Record and brief — Middlebrook v. United States

UONag

Oftice-Supreme Court, U.S,

81-557 FILED

suuieedseeseecseceeecaceveesetees ee

ALEXANDER L. STEVAS,

NO CLERK

THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1981

<<< = Se eo eee Se ee Ke Ke ee KE er er er Er er er Kr Er er eK Ke er er ee |

i ed

KIMBROUGH G. MIDDLEBROOK,

PETITIONER

VERSUS

UNITED STATES OF AMERICA,

RESPONDENT

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

RICHARD L. STRADLEY

Counsel for Petitioner

4515 Miller Creek Road

Missoula, Montana 59803

Phone: (406) 251-4034

THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1981

KIMBROUGH G. MIDDLEBROOK,

PETITIONER

VERSUS

UNITED STATES OF AMERICA,

RESPONDENT

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

RICHARD L. STRADLEY

Counsel for Petitioner

4515 Miller Creek Road

Missoula, Montana 59803

Phone: (406) 251-4034

QUESTIONS PRESENTED FOR REVIEW

I. DID THE TRIAL COURT ERR IN NOT

DISMISSING THE § 7203 CHARGE BASED ON THE

FIFTH AMENDMENT CONFLICT BETWEEN § 7203

AND § 7205?

Petitioner says yes.

II. DID THE COURT'S REFUSAL TO

INSTRUCT THE JURY AS REQUESTED DENY THE

PETITIONER HIS RIGHT TO A “GOOD FAITH"

DEFENSE UNDER 26 USC §§ 7203 and 7205?

Petitioner says yes.

III. DID THE TRIAL COURT ERR IN

NOT ALLOWING THE PETITIONER TO DEVELOP

HIS THEORY CF DEFENSE BY REFUSING TO LET

HIM TESTIFY ABOUT WHAT HE RELIED UPON?

Petitioner says yes.

IV. DID THE TRIAL COURT ERR IN

NOT DISMISSING THE CHARGES BASED UPON THE

VAGUENESS AND AMBIGUITY IN THE LAW RE-

QUIRING FILING OF INCOME TAX RETURNS AND

THE LAW CONCERNING FILING W-4 FORMS?

Petitioner says yes.

V. DID THE TRIAL COURT ERR IN

OVERRULING PETITIONER'S MOTION TO SUP-

PRESS?

Petitioner says yes.

ii

TABLE OF CONTENTS

Questions Presented For Review

Table of Contents

Table of Authorities

Opinion Below

Jurisdiction

Constitutional Provisions And

Statutes Involved

Statement of the Case

Reasons For Review

I.

Il.

Ill.

IV.

A. The § 7203 Count

B. The § 7205 Counts

V.

Conclusion

Affidavit of Service

Appendix

Constitution, Fourth Amendment

iii

A-1

(Table of Contents - Cont.)

Appendix (cont. )

Constitution,

Constitution,

Constitution,

Constitution,

Constitution,

26 USC

26 USC

26 USC

26 USC

26 USC

26 USC

§

ana @Q@

7203

7205

3402

6012

6201

6203

Fifth Amendment

Sixteenth Amendment

Article I, § 2, ¢1.3

Article I, § 8, cl.1

Article I, § 9, c1.4

Government's Instruction # 14

Government's Instruction # 17

Government's Instruction # 18

iv

A-8

A-12

A-13

TABLE OF AUTHORITIES

Cases Page

American Airways vy. Wallace,

57 Fed 77 POPP Ts Yr rer rTTTe 31

Arnstein v. McCarthy, 254 US 71,

GT SCt 26, 65 LEd 138 (1920)..... 6

Bishop v. U. S., 412 US 346, 93 SCt

2008, 30 LEd2d 941 (1973)....20,23

Brushaber v. Union Pacific R.R.Co.,

, t , 00.

