Petition — Moore v. United States

80-919 Mes 2 ee

No. | DEC 6 1980

ow OF OR AAD SMMC OE NER et NSCOR

p MICHAEL RODAK, JR., CLERK

In the

Supreme Court of the United States

OctoBeR TERM 1980

DAVID N. MOORE,

Petitioner,

vB.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT

EDWARD M. GENSON

JEFFREY B. STEINBACK

134 North LaSalle #300

Chicago, Illinois 60602

(312) 726-9015

Attorneys for Petitioner

Of Counsel:

WILLIAM H. STEVENS

UNITED STATES LAW PRINTING CO., CHICAGO, ILLINOIS 60618 (312) 525-6581

QUESTION PRESENTED

Whether the trial court committed reversible error

in concluding that Petitioner’s tax returns were not re-

turns where his returns provided figures from which a tax

could be computed.

iii

PAGE

estion Presented a.2.:0:0.01c6c~ nee ee i

Opinion Below i... 65 1

2 LEN a Ae 2! 1 aconeddeundebcbneshinipailite eisieeE dae 2

Constitutional Provisions Involved -000.......2.22.......ece0--e 2

Statement of the Case _.......... <eeuigaslbliiamcimadsinctaaaneae 2

Reason for Granting the Writ:

The Court of Appeals below improperly disre-

garded established precedent, extended the tax

crime laws and created an innercireuit conflict in

concluding that the District Court properly de-

cided that Defendant’s tax returns were not re-

turns ac a matter Of WOW a. cikisc- ina 5

QCHOMRCBIITEOT oennnccceceseivenssecnsecerasevaiesssstsninainisumpataebisiassaialniaananana 9

Appendix A, Opinion of the United States Court

of Appeals for the Seventh Circuit dated

Amarenet FB, TOO niincccec.e.ennncessesoinsnnsannuabaetanaaaon App. 1

Appendix B, Order denying Petition for Rehear-

ing with En Bane Suggestion dated October

CD ssceisecassnvininicrenesnmisernnrtaanbegs ~ecavinselabaaelal -App. 12

| PREVIOUS PAGE WAS BLANK |

iv

AUTHORITIES CITED

Cases

PAGE

United States v. Daly, 481 F.2d 28 (8 Cir., 1973) ........ 4

United States v. Jordan, 508 F.2d 750 (7 Cir., 1975)... 5

United States v. Long, 618 I’.2d 74 (9 Cir., 1980)........ 6, 8

United States v. Porth, 426 F.2d 519 (10 Cir., 1970) passim

Other Authorities

First Amendment to United States Constitution ........ 6

Fifth Amendment to United States Constitution ........ 5, 6

Sixth Amendment to United States Constitution ........ 6

a a I hc cadens hha ecesiciesiadielasccleabediath-oceamshbactnges 5,7, 9

26 U.S.C. secs. 6651(a), 6653(a) and 6654 200000... 7

In the

Supreme Court of the Rnited States

OcrosBer TerRM 1980

No.

DAVID N. MOORE,

Petitioner,

Vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOk

THE SEVENTH CIRCUIT

Petitioner David N. Moore prays that a writ of cer-

tiorari be issued to review the judgment of the United

States Court of Appeals for the Seventh Circuit.

OPINION BELOW

The published opinion of the United States Court of

Appeals for the Seventh Circuit is appended to this Peti-

tion as Appendix A. The order denying Petitioner a re-

hearing is likewise appended to this Petition as Ap-

pendix B.

2

JURISDICTION

The order of the Court of Appeals was entered on

August 22, 1980. Petitioner’s Petition for Rehearing,

timely filed, was denied on October 8, 1980. The juris-

diction of this court is invoked pursuant to 28 U.S.C. 1254

(1) and Rule 20(1) and (4) of the Rules of this court.

CONSTITUTIONAL PROVISIONS INVOLVED

The Fifth Amendment to the United States Constitution

provides, in pertinent part:

‘“No person shall be . . . deprived of life, liberty,

or property, without due process of law. .. .”’

