this

Court in a case such as this

and is a serious matter for

this Court's consideration

Since the application of

such a balancing test in-

evitably results in a sub-

stantial impairment of

taxpayer's fifth amendment

rights. In the instant

case, the Court of appeals

use of this balancing test

resulted in the absolute

denial to the Petitioner of

his fifth amendment privilege

against compulsory self-

inoriminatiGn 6-8 Ws \\e 4% 10's 9

ConGiuseiog/ is 2s sia «26h 6 6

Appen@ioges ss 4s 64 2s © 3 se OR

Opinion of the United States

Court of Appeals for the Ninth

Circuit Finding No Error

-iii-

Order of the United States

Court of Appeals for the

Ninth Circuit Entering

Judgment and Affirming

The Conviction

Memorandum of Opinion of the

United States District Court

for the Northern District of

California

Order of the United States

District Court for the

Northern District of

California

-iv-

TABLE OF AUTHORITIES

Cases:

California v. Byers Se a

U.S. =

Garner v. United States, ..

U.S.

United States v. Carlson, .

617 F.2ag 518 (9th Cir. 1980)

United States v. Sullivan, .

U. *

United States v. Washington,

431 U.S. 181 (1977)

Constitutional Provisions:

U.S. Const. amend. V.ss e

Statutes:

26 U.S.C. § 7203 (1954) ..

26 U.S.C. § 7205 (1954) ..

28 U.S.C. § 1254 (1) (1966)

Pages

17, 18,

2, 12, 14

19

2, ll, 14

1, 8, 15

passim

20

passim

Ae 2 9

3, 4, 12

15, 16

2

Petitioner, Brian A. Carlson, prays

that a writ of certiorari issue to review

the judgment and opinion below of the

United States Court of Appeals for the

Ninth Circuit entered in this proceeding

on May 8, 1980, affirming Petitioner's

conviction under 26 U.S.C. § 7203.

OPINION BELOW

The opinion of the United States

Court of Appeals for the Ninth Circuit

is reported in United States v. Carlson,

617 F.2d 518 (9th Cir. 1980), and appears

in the appendix hereto. No published

opinion was rendered by the United States

District Court for the Northern District

of California. A copy of said opinion

appears in the appendix hereto.

JURISDICTION

The judgment of the United States

Court of Appeals for the Ninth Circuit

was entered on May 8, 1980. Jurisdic-

tion of this Court is invoked under

Title 28, United States Code § 1254 (1)

(1966).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Constitution of the United States:

Amendment V.

No person shall be held to answer

for a capital, or otherwise in-

famous crime, unless on a present-

ment or indictment of a Grand Jury,

except in cases arising in the land

or naval forces, or in the Militia,

when in actual service in time of

War or public danger; nor shall any

person be subject for the same

offense to be twice put in jeopardy

of life or limb; nor shall be com-

pelled to any criminal case to be

a witness against himself, nor be

deprived of life, liberty, or

property, without due process of

law; nor shall private property

be taken for public use, without

just compensation.

-2-

Title 26, United States Code:

Section 7203.

Any person required under this title

to pay any estimated tax or tax, or

required by this title or by regu-

lations made under authority thereof

to make a return (other than a return

required under authority of Section

6015), keep any records, or supply

any information, who willfully fails

to pay such estimated tax or tax,

make such return, keep such records,

or supply such information, at the

time or times required by law or

regulations, shall, in addition to

other penalties provided by law, be

guilty of a misdemeanor and, upon

conviction thereof, shall be fined

not more than $10,000, or imprisoned

not more than 1 year, or both, to-

gether with the costs of prosecution.

Section 7205.

Any individual required to supply in-

formation to his employer under

Section 3402 who willfully supplies

false or fraudulent information, or

who willfully fails to supply infor-

mation thereunder which would require

an increase in the tax to be withheld

under Section 3402, shall, in lieu of

any other penalty provided by law

(except the penalty provided by

Section 6682), upon conviction there-

of, be fined not more than $500, or

imprisoned not more than 1 year, or

both.

STATEMENT OF THE CASE

Petitioner is a factory worker who

earned $9,346.21 in 1974 and $13,053.53

in 1975. In 1974, the Petitioner claimed

99 withholding exemptions on the with-

holding tax form (Form W-4) he submitted

to his employer, although he was not

married and had no dependents. This form

remained effective through 1975 and re-

sulted in no federal income taxes being

withheld from the Petitioner's wages in

either 1974 or 1975.

The Petitioner claimed the fifth

amendment on his 1974 and 1975 tax re-

turns (Form 1040). He did not provide

any information on the returns from which

his tax liability could be calculated.

The Petitioner claimed the fifth amend-

ment on his tax returns because of his

fear that he would be prosecuted under

26 U.S.C. § 7205 for filing a false with-

whe

holding form and because he feared that

completing his tax returns would tend to

incriminate him in that respect.

The Petitioner was convicted of a

willful failure to file income tax re-

turns in violation of 26 U.S.C. § 7203

in United States District Court for the

Northern District of California. The

United States Court of Appeals for the

Ninth Circuit affirmed the Petitioner's

conviction.

REASONS FOR GRANTING THE WRIT

I. One of the issues raised by this

case, to wit, what questions on a

tax return may a taxpayer refuse

to answer by claiming the fifth

amendment privilege against com-

pulsory self-incrimination when he

actually files a return, was specif-

ically reserved by this Court in

United States v. Sullivan, 274 U.S.

The Petitioner

claimed the privilege on his return

in the manner specified by the dic-

tum of this Court in Sullivan, supra.

Nevertheless, the court of appeals

held that he was not entitled to

claim the privilege.

In Sullivan, this Court held that a

taxpayer may not under normal circum-

stances assert the fifth amendment

privilege against compulsory self-

incrimination by simply refusing to file

a return, but stated in dictum that a

taxpayer must file a return and assert

the privilege on the return with respect

to those questions which he feels would

tend to incriminate him. In the instant

case, the Petitioner did just that. He

_s

filed a return and refused to answer

questions concerning such matters as his

gross income, the amount of federal in-

come taxes actually withheld, and the

number of his deductions. Admittedly,

the Petitioner did not provide any infor-

mation on his return from which his tax

liability could be calculated. However,

he asserted the fifth amendment privilege

with respect to such questions because he

felt, and the court of appeals in fact

found, that the answers to such questions

would tend to incriminate him. Thus, it

would seem that the Petitioner was clear-

ly entitled to the benefit of the privi-

lege. Neverthess, the court of appeals

heid that he was not so entitled.

The court of appeals specifically

found that the questions which the tax-

payer refused to answer "would have

provided ‘a lead or clue to evidence

-_ =

having a tendency to incriminate.'"