LEd 493 (1915) -ceeeevccces 28,29, 30

Cooley v. U. S., 501 F2d 1249 (9th

r. ), cert den, 419 US

TURD. FISTS Po cccccvcesccccecoss sont

Counselman v. Hitchcock, 42 US 547,

T2 SCt 195, 35 LEd 1110

SUMED oes cescsocccccocscoccccseces 6

Dunn v. U. S., 442 US 100, 99 SCt

, 60 LEd2d 723 (1979)..+.+-+25

East Ohio Gas Co. v. Tax Commissioner

of Ohio, 43 Fed 171 (1930)--+++e31

Flint v. Stone Trace Co., 220 US 107,

t » 55 LEd 389

(1910) occevevevecesevesecesvees -31

Garner v. U. S., 424 US 648, 96 SCt

1178, 47 LEd2d 370 (1976)..-15, 16,17

Haynes v. Oradell, 425 US 610, 96 SCt

1755, GO LEd2d 243 (1976)+--+++- 24

Haynes v. U..S., 390 US 85, 88 SCt 772,

v

(Table of Authorities - Cont.) Page

19 LEd2d 923 (1968)........ 9,10,12

Hoffman v. U. S., 341 US 479, 71 SCt

BiG, 95 LEd 1118 (1951)......... 6

Leary v. U. S., 395 US 6, 89 SCt 1532,

d 57 (1969)...... voeSs 10, 12

Lefkowitz v. Turley, 414 US 70, 94

SCt 316, 38 LEd2d 274 (1973)..... 8

Marchetti v. U. S., 390 US 39, 88 SCt

“697, 19 LEd2d 889 (1968)..... 11,12

Murdock v. U. S., 290 US 389, 54 SCt

P LEd 381 (1933)....13,18,22

Penn Mutual Indemnity Company (Dissol-

ve v. Commissioner, 32

—---—_

Tax Court >} SS ee -32

Pollock v. Farmers’ loan & Trust Co.,

9 t

759, later op on reh 158 US 601

15 SCt 912, 39 LEd 1108 (1899)..26,27

Simpson v. U. S., 435 US 6, 95 SCt

909, 55 LEd 2d 70 (1978)........25

U. S. v. Carlson, 617 F2d 518 (9th Cir.

TCA 660s004s0eve~ de oedwes 22

U. S. v. Sullivan, 274 US 259, 47 SCt

607, 71 LEd 1037, 51 ALR 1020

C9GRT ec cece $660006eeé6eeeeeese 15,17

Constitution & Statutes Page

Constitution, Article I, § 2, cl. 3....27

Constitution, Article I, § 8, cl. 1....29

vi

(Table of Authorities - Cont.) Page

Constitution, Article I, § 9, cl. 4....27

Constitution, Fifth Amendment.....9,10,11

12,14, 16

Constitution, Sixteenth Amendment...26,27

26 USC § 3402....... Svaccecocsvesesoceees

ey Eh ,) SAAATONTTT TiTTrTTet rere

BS WES HS GRO cc cccccccccccvscsvecesccee me

BG GEE § GOB. cc cwscccssssesisvisccccee Ds

26 USC § 7203.....ee eevee 0549, 10, 12, 16,21

22,25

26 USC § 7205..... WerrTrrTT. Mik OP

Others Page

Black's Law Dictionary, Revised

DT cc Ls 60 céeuetaeaneeoescne

Corpus Juris Secundum, "Excise",

pp. VUWOUT Ve cosecesesesecssecocccéocne

Corpus Juris Secundum, "Internal

Revenue", pp. rrr rrr

Devit & Blackmar, Federal Jur

Instructions, § 35.31..eeseeeeeee2l

vii

NO.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1981 .

KIMBROUGH G. MIDDLEBROOK,

PETITIONER

UNITED STATES OF AMERICA

RESPONDENT

Petition for Writ of Certiorari To

The United States Court of Appeals

For The Fifth Circuit

BRIEF FOR PETITIONER

Petitioner, KIMBROUGH G. MIDDLE-

BROOK, respectfully prays this Court to

issue a Writ of Certiorari to review the

final decision of the United States Court

of Appeals for the Fifth Circuit entered

on June 22, 1981.

OPINION BELOW

The decision of the United States

Court of Appeals to affirm this cause was

made without opinion under the Fifth Cir-

cuit Court of Appeals Local Rule 21, and

that order appears herein at page A-1.

JURISDICTION

The order affirming the trial

court's judgment was entered on June 22,

1981, and the jurisdiction of this Court

is invoked under 28 USC § 1254.