The Sixth Amendment to the United States Constitution

provides, in pertinent part:

‘*In all criminal prosecutions, the accused shall en-

joy the right to a speedy and public trial, by an im-

partial jury of the state and district wherein the

crime shall have been committed. .. .’’

The Fourteenth Amendment to the United States Con-

stitution provides, in pertinent part:

‘‘No state shall . . . deprive any person of life,

liberty or property, without due process of law... .’’

STATEMENT OF THE CASE

On September 20, 1978, Petitioner David N. Moore was

indicted on three counts of wilful failure to file income

tax returns for the years 1972, 1973, and 1974, in vicia-

tion of 26 U.S.C. 7203.

Petitioner Moore’s income tax return for 1972 was a

joint return by Petitioner and his wife and contained their

names, occupations, Social Security numbers and number

of dependents. Written across the face of the return were

the words ‘‘I protest this tax under the Declaration of In-

3

dependence of 1776 and the U.S. Constitution, Article I,

Section 10 and Amendments 5, 9, and 10.’’ The form was

signed by the Petitioner and his wife but the verification

was crossed out. A packet of tax protest literature was

attached.

The Internal Revenue Service notified Petitioner by

form letter in August, 1973, that his 1972 tax return was

not a sufficient return and directed his attention to United

States v. Porth, 426 F.2d 519 (10 Cir., 1970) and to the

following language therein:

‘*A taxpayer’s return which does not contain any

information relating to the taxpayer’s income from

which the tax can be computed is not a return within

the meaning of the Internal Revenue Code or regula-

tions adopted by the Commissioner.’’

Petitioner replied to the IRS in a four-page letter dated

January 7, 1974 in which he argued that he ‘‘did in fact

file with the Internal Revenue Service a correct 1040 form”’

and cited in support of his position Article I, Section 10

of the United States Constitution and a number of other

authorities including United States vy. Porth. The IRS

took no action in response to Petitioner’s letter.

In May of 1974, Petitioner submitted an amended 1040

form for 1972, for himself only, on which he furnished his

name, address, occupation, Social Security number, number

of exemptions, number of dependents, dividends of $22,

and interest income of $41. Other questions were an-

swered with the written word ‘‘none’’ or the words ‘‘Ob-

ject—5th Amendment.’’ The return was signed and the

verification was crossed out. With his amended 1040 form

for 1972, Petitioner also filed a return for 1973 which

was substantially the same as his amended form.

4

The IRS notified Petitioner by form letter dated July

10, 1974 that his return for 1973 was unacceptable and

directed his attention to United States v. Porth, 426 F.2d

519 (10 Cir., 1970) and United States v. Daly, 481 F.2d 28

(8 Cir., 1973), which case, incidentally, distinguishes a

blanket Fifth Amendment privilege and a specific claim

of privilege on a particular question. Petitioner re-

sponded to this letter in October, 1974 with a personal

letter requesting the IRS to answer his questions concern-

ing income taxes. The IRS did not reply.

On April 29, 1975, Petitioner Moore wrote two letters

to the IRS reiterating his questions and providing further

research material in support of his arguments. The IRS

responded by sending Petitioner another copy of its form

warning letter. In June of 1975, Petitioner replied to this

letter and filed a return for 1974 which was substantially

the same as his 1973 return, with the exception that every

line was filled in. The IRS form letter was again sent to

Petitioner on July 2, 1975.

Petitioner was tried in June, 1979, and the jury found

him guilty on all counts. Thereafter, he was sentenced to

90 days incarceration on Count I with the recommenda-

tion that he participate in a work release program. Im-

position of sentence was withheld on Counts II and III

and Petitioner was placed on two years probation on

each count, the sentences to run concurrently with each

other and consecutively to the period of incarceration.

Petitioner appealed the judgment of the District Court

to the United States Court of Appeals for the Seventh

Circuit. The Court of Appeals affirmed in a judgment

and order dated August 22, 1980. Petitioner’s Petition

for Rehearing with en banc suggestion, timely filed, was

denied on October 8, 1980. The instant Petition for Writ

of Certiorari follows.

a |

REASON FOR GRANTING THE WRIT

The decision of the Court of Appeals below improperly

disregarded established precedent, extended the tax crime

laws and created an innercireuit conflict in concluding

that the District Court properly decided that Petitioner’s

federal income tax returns were not returns as a matter

of law.