United States v. Carlson, 617 F.2d 518,

520 (9th Cir. 1980). The court of appeals

also found that it was "equally certain

that a trial judge examining these facts

would find a substantial threat of incrim-

ination." Id. at 520. Nevertheless, the

court of appeals relied upon this Court's

decision in Sullivan in coming to its con-

clusion that the Petitioner was not en-

titled to the protection of the fifth

amendment privilege. Id. at 523. Thus,

the instant case clearly raised the ques-

tion of how a taxpayer may validly assert

the privilege on his tax return, when, un-

like in Sullivan, he actually files a re-

turn. The court of appels states that

"the policies that justify the Court's ad-

herence to the rule in Sullivan are

equally applicable here." Id. However,

the Petitioner, unlike the taxpayer in

af.

Sullivan, actually filed a return and

claimed the privilege with respect to

questions on the return. Thus, it would

seem that the question becomes whether a

taxpayer may be denied the protection of

the privilege when he has filed a return

and claimed the privilege with respect to

questions on the return in the manner

outlined by this Court's dictum in

Sullivan where it has been specifically

found that the questions which the tax-

payer refused to answer had a substantial

tendency to incriminate him.

In Sullivan, supra, this Court held:

As the defendant's income was taxed,

the statute of course required a re-

turn. . . . In the decision that this

was contrary to the Constitution we

are of opinion that the protection of

the Fifth Amendment was pressed too

far. If the form of return provided

called for answers that the defendant

was privileged from making he could

have raised the objection in the re-

turn, but could not on that account

refuse to make any return at all.

We are not called on to decide what,

=~

if anything, he might have withheld.

Most of the items warranted no com-

plaint. It would be an extreme if not

an extravagant application of the Fifth

Amendment to say that it authorized a

man to refuse to state the amount of

his income because it had been made in

crime. But if the defendant desired to

test that or any other point he should

have tested it in the return so that it

could be passed upon. ‘Ie could not

draw a conjurer's circle around the

whole matter by his own declaration

that to write any word upon the govern-

ment blank would bring him into danger

of the law. .. . In this case the de-

fendant did not even make a declara-

tion, he simply abstained from making

a return. .. .-

274 U.S. at 263-64 (emphasis supplied;

citations omitted.) As already noted, un-

like the taxpayer in Sullivan, the Peti-

tioner did file a return and claimed the

fifth amendment privilege with respect to

questions on the return. In Sullivan, this

Court intimated that the question concern-

ing the taxpayer's income in that case

would not have been incriminating. In

contrast, in the instant case, the ques-

tions as to which the taxpayer claimed

=10<

the privilege were specifically found by

the court of appeals to be potentially

incriminating.

In Garner v. United States, 424 U.S.

648 (1976), this Court reaffirmed the

significance of the dictum in Sullivan:

A § 7203 conviction cannot be based on

a valid exercise of the privilege.

This is implicit in the dictum of

United States v. Sullivan, 274U.S. 259

47 S.Ct. 607, 71 L.Ed. 1037 (1927),

that the privilege may be claimed on

a return. .. . The Fifth Amendment

itself guarantees the taxpayer's in-

sulation against liability imposed on

the basis of a valid and timely claim

of privilege.

Id. at 662-63 (footnote omitted). Since

the Court in Garner, supra, limited its

decision to "claims of privilege...

justified by a fear of self-incrimination

other than under the tax law," id. at 650

n. 3, the instant case presents the oppor-

tunity for this Court to determine the

significance of this Court's decision in

Sullivan with regard to a claim of privi-

wid

lege made because of a taxpayer's fear of

self-incrimination with respect to prose-

cution under the tax laws. The taxpayer

in the instant case claimed the privilege

on his return because of his fear of self-

incrimination with regard to 26 U.S.C.

§ 7205, which prohibits filing a false,

withholding form.

IL The court of appeals, in holding that

the Petitioner was not entitled to

claim the fifth amendment privilege on

his tax return, balanced the need for

public revenue collection by a system

of self-reporting against the Peti-

tioner's privilege against compulsory

self-incrimination. Such a balancing

approach has never been applied by

this Court in a case such as this and

is a serious matter for this Court's

consideration since the application of

such a balancing test inevitably re-

sults in a substantial impairment of

taxpayers' fifth amendment rights. In

the instant case, the court of appeals'

use of this balancing test resulted in

the absolute denial to the Petitioner

of his fifth amendment privilege

against compulsory self-incrimination.

In applying this balancing test, the

court of appeals relied upon the following

statement in the plurality opinion of this

=

Court in California v. Byers, 402 U.S.

424 (1971):

Tension between the State's demand for

disclosure and the protection of the

right against self-incrimination is

likely to give rise to serious ques-

tions. Inevitably these must be re-

solved in terms of balancing the

public need on the one hand, and the

individual claim to constitutional

protections on the other, neither in-

terest can be treated lightly.

Id. at 427. However, this test was not

applied by this Court in the plurality

opinion in Byers, supra, and is thus dic-

tum. This test was applied only by one

Justice in a concurring opinion. Id. at

448-49 (Harlan, J., concurring).

Under the laws as actually applied by

the plurality opinion in Byers, which the

court of appeals did not apply in the in-

stant case, the taxpayer in the instant

case would clearly be entitled to rely on

the claim of privilege he made on his tax

return. The plurality opinion in Byers

determined the privilege question there

involved by inguiring whether "the"

wot Bes

compelled disclosures will themselves

confront the claimant with ‘substantial

hazards of self-incrimination,'" id. at

429, and whether the compelled disclo-

sures were "testimonial." Id. at 432.

There is no doubt that the disclo-

sures required by a tax return, with re-

spect to which the Petitioner asserted

his fifth amendment privilege, are

testimonial. In Garner v. United States,

supra, this Court stated:

The information revealed in the

preparation and filing of an in-

come tax return is, for purposes of

Fifth Amendment analysis, the testi-

money of a "witness". .. .

424 = at 656.

There is also no doubt that the

Petitioner faced a "substantial hazard of

incrimination" with regard to the ques-

tions on the return as to which he

asserted his fifth amendment privilege.

The court of appeals so found. The court

atau

of appeals stated that it was "certain

that a trial judge examining these facts

would find a substantial threat of in-

crimination." United States v. Carlson,

supra, 617 F.2d at 520.

Even apart from the finding of the

court of appeals, it is obvious that the

Petitioner faced a substantial hazard of

incrimination in answering the questions

on the tax return. The Petitioner's fear

of self-incrimination resulted from the

fact that 26 U.S.C. § 7205 prohibits

filing a false witholding form. Alleged-

ly, the Petitioner filed a false with-

holding form claiming 99 withholding

exemptions so that no income taxes would

be withheld from his wages. The Peti-

tioner had no dependents and was not

married. It is obvious from these facts

that the Petitioner's assertion of his

fifth amendment privilege with regard to

-15<

the questions on the tax return was moti-

vated by his fear of a substantial hazard

of self-incrimination. If the Petitioner

had stated his gross income, which as

$9,346.21 in 1974 and $13,053.53 in 1975,

stated that no federal income tax had

been witheld, and stated the number of

deductions available to him as an un-

married person with no dependents, he

would have faced a substantial risk of

prosecution under 26 U.S.C. § 7205. Such

facts as these, regarding which the Peti-

tioner claimed the privilege, would have

strongly indicated that a false with-

holding form had been filed. The

seriousness of the threat of self-

incrimination in the instant case results

from the fact that the taxpayer's fears

of self-incrimination concerned a pos-

sible prosecution under the tax laws.