CONSTITUTIONAL PROVISIONS & STATUTES

INVOLVED

Constitution of the United States,

Fourth Amendment

Constitution of the United States,

Fifth Amendment

Constitution of the United States,

Sixteenth Amendment

Constitution of the United States,

Article I, § 2, cl. 3

Constitution of the United States,

Article I, § 8, cl. 1

Constitution of the United States

Article I, § 9, cl. 4

26 USC §§ 7203 and 7205

2

26 USC §§ 3402, 6012, 6201, and 6203

STATEMENT OF THE CASE

On Januar) 18, 1979, a three-count

indictment was filed in the Nerthern Dis-

trict of Georgia, charging the Petitioner

with violating 26 USC § 7203 for 1976 and

with violating 26 USC § 7205 on January

20, 1976 and again on April 15, 1977. On

those dates, the Petitioner had filed

with his employer a W-4 form on which he

Claimed "exempt" from withholding.

For the tax year 1974, the Peti-

tioner had filed a regular return. For

the tax year 1975, the Petitioner had

filed a "Fifth Amendment" return on which

he had claimed his objections to the

questions asked, by specific line item,

on the basis of Constitutional provisions

including the Fifth and Fourth Amendments

a similar return was filed for 1976 and

following. The Petit‘oner was not prose-

cuted for the 1975 return.

3

Following a jury trial, (Honorable

Walter Nixon presiding) Petitioner was

found guilty on all counts and was sen-

tencec to serve one year, with six months

suspended on two years probation, and a

fine of $1,000.00. One June 22, 1981,

the Fifth Circuit Court of Appeals af-

firmed the conviction of the Petitioner.

The Petitioner testified that he

filed in the manner he did because he

felt to do otherwise would waive his

rights under the Fourth and Fifth Amend-

ment to the Constitution, and further,

that the wages he had received were not

taxable under the Internal Revenue Code.

However, his testimony as to the law he

had relied upon and the other materials

he had relied upon were not allowed by

the Court. (See volume two of the trans-

cript, at pages 314 through 326).

REASONS FOR ALLOWING THE WRIT

I.

The question presented here can be

expressed thusly, does the Fifth Amend-

ment right to be free from being a wit-

ness against oneself in a criminal trial

disappear if the crime is a tax-related

one? 2

This question has not yet been an-

swered by this Court as it pertains to

the interaction between 26 USC §§7203

and 7205, which is the issue here. How-

ever, the question has been answered "no"

in other circumstances by this Court.

The Court of Appeals, by affirming

the conviction of the Petitioner, was

saying "yes" to the questicn.

In this case, assume for purposes

of this argument that the §7205 charges

were correct, i.e., that the W-4 forms

filed with the employers on the dates

charged were indeed willfully false and

5

fraudulent, as the government contends.

Then, if a return ahd been filed for 1976

in the manner required by the Internal

Pevenue Service, showing wages as items

sf gross income, that return would have

been testimony that the W-" form filed

was indeed false and fraudulent.

Therefore, if the Petitioner had

indeed filed a standard tax return for

1976, he would have incriminated himself

concerning the W-4 charge.

Does then the Fifth Amendment ap-

ply? Obviously it should, as that part

of the Amendment is to be accorded liber-

al construction in favor of the right it

was intended to secure. Counselman v.

Hitchcock, 142 US 547, 12 SCt 195, 35 LEd

1110 (1892), Arndstein v. McCarthy, 254

US 71, 41 SCt 26, 65 LEd 138 (1920).

The case of Hoffman v. U.S., 341

US 479, 71 SCt 814,95 LEd 1118 (1951),

provides us with an outline of the con-

6

text in which this case must be analyzed.

The privilege afforded not only ex-

tends to answers that would in them-

selves support a conviction under

a federal criminal statute, but

likewise embraces those which would

furnish a link in the chain of

evidence needed to prosecute the

claimant for a federal crime. Blau

v. U.S., 340 US 159, 170, 71 SCt

950). But his protection must

be confined to instances where the

witness has reasonable cause to

apprehend danger from a direct an-

swer. Mason v. U.S., 244 US 362,

365 61 LEd 1198, 1199, 37 SCt 621

(1917), and cases cited. The wit-

ness is not exonerated from an-

swering merely because he declares

that in so doing he would incriminate

himself-his say so does not in it-

self establish the hazard of in-

crimination ...However, if the wit-

ness, upon interposing his claim

of privilege were required to prove

the hazard in the sense in which a

claim is required to be established

in court, he would be compelled to

surrender the very protection which

the privilege is designed to guar-

antee. To sustain the privilege

it need only be evident from the im-

plications of the question, in the

setting in which it is asked that

a responsive answer to the question

or an explanation of why it cannot

be answered might be dangerous be-

cause injurious disclosure might re-

sult. Hoffman, supra at 486, 487.