The basis of the instant cause of action was a variety

of so-called ‘‘protest’’ income tax return. At the time of

trial, federal case law on the subject of protest tax re-

turns had made it clear that a ‘‘taxpayer’s return which

does not contain any information relating to the taxpayer’s

income from which the tax can be computed is not a re-

turn within the meaning of the Internal Revenue Code or

the regulations adopted by the Commissioner.’’ United

States v. Jordan, 508 F.2d 750, 752 (7 Cir. 1975), quoting

United States v. Porth, 426 F.2d 519, 523 (10 Cir. 1970)

(emphasis added). It was undisputed at Petitioner’s trial

for wilful failure to file income tax returns in violation of

26 U.S.C. 7203 that he had timely filed 1040 tax forms

for every year in question and that each form contained

his name, address, Social Security number, number of

exemptions, number of dependents and occupation. How-

ever, the questions requiring numerical answers were

answered in some cases with numbers, sometimes with

the word ‘‘none’’ and sometimes with the words ‘‘ Object—

Fifth Amendment’’. Each form was signed but the stan-

dard verification phrase above the signature was crossed

out.

The crucial issues at Petitioner’s trial were whether

the documents timely filed with the Internal Revenue

6

Service were proper tax returns within the meaning of

that term as defined by regulations and case law, and, if

not, whether the failure to file proper returns was a good

faith mistake. The trial court took the first question from

the jury and instructed them that as a matter of law

Petitioner’s tax returns were not proper returns, thereby

foreclosing Petitioner’s Fifth Amendment right to pre-

sent a theory of defense supported by the law and the

facts, his Sixth Amendment right to trial by jury, and

his First Amendment rights to freedom of speech.

On appeal, the Court of Appeals concluded that the

District Court correctly decided that Petitioner Moore’s

tax returns were not returns as a matter of law by manu-

facturing two new tests which are at odds with the defini-

tion of a tax return in United States v. Porth, 426 F.2d

519 (10 Cir.), cert. denied, 400 U.S. 824 (1970), the defini-

tion adopted by almost all courts including the Seventh

Cireuit at the time Petitioner Moore filed the returns in

question and at the time of his trial. The Court first

declared that Petitioner’s returns were not returns be-

cause the declaration that the tax forms were completed

and signed under penalty of perjury had been obliterated

on each return. In addition, the Court declared that the

tax returns were insufficient because the information sup-

plied in the returns did not manifest an ‘‘honest and

genuine’’ attempt to meet the requirements of the Internal

Revenue Code. The Court recognized that the latter hold-

ing placed the Seventh Circuit in conflict with the decision

of the Ninth Circuit in United States v. Long, 618 F.2d 74

(1980), but stated:

‘If the Courts of Appeals continue to disagree the

Supreme Court will eventually have to decide the

question, but it is our view that when it is apparent

that the taxpayer is not attempting to file forms ac-

7

curately disclosing his income, he may be charged

with failure to file a return.’’ Appendix A at 10.

Petitioner contends that the decision of the Court of

Appeals is improper in several respects. Initially, it is

evident that the Court’s reliance on the lack of a proper

verification on the tax returns is unprecedented and unfair.

Lack of verification has never been the subject of a criminal

prosecution under 26 U.S.C. 7203. The Court is forced

to rely on the dubious authority of two recent Tax Court

decisions upholding additions to tax for failure to file

tax returns in violation of 26 U.S.C. sees. 6651(a), 6653 (a)

and 6654, and a number of cases involving the sufficiency

of corporate tax returns under pre-Code tax law. Appendix

A at 7. More importantly, neither the Internal Revenue

Service or the United States Attorneys who prosecuted

this case informed Petitioner Moore that the absence of

verification was a part of the case against him and, as a

result, Petitioner had no opportunity to prepare a defense

on the issue. The lack of verification on the returns was

not an issue at trial, in any event, but was raised for

the first time by the government brief on appeal. Clearly,

this manner of judgment by hindsight ignores Petitioner’s

right to a meaningful defense and a fair trial.