The link in the chain of evidence is not

nite

attenuated in the instant case as it was

in Sullivan, supra, where the taxpayer

feared prosecution under the National

Prohibition Act. Because the taxpayer in

the instant case feared prosecution un-

der the tax laws, his fear of self-

incrimination with regard to answering

tax-related questions was direct and sub-

stantial.

The court of appeals' use of a

balancing test in the instant case raises

serious questions. Such "balancing in-

evitably results in the dilution of

constitutional guarantees." California

v. Byers, supra, 402 U.S. at 463 (Black,

J., dissenting). This balancing approach

will have the result "that the scope of

the Fifth Amendment's protection will now

depend on what value a majority” of

judges "chooses to place on this explicit

constitutional guarantee as opposed to the

-17J=

government's interest in convicting a man

by compelling self-incriminating testi-

mony." Id. As Mr. Justice Black went on

to say:

Id.

In my view, vesting such power in

judges to water down constitutional

rights does indeed "embark us" on

- « « “uncharted and treacherous

i

I can only assume that the unarti-

culated premise of the decision is

that there is so much crime abroad

in this country at present that Bill

of Rights' safeguards against arbi-

trary government must not be com-

pletely enforced. I can agree that

there is too much crime in the land

for us to treat criminals with favor.

But I can never agree that we should

depart in the slightest way from the

Bill of Rights' guarantees that give

this country its high place among

the free nations of the world.

As Mr. Justice Brennan stated in

Byers, supra:

Our society is not endangered by the

Fifth Amendment. "The dangers of

which we must really beware are* * *

that we shall fall prey to the idea

that in order to preserve our free

society some of the liberties of the

individual must be curtailed, at

-18-

least temporarily. How wrong that

kind of a program would be is surely

evident from the mere statement of

the proposition." J. Harlan, Live

and Let Live, in The Evolution of a

Judical Philosophy, 285, 288 (D.

Shapiro ed., 1969).

Id. at 474 (Brennan, J., dissenting).

This Court quite rightly hesitated to ap-

ply a balancing test in Byers. The court

of appeals' conclusion that the govern-

ment's need for information requires a

dilution ot the guarantees of the fifth

amendment against compulsory self-

incrimination is at odds with the im-

mutable character of that privilege:

The ancient privilege of a witness

against being compelled to incrimi-

nate himself is precious to free

men as a shield against highhanded

and arrogant inquisitorial practices.

It has survived centuries of con-

troversies, periodically kindled by

popular impatience that its pro-

tection sometimes allows the guilty

to excape punishment. But it has

endured as a wise and necessary

protection of the individual

against arbitrary power, and the

price of occasional failures of

justice is paid in the larger

-19-

interest of general personal

security.

United States v. Washington, 431 U.S. 181,

193 (1977) (Brennan, J., dissenting).

CONCLUSION

For the foregoing reasons, a writ of

certiorari should issue to review the

judgment and opinion of the United Court

of Appeals for the Ninth Circuit.

Respectfully submitted,

Peter R. Stromer ;

904 Community Bank Bldg.

111 West S. John St.

San Jose, CA 95113

~20=

APPENDICES

-2i-

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, NO. 79-1277

Plaintiff-Appellee, OPINION

BRIAN A. CARLSON,

)

)

)

)

-vs- )

)

Defendant-Appellant. )

)

Appeal from the United States

District Court for the

Northern District of California

Before: WALLACE and KENNEDY, Circuit

Judges, and LARSON,* District

Judge

WALLACE, Circuit Judge:

Carlson was convicted of willful

failure to file income tax returns in

violation of 26 U.S.C. § 7203. On appeal

he seeks reversal by claiming that his

failure to file proper returns constitut-

ed a valid exercise of his Fifth

*Honorable Earl R. Larson, United States

District Judge, District of Minnesota,

sitting by designation.

oj-

Amendment privilege against self-

incrimination. We affirm the conviction.

I

Carlson, a factory worker, earned

$9,346.21 in 1974 and $13,053.53 in 1975.

Although he had filed complete tax re-

turns for previous years, Carlson did not

do so for 1974 and 1975. Instead, as

part of a tax protest movement, he util-

ized the following tax-evasion scheme

for each of those years. In 1974, Carl-

son claimed 99 withholding exemptions on

the withholding tax form (form W-4) that

he submitted to his employer, although he

was not married and had no dependents.?

This form W-4 remained effective through

1975, and resulted in no federal income

taxes being withheld from Carlson's wages

in either 1974 or 1975. Carlson there-

after asserted the Fifth Amendment on his

=2-

1974 and 1975 year-end tax returns (form

1040) in lieu of providing any informa-

tion trom which his tax liability could

be calculated. He appended to the 1974

return tax protest material claiming that

federal reserve notes were unconstitu-

tional, that he therefore had not re-

ceived enough constitutionally valid

money to require filing a tax return, and

that all rules promulgated by the Secre-

tary of the Treasury were also unconsti-

tutional.

The result of Carlson's submission of

the false withholding form and his subse-

quent assertion of the Fifth Amendment in

his year-end returns was that Carlson

paid no federal income taxes for 1974 or

1975. Carlson claims that he validly

asserted the Fifth Amendment to avoid in-

criminating himself for having previously

filed the false withholding forms. After

-3-

hearing all of the evidence, however,

the district judge, sitting without a

jury, found that Carlson "did not have a

good-faith claim or reasonable ground for

{asserting the] privilege, as he was a

tax protestor and his activities and his

actions and methods of submitting his re-

turns were those of a tax protestor

only." He held, therefore, that Carl-

son's Fifth Amendment claim did not con-

stitute defense to his prosecution,

pursuant to section 7203, for failure to

file a tax return.

II

This case presents a question of

first impression: can the privilege

against self-incrimination constitute a

defense to a section 7203 prosecution

when it is asserted to avoid incrimina-

tion for a past violation of income tax

laws? The United States Supreme Court

~

has stated that "[a] section 7203 con-

viction cannot be based on a valid exer-

cise of the privilege," Garner v. United

States, 424 U.S. 648, 662 (1976), but the

Court expressly limited the reach of its

decision in Garner to "only those [claims

of privilege] justified by a fear of

self-incrimination other than under the

tax laws." Id. at 650 n.3 (emphasis

added). Garner thus left open the extent

to which the Fifth Amendment prevents

compelled self-incrimination in tax re-

turns for past tax law crimes. No case

has been cited to us, and we have found

none in other circuits that has dealt

directly with this question left open by

Garner.” We must, therefore, confront

the issue for the first time.