To assert that the Petitioner might have

incriminated himself had he "provided

sufficient information from which to com-

pute a tax liability" (the definition of

a legal tax return), is no non sequiter.

Had the Petitioner done so, he would have

directly impeached his assertion that he

had incurred no tax liability, and pro-

vided the government with the evidence

to convict himself under a prosecution

under 26 USC §7205.

As this Court held in Lefkowitz

v. Turley, 414 US 70, 94 SCt 316, 38

LEd 2d 274 (1973):

The (Fifth) Amendment not only pro-

tects the individual against being

involuntarily called as a witness

against himself in a criminal pro-

secution, but also privileges him

not to answer official questions put

to him in any other proceeding, civii

or criminal, formal or informal where

the answers might incriminate him if

future proceedings.

It is undisputed that the questions put

to taxpayers on a 1040 form are official

questions put to the taxpayer by the gov-

ernment, and further that the answers to

those questions can be and will be used

against a person if it evidences a crime.

Garner v. U.S., 424 US 648, 96 SCt 1178,

47 LEd2d 370 (1976).

The Fifth Amendment problems created

by 26 USC §§7203 and 7205 are analagous

to the situations which this Court con-

fronted in Haynes v. U.S., 390 US 85,

88 SCt 772, 19 LEd2d 923, (1968) and also

Leary v. U.S., 395 US 6, 89 SCt 1532, 23

LEd2d 57 (1969). Haynes concerned "whe-

ther enforcement of §5841 (of 26 USC) a-

gainst petitioner, despite his assertion

of the privilege against self-incrimina-

tion, is constitutionally permissable ...

and if a prosecution under §5841 would

have punished petitioner for his failure

to incriminate himself, it would follow

that a proper claim of privilege should

have provided a full defense to this pro-

secution."” Haynes, supra at 90.

9

In the instant case the statutes in-

fringe on this Petitioner's Fifth Amend-

ment privilege becasue 26 USC §7205

prohibits certain conduct and failure to

provide information which would incrim-

nate this Petitioner under §7205 comprises

the offense charged under 26 USC §7203.

In both Haynes and this case, the syner-

Ristic effect of two statutes infringes

upon the Petitioner's Fifth Amendment

rights.

Leary involved the identical issue,

phrased thusly by this Court at 23 LEd2d

pp. 73-74:

The aspect of the self-incrimination

privilege which was involved in Mar-

chetti and which Petitioner asserts

here, is not the undoubted right of

an accused to remain silent at trial.

It is instead the right not to be

criminally liable for one's previous

failure to obey a statute which re-

quired an incriminatory act...

Accordingly, we reverse petitioner’ s

eonviction.

It is no argument that the Petitioner

placed himself in the position from which

10

he seeks relief under the Fifth Amend-

ment, or that one cannot break one law

and then violate another for the reason

that not to violate it would incriminate

oneself for the first violation. This

argument was well answered in the case of

Marchetti v. U.S. , 390 US 39,88 SCt 697,

19 LEd2d 889 (1968) which stated at pages

50-51:

We find this reasoning no longer

persuasive. The question is not

whether the petitioner holds a "right"

to violate state law, but whether

having done so, he may be compelled

to give evidence against himself.

The constitutional privilege was in-

tended to shield the guilty and im-

- prudent as well as the innocent and

foresizhted; if such an inference of

antecedent choice were alone enough

to abrogate the privilese's pro-

tection, it would be excluded from

the situations in which it has his-

torically been guaranteed, and with-

held from those who most require it.

The same applies here. The question is

not if the Petitioner had a right to vio-

late §7205, but, if having done so, may

he be compelled to give evidence against

ll

himself about this violation or face

charges under § 7203 for failing to in-

criminate himself. And the answer is the

same as it was in Marchetti, Haynes, and

Leary, a resounding NO!

Therefore, the trial court erred in

not dismissing the § 7203 charge based on

the Fifth Amendment conflict between §§

7203 and 7205.