Equally unprecedented and far-reaching is the holding

of the Court of Appeals that, even if the tax forms in the

present case had been verified, they were insufficient be-

cause the information supplied did not manifest an ‘‘hon-

est and genuine’’ attempt to meet the requirements of the

Tax Code. The essentially subjective test thus fashioned

by the Court is a radical departure from the definition of

a tax return in United States v. Porth, 426 F.2d 519 (10

Cir.), cert. denied, 400 U.S. 824 (1970), which had been

accepted by almost all circuits including the Seventh Cir-

cuit at the time of Petitioner’s trial. What is more, the

8

Court hereby has created a conflict between the circuit

courts. Most recently, the Ninth Cireuit held returns

comparable to Petitioner’s to be valid returns under the

Porth test in United States v. Long, 618 F.2d 74 (9 Cir.

1980). . The Court expressly recognizes the conflict thus

created, stating:

‘‘The Ninth Circuit is clearly correct in stating that

a tax liability could be computed from zeroes, or from

small amounts. ... The mere fact that a tax could

be calculated from information on a form, however,

should not be determinative of whether the form is a

return. . . . The government should not have to

guess whether it should take the position that a form

is not a return and charge the taxpayer with failure

to file, or that the form is a return and charge him

with filing a false return or tax evasion. If the

Courts of Appeals continue to disagree the Supreme

Court will eventually have to decide the question, but

it is our view that when it is apparent that the tax-

payer is not attempting to file forms accurately dis-

closing his income, he may be charged with failure

to file a return.’’ Appendix A at 9, 10.

The ‘‘honest and genuine’’ standard enunciated by the

Seventh Circuit is not only a departure from established

precedent and in conflict with the decisions of other cir-

cuits, but the source of a peculiar dilemma in the instant

case. It is evident that under the subjective test pro-

pounded by the Court the question whether a return is a

lawful return must be decided by the jury, as trier of

fact. Notwithstanding this fact, the Court declares that

in this case the trial court properly decided the issue.

If the new test were to be applied by the trial court and

the trial court could then instruct the jury that the tax

returns at issue in a given prosecution did not evince an

honest and genuine endeavor to satisfy the law, the trial

9

court would completely usurp the function of the jury

in a prosecution for wilful failure to file income tax

returns under 26 U.S.C. 7203.

It is clear from the foregoing that the Court of Appeals

has created new law in order to sustain Petitioner’s con-

viction in violation of Petitioner’s constitutional rights.

The Court affirms for the first time criminal penalties for

failure to verify a tax return. The Court affirms for the

first time that a taxpayer who does not manifest an

‘*honest and genuine’’ attempt to meet the requirements

of the tax code is guilty of a misdemeanor. The new law

thus created by the Court of Appeals constitutes a radical

departure from precedent and creates an innercireuit con-

flict.

CONCLUSION

For all the foregoing reasons, the Petition for Writ of

Certiorari should be allowed to review the instant decision

of the United States Court of Appeals for the Seventh

Circuit.

Respectfully submitted,

Epwarp M. Grenson

JEFFREY B. SrernBack

134 North LaSalle #300

Chicago, Illinois 60602

(312) 726-9015

Attorneys for Petitioner

Of Counsel:

WitursMm H. Stevens

APPENDIX

APPENDIX A

in the

United States Court of Appeals

For the Seventh Cirrnit

No. 79-2041

Unitrep States or AMERICA,

Plaintiff-A ppellee,

Davin N. Moores,

Defendant-A ppellant.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 78 CR 639-1 — Husert L. Wu, Judge.

ArcuEp JuNE 11, 1980 — Decroep Avucust 22, 1980

Before Swycert, Circuit Judge, Woov, Circuit Judge,

and Larson, Senior District Judge.*

Larson, Senior District Judge. Defendant David Moore

was charged with failing to file income tax returns for

* The Honorable Earl R. Larson, United States Senior District

Judge for the District of Minnesota, is sitting by designation.

App. 2

the years 1972, 1973, and 1974, in violation of 26 U.S.C.