We have recently considered the

validity of a Fifth Amendment assertion

made in a tax return to avoid self-

~-S—

incrimination for non-tax-law violations.

United States v. Neff, No. 79-1286 (9th

Cir., 615 F.2d 1235, 1980). We held that

the validity of such an assertion should

be assessed in light of the following

factors: whether the privilege was assert-

ed at the time of filing the return and

in response to specific questions con-

tained therein, whether the taxpayer was

faced with a real and appreciable danger

of self-incrimination, and whether he had

reasonable cause to believe that an honest

response to the questions would provide a

link in the chain of evidence needed to

prosecute him for a crime. Id. Moreover,

we determined that the trial judge is to

ascertain the potentially incriminatory

nature of elicited responses by examining

the questions, their setting, and the

peculiarities of the case, with the

burden of showing their hidden danger

~

falling upon the taxpayer should the

trial judge find the questions to be

'innocuous. Id. at :

An examination of the facts of this

case reveals that Carlson did assert

the privilege at the time he filed his

return, and did so while facing a real

and appreciable hazard of prosecution

for having previously filed a false

withholding form. > In addition, there

is little doubt that a truthfully com-

pleted tax return, stating his gross in-

come, the lack of federal income taxes

actually withheld, and the true number

of available deductions would have pro-

vided "a lead or clue to evidence having

a tendency to incriminate" Carlson. Id.

at - It is equally ceratin that a

trial judge examining these facts would

find a substantial threat of incrimina-

tion. Thus, it appears that Carlson

oo Fun

satisfies those indicia of validity pre-

viously asserted to avoid self-incrimina-

tion other than under the tax laws.

When the privilege is asserted to

avoid incrimination for past tax crimes,

however, additional complications arise.

If Carlson's assertion of the privilege

were valid, it would license a form of

conduct that would undermine the entire

system of personal income tax collection.

The essence of Carlson's plan was to

claim 99 withholding exemptions so that

no federal income tax would be withheld

by his employer, and then to assert the

Fifth Amendment privilege in lieu of a

properly completed tax return, thus

attempting to avoid both prosecution for

the false withholding claim and payment

of required income taxes. The widespread

use of such a scheme would emasculate the

present system of revenue collection

=-8-

which, by virtue of its scope alone,

necessarily depends upon personal report-

ing by wage earners. We are thus con-

fronted with the collision of two criti-

cal interests: the privilege against

self-incrimination, and the need for pub-

lic revenue collection by a process

necessarily reliant on self-reporting.

To decide which of these two inter-

ests prevails, we follow Supreme Court

guidance:

Tension between the State's demand

for disclosures and the protection

of the right against self-incrimina-

tion is likely to give rise to

serious questions. Inevitably these

must be resolved in terms of balanc-

ing the public need on the one hand,

and the individual claim to consti-

tutional protections on the other;

neither interest can be treated

lightly.

California v. Byers, 402 U.S. 424, 427

(1971).> We approach this balancing task

with care, for we believe that fundament-

al constitutional protections, such as

-9-

the privilege against self-incrimination,

may be limited only for the most sub-

stantial of reasons. See id. at 448

(Harlan, J., concurring). The Supreme

Court has stated that "the ocivitens has

never been given the full scope which the

values it helps to protect suggest,"

Schmerber v. California, 384 U.S. 757,

762 (1966), but it has also persistently

instructed that the privilege "must be

accorded liberal construction in favor of

the right it was intended to secure."

Hoffman v. United States, 341 U.S. 479,

486 (1951); see Arndstein v. McCarthy,

254 U.S. 71, 72-73 (1920); Counselman v.

Hitchcock, 142 U.S. 547, 562 (1892),

disapproved on other grounds, Kastigar v.

United States, 406 U.S. 441, 449-55

(1972). In balancing Carlson's asser-

tion of the privilege against the govern-

mental interest in revenue collection, we

-10-

conclude that there are two factors we

should consider: the history and purposes

of the privilege, and the character and

urgency of the countervailing public in-

terests. California v. Byers, supra,

402 U.S. at 449 (Harlan, J., concurring).

The history of the siti tien against

self-incrimination predates its enshrine-

ment within the Bill of Rights. See 8

Wigmore, Evidence § 2250, at 267-92

(McNaughton Rev. 1961); Pittman, The

Colonial and Constitutional History of

the Privilege Against Self-Incrimination

in America, 21 Va. L. Rev. 763 (1935).

It initially arose in response to pro-

cedures whereby the ecclesiastical courts

of England would compel one against whom

no charge had been made to incriminate

himself in response to broad, incrimina-

tion-seeking questions. McCormick on

Evidence 248 (1972). The privilege,

@-jj-

which had been recognized to some extent

in colonial America, Pittman, supra, at

781, and which had been incorporated into

the constitutions of several states prior

to ratification of the federal Constitu-

tion, id. at 764-65, was adopted by the

drafters of the Bill of Rights "not only

[as] an answer to numerous instances of

colonial misrule but [as] a shield

against 'the evils that lurk[ed] in the

shadows of a new and untried sovereign-

ty.'" McCormick on Evidence, supra, at

248 quoting, Pittman, supra, at 789.

As history illustrates, the primary

purpose of the privilege is protective.

The ancient privilege of a witness

against being compelled to incrimi-

nate himself is precious to free

men as a shield against high-handed

and arrogant inquisitorial prac-

tices. It has survived centuries

of controversies, periodically

kindled by popular impatience that

its protection sometimes allows

the guilty to escape punishment.

But it has endured as a wise and

>

necessary protection of the indi-

vidual against arbitrary power,

and the price of occasional

failures of justice is paid in

the larger interest of general

personal security.

United States v. Washington, 431 U.S.

181, 193 (1977) (Brennan, J., dissent-

ing). Stated differently, the privilege

is an effort to "comply with the prevail-

ing ethic that the individual is sover-

eign and that proper rules of battle

between government and individual require

that the individual not be bothered for

less than good reason and not be con-

scripted by his opponent to datesk him-

self ...." 8 Wigmore, Evidence § 2251],

p. 318 (McNaughton Rev. 1961).

In the case before us, Carlson has

attempted to take advantage of the privi-

lege's protective capacity to further a

calculated effort to avoid the payment

of taxes. Although it is true that

-13-

Carlson actually seeks protection

against self-incrimination for his prior

tax crime, he does so only as part of an

Overall plan to evade taxes. The first

step of that plan--submitting a false

withholding form to his employer--was

concealed from the Service by assertion

of the Fifth Amendment on Carlson's year-

end returns; and the very act of assert-

ing the Fifth Amendment also effectuated

the second step of the plan--failing to

file meaningful returns that would di-

vulge both his prior misstatement and his

overall year-end tax liabilities. In

other words, the Fifth Amendment was the

linchpin of Carlson's plan to evade the

payment of taxes. He used the privilege

more as a sword than as a shield. See

United States v. Schmitz, 525 F.2d 793,

(9th Cir. 1975); accord, United States v.