Il.

The instructions granted by the

Court in this cause are in total conflict

with the applicable decisions of this

Court. In some instances, they are even

in conflict with other Circuits, notably

the Ninth Circuit Court of Appeals.

In particular, the Court granted

the government's requested instruction

number 14, over the Petitioner's objec-

tions. (The full text of this instruc-

tion appears in the Appendix). This in-

struction negated any "good faith" de-

fense to willful tuailure to file. It

12

stated:

The intentional refusal by a tax-

payer to reflect little or no in-

come on a tax return form as to his

income or expenses with the excuse

that to do so would violate his

right against self-incrimination

under the Fifth Amendment to the

Constitution is no legal justifica-

tion for not filing a timely com-

plete income tax return reflecting

the amounts of income for 1976. The

same is true for an excuse that Fed-

eral Reserve Notes are not legal

tender or that the Federal Reserve

system is unconstitutional. These

are not legal justifications for

willful failure to file.

This completely ignores the law that these

reasons are indeed legal justifications

for not filing if the person holding

those views holds them in good faith.

U.S. v. Murdock, 290 US 389, 54 SCt 223,

78 LEd 381 (1933) defines willfulness

as a thing done without ground for be-

lieving it is lawful. Therefore, if a

person has grounds for believing that

his conduct is indeed lawful, that would

negate the element of willfulness. ry

13

In other words, 2 person's good faith

beliefs can negate willfulness, and the

jury has a right to examine those beliefs

to see if indeed they are held in good

faith. The jury was not allowed to so

do in this case, and the Petitioner was

denied a fair trial thereby.

This same problem applies to the

government's instruction number 17, also

granted by the trial Court. (The full

text of this instruction is set forth in

the Appendix). This instruction applied

to Federal Reserve Notes, and again cut

off the Petitioner's right to a good

faith defense.

As to the Fifth Amendment privilege,

the instructions of the Court again went

outside the decisions of this Court. In

addition to the language in instruction

number 14 cited above that the Fifth Amend-

ment was not a legal justification for

failure to file, the Court granted the

14

the government's instruction number 16

(in Appendix) which stated:

You are further instructed that a

taxpayer may not refuse to enter

on his return the necessary infor-

mation as to his income and expenses

by claiming a privilege against self-

incrimination. The Fifth Amendment

to the Constitution of the United

States does not protect or shield a

taxpayer from revealing the required

financial information or amounts of

his income on his income tax return.

Therefore, defendant's claim of a

Fifth Amendment privilege against

disclos:ng his income on a tax re-

turn should not be considered by the

jury as a good faith defense to

the charge of willful failure to file.

As can be seen, these instructions stated

to the jury that under no circumstances

can one claim to have a Fifth Amdnement

privilege against filing a tax return.

This flies directly in the face of this

Court's decisions in U.S. v. Sullivan,

274 US 259, 47 SCt 607, 71 LEd 1037, 51

ALR 1020 (1927), and Garner v. U.S., 424

US 648, 96 SCt 1178, 47 LEd2d 379 (1976).

Sullivan not only says that the

Fifth Amendment is a defense, it further

states that you must raise that defense

on the return itself, or you waive it.

Roane atk ao aa elhClek ee & =. Ano tt «a DBs Dat. oc

defense to failure to file, even the

erroneous but good faith claim of the

Fifth Amendment privilege is a defense to

a failure to file charge.

A §7203 charge (willful failure to

file) can only arise if the person so

charged has failed in some manner to put

down items of income on his return, as

other items which might be lacking would

not lead to a failure to file charge.

Therefore, Garner stands for the proposi-

tion that the Fifth Amendment privilege

concerning a tax return embodies the

right to refuse to include items of in-

come.

These instructions negated the

Petitioner's right to a defense based on

the Fifth Amendment, as to whether or not

he had correctly claimed it, and further

negated his right to a defense based on

Petitioner's good faith, but erroneous,

Claim of the privilege.

16

In addition to these erroneous instruc-

tions (14, 16, 17) all of which were ob-

jected to by the Petitioner, the Court

refused the Petitioner's instructions

which correctly stated the law. Asa

matter of fact, the trial Court refused

all of the Petitioner's requested in-

structions.