§ 7203. Defendant was tried in June 1979 and the jury

found him guilty on all counts. Defendant was a busi-

nessman whose income in each of the years he failed to

file was in excess of $30,000. He had filed valid tax re-

turns for at least five years prior to 1972.

In April 1973 defendant and his wife submitted a joint

return for the 1972 year to the I.R.S. This form con-

tained only their names, occupations, social security

numbers and numer of dependents. Fifth Amendment

objections were written across the form and a packet of

tax protest literature was attached. The form was signed

by the defendant and his wife, but the verification was

scratched out. The I.R.S. notified defendant in August

1973 that the forms were not sufficient returns. In a

rather contentious January 1974 letter, defendant replied

to the LR.S., stating that he considered dollars to be

worthless and his tax return to be adequate.

In May 1974, however, defendant submitted an amended

1040 form for the 1972 year. This form was filed for

himself only. On the amended form defendant filled in

the various blanks calling for numerical information with

‘‘none,’’ except that under interest income he put $41 and

under dividend income he placed the figure $22. The Fifth

Amendment objections were retained and more tax protest

material was appended. Although signed, the certification

on the form was again marked over.

In 1974 defendant also filed a return for the year 1973

which was substantially the same as his amended form

for 1972. It contained a small amount in interest income

and the certification was scratched out. The I.R.S. noti-

fied defendant by letter in July 1974 that it did not con-

sider this to be a return. In 1975 defendant filed a similar

App. 3

return for the 1974 year. The I.R.S. again informed him

that it did not consider this to be a return.

Gn appeal defendant raises a number of supposed errors

made by the district court. Defendant claims that the

district court allowed the introduction of irrelevant and

prejudicial evidence. The district court judge allegedly

participated excessively in the trial, particularly in ques-

tioning the defendant while he was testifying. Defendant

contends that the instructions did not adequately inform

the jury of his good faith defense. Finally, defendant

contends that the district court usurped the jury’s func-

tion in deciding the issue of whether or not a return had

been filed. Defendant claims that the documents he filed

with the I.R.S. are returns.

It is acceptable for a judge to question a witness as

long as he is careful not to do so in a way which would

communicate a belief in the defendant’s guilt to the jury.

United States v. Baron, 602 F.2d 1248, 1249 (7th Cir.),

cert. denied, 100 S.Ct. 456 (1979). Defendant was the

subject of some interrogation by the district court. The

questioning was not hostile, nor was it of a type which

would impair the defendant’s right to a fair trial.

Defendant claims that the district court committed sev-

eral evidentiary errors. Testimony accepted from an

1.R.S. agent was allegedly improper. No objection was

made to this evidence at trial, and it was clearly per-

missible in any event. Some mention was made of a trust

fund which defendant had established and which the gov-

ernment thought may have been a tax avoidance device.

Any problem here was eliminated by a stipulation that

the trust fund was not intended to be used to avoid taxes.

Some of defendant’s returns prior to 1972-74 were intro-

duced as evidence. It is acceptable to use earlier re-

App. 4

turns to show willfulness. See United States vy. Stout,

601 F.2d 325, 329 (7th Cir.), cert. denied, 100 S.Ct. 481

(1979), and cases cited therein. Finally, defendant con-

tends that evidence that he purchased an expensive house

and a Mercedes car during the period 1972-74 was irrele-

vant and highly prejudicial. Defendant said that he be-

lieved Federal Reserve Notes were worthless and there-

fore he did not have any real income. The use of these

notes in making various purchases tends to undercut the

good faith or reasonableness of a belief that dollars are

worthless, and is therefore plainly relevant.

Defendant next argues that he was not given the oppor-

tunity to adequately present his theories of defense, largely

because of the failure of the district court to give requested

instructions. In particular, he claims that he could not

present to the jury his defense of good faith. A defen-

dant is entitled to have the jury instructed on a theory of

defense which has some foundation in the evidence and

which is supported by the law. United States v. Cullen,

454 F.2d 386, 390 (7th Cir. 1971) ; United States v. Grimes,

413 F.2d 1376, 1878 (7th Cir. 1969).

Willfulness is an element of the 26 U.S.C. § 7203 crime.