Newman, 468 F.2d 791, 795 (5th Cir. 1972),

=} @=

cert. denied, 411 U.S. 905 (1973). The

history and purpose of the privilege do

not, in light of such circumstances,

weigh heavily in favor of extending its

coverage to Carlson.

At the same time, the character and

urgency of the public interest in rais-

ing revenue through self-reporting weighs

heavily against affording the privilege

to Carlson. The federal government's

power to raise revenue is its lifeblood.

Were taxpayers permitted to employ Carl-

son's scheme, they could avoid filing

completed tax returns and thereby severe-

ly impair the government's ability to

determine tax liability. Such frustra-

tion of the self-reporting system would

force the Internal Revenue Service either

to investigate each citizen's claimed

and permissible withholding exemptions in

an effort to prosecute for each separate

-15<

filing of a false withholding claim, or

to bear the burden of investigating and

calculating from scratch each citizen's

tax liability in order to assess the ap-

propriate amount of income tax. Need-

less to say, either alternative would be

inordinately burdensome if not impos-

sible.

Another factor in our weighing pro-

cess is that the requirement of filing

an annual income tax return is primarily

designed to facilitate revenue collec-

tion, not criminal prosecution. "[T]Jhe

questions in the income tax return [are]

neutral on their face and directed at the

public at large." Albertson v. SACB,

382 U.S. 70, 79 (1965). For this reason,

refusal to file any return at all has

never been protectable by a taxpayer's

privilege against self-incrimination.

United States v. Sullivan, 274 U.S. 259,

=i6=

263-64 (1927). We think the policies

that justify the Court's continued ad-

herence to the rule in Sullivan are

equally applicable here.

After weighing the appropriate fac-

tors, we conclude that the purpose and

history of the privilege against self-

incrimination do not compel protection of

Carlson's actions, and that the character

and urgency of the opposing revenue in-

terests require that his scheme not be

permitted. We therefore hold that an

individual who seeks to frustrate the tax

laws by claiming too many withholding

exemptions, with an eye to covering that

crime and evading the tax return require-

ment by assertion of the Fifth Amend-

ment, is not entitled to the amendment's

protection. °

o1F=

IIt

In spite of our holding that Carlson

is not entitled to protection of the

Fifth Amendment, we still must review the

district court's finding that Carlson did

not assert his claim in "good faith."

This finding is not mooted by our holding

that Carlson's assertion of the privilege

was invalid, due to a statement in Garner:

"Because § 7203 proscribes ‘'willful'

failures to make returns, a taxpayer is

not at peril for every erroneous claim

of privilege. .. . [A] defendant could

not properly be convicted for an erron-

eous claim of privilege asserted in good

faith." Garner v. United States, supra,

424 U.S. at 663 n.18. The "good faith"

referred to in Garner, of course, is not

necessary for proper assertion of the

privilege against self-incrimination:

we do not normally examine the good faith

-18-

of an individual seeking the privilege's

protection, we simply examine the reali-

ty and appreciability of the hazard he

claims to be facing. United States v.

Neff, supra, slip op. at - In prose-

cutions of the kind before us, however, a

defendant's assertion of even an invalid

Fifth Amendment claim in "good faith"

would defeat the section 7203 require-

ment that a failure to file income tax

returns be "willful." Someone who thinks

he is complying with the law cannot be

said to be “willfully" violating it.

Therefore, we must review the trial

court's finding that Carlson did not make

his claim in good faith.

The trial judge's determination was

a finding of fact. "[U]pon appeal of a

conviction in a criminal case the evi-

dence must be considered in a light most

favorable to the government and the

-19-

findings of fact of a trial judge (or

jury) may not be set aside unless clear-

ly erroneous." United States v. Glover,

514 F.2d 390, 391 (9th Cir.), cert.

denied, 423 U.S. 857 (1975); United

States v. Hood, 493 F.2d 677, 680 (9th

Cir.), cert. denied, 419 U.S. 852 (1974).

The record clearly discloses that Carlson

was a tax protestor who attempted to

frustrate the tax laws by use of the

Fifth Amendment. We cannot say that the

trial judge's conclusion that Carlson

failed to assert the privilege in good

faith was clearly erroneous.

AFFIRMED.

=20-

FOOTNOTES

1. Needless to say, 99 withholding

exemptions far exceeded the number to

Carlson. 26 U.S.C. § 3402(f) (1).

2. United States v. Brown, 591 F.2d

307 (5th Cir.), cert. denied, 99 S. Ct.

2831 (1979), confronted the same fact

Situation as that before us but did not

resolve the question left unanswered by

Garner.

3. The government concedes that Carlson

could have been prosecuted under 26

U.S.C. § 7205 for filing a false with-

holding form.

4. Because withholding forms are filed

only with the employer, 26 U.S.C.

§ 3402(f) (2), false forms are not readi-

ly detected by the Internal Revenue

Service. This problem is compounded

when the taxpayer successfully refuses

to provide the IRS with information

oto

normally received in a tax return.

5. In Byers, a majority of the court

expressly adopted this balancing approach:

three Justices joined Chief Justice

Burger in the plurality opinion,

California v. Byers, 402 U.S. 424, 425

(1971), and Mr. Justice Harlan applied

such a balancing analysis in his con-

currence. Id. at 448-49. After articu-

lating the balancing approach, however,

the plurality opinion failed to apply it,

id. at 427-34, and we thus recognize the

plurality balancing language to be dic-

tum. We agree, nonetheless, with

Justice Harlan's conclusion that the

Fifth Amendment's preference for an

accusatorial (rather than inquisitorial)

system of criminal law enforcement is

not "of such overriding significance that

[it] compel[s] substantial sacrifices in

the efficient pursuit of other

~

governmental objectives in all situa-

tions where the pursuit of those objec-

tives requires the disclosure of

information which will undoubtedly

significantly aid in criminal law en-

forcement." Id. at 448 (Harlan, J.,

concurring).

The dissenting Justices in Byers

argued forcefully that "this balancing

inevitably results in the dilution of

constitutional guarantees," id. at 463

(Black, J., dissenting), and that we

should not "depart in the slightest way

from the Bill of Rights." Id. See also

Olmstead v. United States, 277 U.S. 438,

472-77 (1928) (Brandeis, J., dissenting).

We believe, however, that their absolute

approach would undercut the precedent of

United States v. Sullivan, 274 U.S. 259

(1927) (Fifth Amendment does not justify

a complete failure to file a tax return).

=3-

It cannot be denied that the act of

refusing to file a tax return may

give rise to a permissible infer-

ence .. . that one who did not

file was indeed engaged in

criminal activity. The incrimi-

nating inference arises from

inaction rather than from any

utterance or active disclosure,

but nevertheless there is an

inference of a guilty state of

mind, from which can be inferred

the criminal facts. These in-

ferences are made possible by

the general obligation to report

income and the exception when the

report would result in an in-

criminating disclosure.

Mansfield, The Albertson Case: Conflict

Between the Privilege Against Self-

Incrimination and the Government's Need

for Information, 1966 Sup. Ct. Rev.

103, 118. Consequently, were we to ad-

here to an absolute protection against

incrimination, we would be forced either

to abandon a highly important information

gathering device or to engage in the fic-

tion that it does not incriminate. We

-4-

doubt that even the dissenters in Byers

would be willing to carry the privilege

so far.

We agree that "'the scope of the

privilege [does not coincide] with the

complex of values it helps to protect.'"

California v. Byers, supra, 402 U.S. at

449 (Harlan, J., concurring), quoting

Schmerber v. California, 384 U.S. 757,

762 (1966). Whether the government may

punish a person who asserts the privilege

in lieu of providing tax information

"cannot be answered on the ground that

compelling him to come forward is not in-

criminating, for it surely is. It can

only be answered by determining whether

the government's interest in raising

revenue is sufficiently important to

justify some reduction in the protection

of the privilege." Mansfield, supra,

at 120. . iz

6. It may be that the crime of claim-

ing too many withholding allowances,

even when not undertaken as part of a

scheme such as Carlson's, will never

be protected by assertion of the Fifth

Amendment on a tax return because of the

character and urgency of the tax laws

‘which may mandate such a result. We

need not, however, decide that question

to resolve this case.

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, NO. 79-1277

Plaintiff-Appellee, ORDER

BRIAN A. CARLSON,

Defendant-Appellant.

me ee eee eee ee ee ee

Before: WALLACE and KENNEDY, Circuit

Judges, and LARSON,* District

Judge

The panel as constituted above

voted to deny the petition for rehearing

and to reject the suggestion for re-

hearing en banc.

The full court has been advised

of the suggestion for rehearing en banc,

and no judge of the court has requested

a vote on the suggestion for

*Honorable Earl R. Larson, United States

District Judge, District of Minnesota,

sitting by designation.

~jl=

rehearing en banc. Fed. R. App. P.

35(b).

The petition for rehearing is

denied and the suggéstion for rehearing

en banc is rejected.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF

AMERICA,

NO. CR-78-498-CBR

MEMORANDUM OF

OPINION

)

)

)

Plaintiff, )

)

vs. )

)

RANDALL B. CARLSON, )

)

Defendant. )

This is a criminal prosecution

brought pursuant to Section 7203 of the

Internal Revenue Code of 1954, 26 U.S.C.

§7203.2

1 Section 7203 provides:

"Any person required under this

title to pay any estimated tax or tax, or

required by this title or by regulations

made under authority thereof to make a

return (other than a return required un-

der authority of section 6015), keep any

records, or supply any information,

who willfully fails to pay such estimat-

ed tax or tax, make such return, keep

such records, or supply such information,

at the time or times required by law or

regulations, shall, in addition to other

penalties provided by law, be guilty of

a misdemeanor and, upon conviction there-

of, shall be fined not more than $10,000,

or imprisoned not more than 1 year, or

both, together with the costs of prosecu-

tion.

Defendant is charged with two

@j-

counts of willfully failing to make

income tax returns, a misdemeanor. *

The pertinent facts are undisputed and

have been stipulated to by the parties.

Defendant has voluntarily waived his

right to a trial by jury. See Fed.R.

Crim.Pro. 23.

In 1974 and 1975, the years in ques-

tion, defendant Randall B. Carlson was

employed by United Can Company. His

W-2 forms indicate that he was paid wages

2 Each count of the information

states that for the year in question

defendant "was required by law * * *

to make an income tax return * * *

stating specifically the items of his

gross income and any deductions, exemp-

tions[,] and credits to which he was

entitled[;] and that, well knowing all

of the foregoing facts, he did will-

fully and knowingly fail to make such

income tax return * * *." In this

opinion, the Court will focus on de-

fendant's failure to state his "gross

income and * * * exemptions," because

his failure to state "deductions * * *

and credits" could only have increased

rather than decreased his tax liabil-

ity.

-2=

of $19,465.15 the first year and

$16,873.29 the second. However, he did

not file a completed income tax return

with the Internal Revenue Service (IRS)

for either year. With respect to 1974,

he simply mailed a Form 1040 to the IRS

on which he stated his name and address

and wrote across the face of the form,

"Under protest I plead the Fifth Amend-

ment to the U. S. Constitution," and

signed and dated the return. With re-

spect to 1975, he mailed a Form 1040 to

the IRS on which he stated his name,

address, and Social Security number and

wrote across the face of the form, "Filed

in protest of the Fifth Amendment to the

Constitution of the U.S.A." Again, he

signed and dated the return.

Defendant claims that he invoked the

Fifth Amendment to avoid prosecution

under 18 U.S.C. §1001° and 26 U.S.C.

§7205,4 criminal statutes that prohibit

making false statements to a government

agency and submitting false withholding

statements to an employer. These

3 18 U.S.C. §1001 provides:

"Whoever, in any matter within

the jurisdiction of any department or

agency of the United States knowingly

and willfully falsifies, conceals or

covers up by any trick, scheme, or de-

vice a material fact, or makes any

false, fictitious or fraudulent state-

ments or representations, or makes or

uses any false writing or document know-

ing the same to contain any false, fic-

titious or fraudulent statement or entry,

shall be fined not more than $10,000 or

imprisoned not more than five years, or

both."

4 26 U.S.C. §7205 provides:

"Any individual required to

supply information to his employer under

section 3402 who willfully supplies

false or fraudulent information, or

who willfully fails to supply informa-

tion thereunder which would re-

quire an increase in the tax to be with-

held under section 3402, shall, in lieu

of any other penalty provided by section

6682), upon conviction thereof, be fined

not more than $500, or imprisoned not

more than 1 year, or both."

-4-

prosecutions would have been based on

the W-4 forms defendant had earlier

filed with United Can Company. Although

he was then single and had no dependents,

defendant claimed 18 withholding allow-

ances on December 12, 1973, 30 withhold-

ing allowances on January 11, 1974, 90

withholding allowances on April 30, 1974,

and 99 withholding allowances on

October 14, 1974.>

5 There is no question but that de-

fendant could have been prosecuted

under 18 U.S.C. §1001 and 26 U.S.C. §7205

for submitting these W-4 forms had the

Government acted within the applicable

limitations period. For some reason un-

known to this Court, however, the Govern-

ment neglected to institute criminal

proceedings against defendant until the

statute of limitations period for those

violations had run. For that reason,

the Government in this prosecution must

rely on 26 U.S.C. §7203, a statute which

carries with it a six-year, rather than

a three-year statute of limitations.