Willfully in the tax crime statutes means a voluntary,

intentional violation of a known legal duty. l’nited States

v. Pomponio, 429 U.S. 10, 12 (1976); United States v.

Bishop, 412 U.S. 346, 360 (1973); United States v. Mc-

Corkle, 511 F.2d 482, 484 (7th Cir.), cert. denied, 423 U.S.

826 (1975). The Supreme Court has specifically ruled

that no additional good faith defense instruction need be

given. United States v. Pomponio, 429 U.S. at 13. See

United States v. Sawyer, 607 F.2d 1190, 1192 (7th Cir.

1979), cert. denied, 100 S.Ct. 1338 (1980). The district

App. 5

court here several times gave the correct definition of

willfully to the jury.’ It did not need to do more.

The district court apparently concluded that the true

nature of defendant’s defense was that he had made a

mistake of law, because he believed that he had filed an

adequate ‘‘return.’’? The mistake of law defense is ex-

tremely limited and the mistake must be objectively rea-

sonable. United States v. Barker, 546 F.2d 940, 948 (D.C.

Cir. 1976). See United States v. Moore, 586 F.2d 1029,

1033 (4th Cir. 1978); Kratz v. Kratz, 477 F. Supp. 463,

480 (B.D. Pa. 1979). The district court correctly instructed

the jury on this defense. After telling the jury that as a

matter of law what defendant filed were not returns, the

court continued:

‘‘The question is, did he reasonably believe that they

were, ... it is Mr. Moore’s theory that during the

' The district court told the jury that the government must prove

that defendant ‘willfully, purposely as distinguished from inad-

vertently, negligently or mistakenly failed to file such a return.”

The court went on to instruct that:

“The term willful for purposes of these instructions means

voluntary, deliberately and intentionally, as distinguished from

accidentally, inadvertently or negligently. Willfulness in the

context of a failure to file a proper tax return simply means

a voluntary, intentional violation of a known legal obligation

to file such a return,”

The jury's conclusion that defendant acted willfully would neces-

sarily negate any possibility of “good faith” in failing to file.

In fact, this Court, and other circuits as well, have held that only

an inadvertent failure to file or a bona fide misunderstanding of

the duty to file are justifiable or good faith excuses. United States

v. McCorkle, 511 F.2d at 486. Good faith disagreements with the

law or good faith beliefs that it is unconstitutional are not defenses.

U/nited States vy. Karsky, 610 F.2d 548, 550 (8th Cir. 1979),

ceri, denied, 100 S.Ct. 1058 (1980); United States v. Ware, 608

2d 400, 405 (10th Cir. 1979),

App. 6

time which he was required to file these returns...

he did timely (file) what he then reasonably believed

to be a proper income tax return... and he did not,

therefore, willfully fail to file a proper return.’’

It may not even have been necessary for the district

court to give this instruction. The I.R.S. rejected defen-

dant’s returns because they did not contain adequate in-

formation to allow calculation of a tax liability. Defen-

dant believed his returns were sufficient not because they

provided the necessary information, but because he be-

lieved he had no legal income to report. This belief was

based on the alleged unconstitutionality of the income tax

and of Federal Reserve Notes. If defendant had studied

United States v. Daly, 481 F.2d 28 (8th Cir.), cert. denied,

414 U.S. 1064 (1973), and United States v. Porth, 426

F.2d 519 (10th Cir.), cert. denied, 400 U.S. 824 (1970), as

carefully as he claims, he would heve noticed that the

courts have consistently rejected these views as totally

frivolous. It would appear impossible tor a taxpayer to

reasonably believe that Federal Reserve Notes are worth-

less and therefore that income received in that form does

not have to be reported.

Finally, defendant contends that what he filed was a

return and that the district court erred in taking this issue

from the jury. The determination of what is an adequate

return is a legal question and it was proper for the dis-

trict court to decide that question.

Defendant asserts that he filed an acceptable return

because he did provide some figures, although incomplete

and inaccurate, from which a tax could be computed. He

argues that his return is therefore unlike those which con-

tain blanket objections and no income figures at all. This

App. 7

is a difficult problem and one which we fortunately do

not have to decide. The forms defendant supplied to the

I.R.S. were not returns for another reason: they were not

verified.