See 26 U.S.C. §6531; United States v.

Porth, 426 F.2d 519, 522 (10 Cir.)

cert. denied, 400 U.S. 824 (1970).

To establish a violation of 26 U.S.C.

§7203, the Government must prove that de-

fendant was required to make a return,

that he failed to do so, and that this

failure was willful. Because the Govern-

ment has not established proof of the

second and third elements beyond a rea-

sonable doubt, this Court must acquit.

There is no question that defendant

was required to file a tax return for

1974 and 1975. With wages in excess of

$19,000 the first year and in excess of

$16,000 the second, his gross income was

significantly greater than the minimum

established by 26 U.S.C. §6012(a). The

stipulated facts therefore establish the

first element of a §7203 violation beyond

a reasonable doubt.

There is more difficulty with the

second element, however, for although

defendant did not technically file a

-6-

return for 1974 or 1975, he appears to

have a valid constitutional defense to

the §7203 filing requirements. When de-

fendant mailed his 1040 forms to the IRS

in 1974 and 1975, he failed to include

any information in them from which the

Government could compute his tax. As a

result, under the great weight of author-

ity, he did not file a return within the

meaning of the Internal Revenue Code or

the regulations adopted by the Commis-

Sioner. See United States v. Klee, 494

F.2d 394, 397 (9 Cir.), cert. denied,

419 U.S. 835 (1974), quoting United

States v. Porth, 426 F.2d 519, 523 (10

Cir.), cert. denied, 400 U.S. 824 (1970);

accord, United States v. Johnson, 577

F.2d 1304, 1311 (5 Cir. 1978); United

States v. Gardiner, 531 F.2d 953 (9

Cir.), cert. denied, 429 U.S. 853 (1976).

Defendant contends, however, that his

=~ =

failure to include any wage and exemption

information on his tax returns was justi-

fied insofar as he had a valid Fifth

Amendment privilege not to make such

disclosures. In this contention he re-

lies on Garner v. United States, 424 U.S.

648, 662 (1976), and United States v.

Sullivan, 274 U.S. 259, 263 (1927),

cases in which the Supreme Court affirm-

ed the right of a taxpayer to refuse to

answer incriminating questions on a tax

return. Alithough these cases state that

a taxpayer cannot rely on the Fifth

Amendment to "refuse to make any return

at all," the Supreme Court indicated that

a taxpayer may still invoke the Fifth

Amendment on his tax return with respect

to each item to which he has a valid

constitutional objection. See 262 U.S.

at 263. See also United States v.

Johnson, supra, 577 F.2d at 1310;

=G~

Heligman v. United States, 407 F.2d 448,

450-451 (8 Cir.), cert. denied, 395 U.S.

977 (1969). A taxpayer cannot "simply

abstain * * * from making a return" be-

cause he has a valid Fifth Amendment

privilege as to some of the information

requested. However, where he provides

the IRS with the non-testimonial infor-

mation it seeks, and only invokes the

Fifth Amendment with respect to those

items that create "'substantial hazards

of self-incrimination,'" California v.

Byers, 402 U.S. 424, 429 (1971), he must

be held immune from prosecution under

§7203. Cf. Garner, supra, 424 U.S. at

662 n.16 (no privilege to refuse dis-

closure of non-testimonial information

"fundamental to a neutral reporting

scheme").

Here, defendant is charged with a

willful failure to state "specifically

aOw

the items of his gross income and * * *

exemptions." See note z, supra. If

defendant's claim that disclosure of this

information would have subjected him to

criminal prosecution is valid, then his

Fifth Amendment claim must be upheld and

the Court cannot convict under 26 U.S.C.

§7203.

Defendant was concerned that his

willful submission of false withholding

certificates -- the W-4 forms listing

up to 99 allowances -- subjected him to

prosecution under, inter alia, 26 U.S.C.

§7205. Because he claims that this

statute requires the Government to prove

first, that he had income in the form of

wages, and second, that he had willfully

claimed a false number of withholding

allowances, he argues that the income and

exemption information on his Form 1040

was privileged from disclosure.

niiea

The Government cannot reasonably

deny that defendant could have subjected

himself to prosecution under §7205 had

he indicated on his 1040 forms the num-

ber of exemptions he was claiming. The

real issue is whether proof that the tax-

payer earned income in the form of wages

is one of the elements of §7205 as well.

Section 7205 applies to "[a]Jny in-

dividual required to supply information

to his employer under [26 U.S.C.] section

3402 * * *," Section 3402 by its terms

applies to "every employer making payment

of wages." Reading these statutory

provisions together, the Court concludes

that the Government could successfully

prosecute a taxpayer under §7205 only if

it first proved that the taxpayer had re-

ceived some wages from his employer. Cf.

United States v. Smith, 487 F.2d 329, 330

(9 Cir. 1973), cert. denied, 416 U.S.

“lie

989 (1974) ("[§7205] offense is made

out when a person required by law to

complete and file a W-4 intentionally

uses the form to supply false informa-

tion."). Unless the employer paid wages

pursuant to §3402, the defendant would

not be required to supply withholding

information pursuant to §7205.

Applying this construction to §7205,

the Court must find that defendant valid-

ly invoked his Fifth Amendment privilege

against disclosing wage and exemption

intesiiehia.” Because disclosure of that

6 The Government's contention that

defendant could have avoided incrimi-

nating himself by listing his wages on

line 12 of his tax returns rather on

line 9 is specious. Line 12 specifical-

ly calis for “Income other than wages,

dividends, and interest" (emphasis

added). The only income defendant re-

ceived in 1974 and 1975 -- at least

according to the stipulated facts on

which the Court must base its decision --

was the wages paid by his employer,

United Can Company. These could proper-

ly have been listed only as "Wages,

salaries, tips and other employee com-

pensation" (emphasis added) on line 9.

oj) 2=

information would have subjected him

to criminal prosecution, this Court must

find that his invocation of the Fifth

Amendment was proper. See California

v. Byers, supra, 402 U.S. at 439-440,

441 n.3 (Harlan, J., concurring); see

also United States v. Irwin, 561 F.2d

198, 201 (10 Cir. 1977), cert. denied,

434 U.S. 1012 (1978) ("A valid claim of

privilege must be based upon a real pos-

sibility that submitting answers will

subject the taxpayer to criminal prose-

cution.").

Despite this conclusion, the Court

is concerned with the form in which de-

fendant invoked his privilege. De-

fendant's tax returns contained only his

name, address, signature, date, and a

non-specific Fifth Amendment claim. This

case would have been easier to decide had

defendant separately stated his

=] 3-

constitutional privilege as to wages and

as to exemptions, then drawn a line

through the other boxes on his returns.