26 U.S.C. § 6001 states that ‘‘every person liable for

any tax imposed by this title .. . shall . . . make such

returns, and comply with such rules and regulations as

the Secretary (of the Treasury) may from time to time

prescribe.’’ Section 6011(a) requires taxpayers to make

returns ‘‘according to the forms and regulations pre-

scribed by the Secretary.’’ Section 6061 provides that

returns ‘‘shall be signed in accordance with forms or regu-

lations prescribed by the Secretary.’’ Section 6065 (sec-

tion 6065(a) at the time defendant filed his returns) states

that ‘‘any return ... required to be made under any

provision of the internal revenue laws or regulations shall

contain or be verified by a written declaration that it is

made under the penalties of perjury.’’ In 26 C.F.R.

$ 1.6065-1(a) the Secretary of the Treasury has by regu-

lation also required income taxpayers to verify their re-

turns. Defendant had a duty by statute and regulation

to file tax returns with a verified signature. The forms

he submitted to the I.R.S. were not returns because the

declaration that the forms were completed and signed

under penalty of perjury was obliterated. Cupp v. Com-

missioner, 65 T.C. 68, 78-9 (1975), aff’d unpub. mem., (3d

Cir. June 10, 1977); Ellison v. Commissioner, 35 T.C.M.

1261, 1263 (CCH) (1976), aff’d unpub. mem., (10th Cir.

Jan. 20, 1978). See Commissioner v. The Pilliod Lumber

Co., 281 U.S. 245, 248 (1930) (corporate return); Burford

v. Commissioner, 153 F.2d 745, 746 (5th Cir. 1946) (cor-

porate return); UHL Estate Co. v. Commissioner, 116

F.2d 403, 404 (9th Cir. 1940) (corporate return).

App. 8

Even if the forms had been verified, the LR.S. could

have properly rejected them as insufficient returns.’ The

tax protestor cases have forced courts to grapple with

the definition of a ‘‘return.’’ The tax code and regula-

tions provide little guidance. In United States v. Porth,

supra, at 523, the Tenth Circuit held that a return ‘‘ which

does not contain any information relating to the taxpayer’s

income from which the tax can be computed is not a re-

turn within the meaning of the Internal Revenue Code.’’

The return in Porth had no information at all on income.

The Porth test has been adopted by almost all courts, in-

cluding this one. United States v. Stout, 601 F.2d 325, 328

(7th Cir.), cert. denied, 100 S.Ct. 481 (1979) ; United States

v. Jordan, 508 F.2d 75v, 751-52 (7th Cir.), cert. denied,

423 U.S. 842 (1975). It is not clear, however, what the

result should be when the form does include some income

figures, even if incomplete or inaccurate.

Varying positions have been taken by the Courts of

Appeals. The Tenth Circuit has held that a form giving

some small income amounts in ‘‘constitutional’’ dollars

was tantamount to one giving no information, and would

“te treated as such. United States v. Brown, 600 F.2d

248, 251 (10th Cir.), cert. demed, 100 S.Ct. 283 (1979).

The Third Circuit appears to have taken a similar ap-

proach in United States v. Edelson, 604 F.2d 232, 234

(3rd Cir. 1979). The form had only a total income figure,

and that was in ‘‘constitutional’’ dollars. In United States

v. Smith, 618 F.2d 280, 281 (Sth Cir. 1980), the taxpayer

put zeroes in some of the income blanks. The court said

the ‘‘return’’ did not purport to disclose the required

information and would not be treated as a return. Most

recently, in United States v. Farber, No. 79-1815 (8th

2 Although not necessary, a discussion of this issue may provide

useful guidance to the government in future cases.

App. 9

Cir. July 10, 1980), the Eighth Circuit upheld the failure-

to-file conviction of a taxpayer who had reported a small

amount of income. /d., slip opinion at 2 n.2. In all of these

cases it was apparent from Fifth Amendment objections

written on the forms and from accompanying literature

that the filer was a tax protestor.