However, defendant's “broad brush"

method should not change the result here.

As this Court has found, defendant

was privileged to refuse to state the

amount of his wages and the number of his

exemptions. The Government has not al-

leged that he wrongfully failed to in-

clude any other data on his return. No-

where in the stipulated facts is it indi-

cated that defendant had any other

taxable income. As a result, the Court

must conclude that defendant was not re-

quired to respond to the other items on

his return. Because defendant validly

asserted his Fifth Amendment privilege

as to the only items on his return that

the Government alleges he was required

to respond to, the Court must acquit.

o}4-

Criminal liability cannot hinge on the

technical question of whether defendant's

valid claim of a constitutional privilege

tas asserted in large letters covering

the face of the return rather than in the

small boxes corresponding to the requests

for the privileged information.

Even if the Court were wrong in con-

cluding that defendant properly claimed a

Fifth Amendment privilege, it would reach

the same result. Although the Government

may have proven beyond a reasonable doubt

that defendant was required to file re-

turns for 1974 and 1975 and that he had

no privilege justifying his failure to

file those returns, the Government's case

would nonetheless falter on the third

element of §7203, proof beyond a reason-

able doubt that defendant's failure to

file was "willful."

-15=

Section 7203 is very explicit in its

mens rea requirement. It only applies

to individuals who "willfully" fail to

meet their statutory obligations. As the

Supreme Court noted in Garner v. United

States, supra, 424 U.S. at 663 n.18:

"Because §7203 proscribes ‘willful

failures to make returns, a taxpayer

is not at peril for every erroneous

claim of privilege. The Government

recognizes that a defendant could

not properly be convicted for an

erroneous claim of privilege

asserted in good faith."

Other courts have agreed that a taxpayer

could not be successfully prosecuted

under 26 U.S.C. §7203 if his invocation

of the Fifth Amendment, although errone-

ous, was made in good faith. See, e.g.,

United States v. Johnson, supra, 577 F.

2d at 1311; Cooley v. United States,

-501 F.2d 1249, 1252-1253 & n.4 (9 Cir.

1974), cert. denied, 419 U.S. 1123

-16=

(1975) ./

On the stipulated facts and without

an opportunity to listen to and observe

the defendant, assuming that he took the

stand to testify, this Court could not

conclude beyond a reasonable doubt that

defendant's invocation of the Fifth

Amendment on his 1974 and 1975 tax re-

turns was not made in good faith. As

the discussion of the second element of

§7203 indicates, defendant's exercise

of his Fifth Amendment privilege was

proper, both as to its form and its

7 The cases relied upon by the

Government to establish willfulness

all arose in the context of a taxpayer

who had no basis whatever for invoking

the Fifth Amendment. See, e.g., United

States v. Irwin, 561 F.2d 198 (10 Cir.

1977), cert. denied, 434 U.S. 1012

(1978); United States v. Gardiner, 531

F.2d 953 (9 Cir.), cert. denied, 429

U.S. 853 (1976); United States v. Daly,

481 F.2d 28 (8 Cir.), cert. denied, 414

U.S. 1964 (1973); United States v. Porth,

426 F.2d 519 (10 Cir.), cert. denied,

400 U.S. 824 (1970).

<t 3m

content. Surely it would follow that

even if the Court's legal analysis were

incorrect, defendant's attempt to invoke

the privilege was done with a good-faith

belief in its validity. Because there

is no evidence before this Court to the

contrary, and because the Court has had

no opportunity to assess the motivation

or credibility of the defendant at trial,

it must conclude that the Government has

failed to prove beyond a reasonable doubt

that if defendant failed to file, such

failure was "willful" within the meaning

of §7203.

The Court is certainly aware that it

is acgquitting a man whose actions in sub-

mitting the false withholding certifi-

cates were clearly illegal. There were

at least two statutes under which the

Government could have successfully prose-

cuted this action. However, because the

-18-

applicable period of limitations had

run, those statutes became unavailable.

Moreover, even under §7203, the Govern-

ment might have prevailed had it been

able to prove that defendant had re-

ceived income other than wages in 1974

and 1975 and had therefore invoked his

Fifth Amendment privilege in bad faith.

However, no such evidence was presented

to the Court. As a result, the Court

concludes that it must acquit defendant

Randall B. Carlson of the charges of

having violated 26 U.S.C. §7203.

This Memorandum of Opinion shall

constitute the Court's General and

Special Findings as required by Rule

23(c) of the Federal Rules of Criminal

Procedure.

Dated:

Charles B. Renfrew

United States District

Judge

-19-

PETER R. STROMER

Attorney at Law

lll W. St. John Street, #904

San Jose, California 95113

Telephone: (408) 295-4429

Attorney for Defendant

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

Defendant.

UNITED STATES OF AMERICA, ) CRIMINAL

) NUMBER:

Plaintiff, )

) 78-400-SC

-V- )

)

BRIAN A. CARLSON, ) ORDER

)

)

)

Defendant BRIAN A. CARLSON'S Motion

to Stay Execution of Sentence Pending

Appeal came on for hearing in the court-

room of U. S. Magistrate, the Honorable

O. E. Woodruff, Jr., 450 Golden Gate

Avenue, San Francisco, California, on

April 9, 1979, at 9:30 a.m. there being

-l-

no opposition to the Motion.

IT IS HEREBY ORDERED that the de-

fendant be and hereby is granted a Stay

of Execution of Sentence in the above-

captioned case. The defendant, Brian A.

Carlson, being personally present and re-

presented. by counsel, Peter R. Stromer,

Esq., having executed an Appearance Bond

in the amount of $5,000 is ordered to

appear when summoned before the Honorable

Samuel Conti, upon final determination of

defendant's pending

to the U. S. Court of Appeals for the

Ninth Circuit.

IT IS FURTHER ORDERED that defendant

//

//

//

//

//

//

Brian A. Carlson, comply with all the

conditions detailed on the Appearance

Bond.

Approved as to form and content:

Nancy L. Simpson

Assistant U.S. Attorney

DATED:

OWEN E. WOODRUFF, JR.

United States Magistrate

ti

IN THE SUPREME COURT OF THE UNITED STATES

October Term, 1980

No.

Brian A. Carlson,

Petitioner,

Vv.

United States of America

Kkkkkk kkk KKK KKK KKK KKK KKK

CERTIFICATE OF SERVICE

kkkkkkakkkkkkeKekKekkkkekekKkekeKeKRKKK KKK KKK

I hereby certify that on this 5th

day of August, 1980, three copies of the

Petition for Writ of Certiorari were

mailed, postage prepaid, to Nancy L. Simp-

son, Assistant U.S. Attorney, P.O. Box

36055, San Francisco, CA 94102.

I further certify that all parties

required to be served have been served.

bet? Mesa

Peter R. Stromer