The Ninth Circuit, however, has taken the opposite

position. In United States v. Long, 618 F.2d 74, 75 (9th

Cir. 1980), the taxpayer submitted a form with zeroes in

all the blanks. The court held that even if this

information was false, a tax liability could be computed

from it and it was therefore an adequate return. Part of

the court’s rationale appeared to be that a different penalty

could be levied against those who took the chance of

supplying false information. Jd. at 75 n.4. Cf. Umited

States v. Schmitz, 542 F.2d 782, 783 (9th Cir. 1976), cert.

denied, 429 U.S. 1105 (1977), where the same court af-

firmed a conviction involving a return with zeroes and

small amounts, although this was not an issue on appeal.

The Ninth Circuit is clearly correct in stating that a

tax liability could be computed from zeroes, or from

small amounts. The fact that the information is

inaccurate only means that the tax owed, if any, will be

wrong, not that it cannot be calculated. When the income

information is incomplete, a more difficult problem is pre-

sented, but as long as a total income figure is given, the

LR.S. could compute the tax. Certainly a bright line rule

that even a form with inaccurate or incomplete income

information is a return would be easier to enforce.

The mere fact that a tax could be caleulated from in-

formation on a form, however, should not be determina-

tive of whether the form is a return. Porth relied in part

on earlier Supreme Court cases which considered the

definition of a return in another context. These cases in-

App. 10

dicate that it is not enough for a form to contain some

income information; there must also be an honest and

reasonable intent to supply the information required by

the tax code. See Germantown Trust Co. v. Commis-

sioner, 309 U.S. 304, 308-9 (1940); Florsheim Brothers Co.

v. United States, 280 U.S. 453, 462 (1930). In Zellerbach

Paper Co. v. Commissioner, 293 U.S. 172, 180 (1934), if

was said that:

‘‘Perfect accuracy or completeness is not necessary to

rescue a return from nullity, if it purports to be a

return, is sworn to as such, and evinces an honest

and genuine endeavor to satisfy the law.’’ (citation

omitted. )

In the tax protestor cases, it is obvious that there is no

‘‘honest and genuine’’ attempt to meet the requirements

of the code. In our self-reporting tax system the govern-

ment should not be forced to accept as a return a document

which plainly is not intended to give the required informa-

tion.

It is important to harmonize the various tax crime

laws. The government apparently prefers to charge tax

protestors with failure to file—§ 7203, a misdemeanor,

rather than tax evasion—§ 7201, or making false

returns—-§ 7206, both felonies. A serious problem might

be presented if the government took the position that

any form with false information on it is not a return.

That is not our situation. It is not the false data which

makes these returns defective, but the fact that there is

no real attempt to comply with the requirement of filing

a return.

The government should not have to guess whether it

should take the position that a form is not a return and

charge the taxpayer with failure to file, or that the form

App. 11

is a return and charge him with filing a false return or

tax evasion. If the Courts of Appeals continue to dis-

agree the Supreme Court will eventually have to decide

the question, but it is our view that when it is apparent

that the taxpayer is not attempting to file forms accurately

disclosing his income, he may be charged with failure to

file a return.

The conviction is affirmed.

A true Copy:

Teste:

SERRE REE E EERE E HE FREER EER REE EES RR EE EEE RR RHR EER RRR eee

Clerk of the United States Court of

Appeals for the Seventh Circuit

App. 12

APPENDIX B

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

October 8, 1980

Before

Hon. Lutuer M. Swycert, Circuit Judge

Hon. Hartincton Woop, Jr., Circuit Judge

Hon. Eart R. Larson, Senior District Judge*

UNITED STATES OF AMERICA,

Plaintiff -A ppellee,

No. 79-2041 vB.

DAVID N. MOORE,

Defendant-A ppellant.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 78-Cr-639

Judge Hubert L. Will

On consideration of the petition for rehearing and

suggestion for rehearing in banc filed in the above entitled

cause by defendant-appellant, no judge in active service

has requested a vote thereon, and all of the judges on

the original panel have voted to deny a rehearing. Ac-

cordingly,

IT IS ORDERED that the aforesaid petition for re-

hearing be, and the same is hereby DENIED.

*The Honorable Earl R. Larson, United States Senior District

Judge for the District of Minnesota, is sitting by designation.