The Petitioner submitted two in-

structions based on Sullivan, numbers 8

and ll as follows:

You are instructed that if a per-

son wishes to assert his Right a-

gainst Self-Incrimination regarding

specific items, he must do so on the

tax return itself or forever waive

the Privilege.

You are instructed that: "If the

tax return form provided called for

answers that the Defendant was pri-

vileged from making that he could

have raised the objection in the re-

turn, but could not on that account

refuse to make any return at all."

The Petitioner further submitted an

instruction based on Garner about the

erroneous claim of the privilege in good

17

faith, number 9.

You are instructed that even if

the Defendant erroneously or mis-

takenly asserted his Constitutional

rights under the Fifth Amendment

on the tax returns in question, that

if he did so in "good faith" then

you must find that the Defendant did

not act willfully. If you find that

the evidence shows that the Defen-

dant acted in good faith, you must

find him not guilty.

Three instructions based on willfulness

as defined by Murdock, numbers 4,10, and

14, were offered as follows:

You are instructed that the speci-

fic intent of "willfulness" must

be proven in order to convict the

Defendant of failure to make an

income tax return. The term "will-

fully," used in connection with this

offense, means voluntarily, purpose-

fully, deliberately, with evil mo-

tives, or with bad purpose. Mere

negligence, even gross negligence,

even reckless disregard for the law,

is not sufficient to constitute will-

fulness under criminal law.

However, if you find that the De-

fendant failed to make a return be-

cause of negligence, inadvertence,

accident or reckless disregard for

the requirement of the law, or due

to his gowd faith misunderstanding

of the requirements of the law, or

that he had actual belief that in

good faith believed that he had the

18

made a return even though he may

not have, or that he in good faith

believed that he had the right to

assert his Constitutional rights

under the Fifth Amendment on the

returns in question in the manner

that he did, then you must find that

the Defendant's conduct is not will-

ful, and must find the Defendant

not guilty.

If you believe that the reasons

Stated by the Defendant in his re-

fusal to answer Form 1040 questions

were given in good faith, and based

upon his actual belief, you should

consider that in determining whether

or not his refusal to answer the

questions was willful.

You are instructed that the spe-

cific intent of "willfulness" must

be proven in order to convict the

Defendant of the offenses charged in

Count II and III. The term "will-

fully," used in connection with

these offenses, means voluntarily,

purposefully, deliberately, with

evil motives, or with bad purpose.

Mere negligence, even gross negli-

gence, even reckless disregard for

the law, is not sufficient to con-

stitute willfulness under criminal

law.

If you find that the Defendant

supplied false information to his

employer because of negligence in-

advertance, accident or reckless

disregard for the requirement of

the law, or that he had actual belief

that in good faith he had no tax

liabilities for the years in ques-

tion, then you must find that the

Defendant's conduct was not willful,

and you must find the Defendant not

19

guilty.

There were two instructions offered on Chic

Fifth Amendment itself, as the Petitioner

had claimed the privilege both on the tax

return in answer to specific questions,

and on the witness stand. These were num-

bers 6 and 7 as follows:

You are instructed that one of

the primary functions of the Fifth

Amendment privilege against self-

incrimination is to protect inno-

cent men. Every person is entitled

to the full enjoyment of the Con-

stitutional privilege against self-

incrimination.

You are instructed that you are

not to make any inference of guilt

on the part of Defendant by the

fact that he asserted his Consti-

tutional rights under the Fifth

Amendment as a United States citizen

on his tax return for the year 1976.

Information given on a tax return is

testimonial and to infer guilt on the

part of the Defendant for asserting

that right would make a hollow mockery

of the exercise of this privilege

itself.

All of these were denied and in addition

one based on Bishop v. U.S., 412 US 346,

93 SCt 2008 (1973), 36 LEd2d 941, number

16, as follows:

20

You are instructed that the re-

quirement of an offense committed

willfully is not met if a taxpayer

has relied in good faith upon a

prior decision of this Court or the

Supreme Court of the United States

of America and if you find from the

evidence that the Defendant did in

good faith rely on a prior decision

of this court or the Supreme Court

of the United States of America,

then you must find the Defendant

not guilty.

This instruction would have at least

opened up the defense of good faith based

on reliance on this Court's opinions, but

this avenue also was closed by the Court.

In addition, the U.S. Court of

Appeals for the Ninth Circuit has been

granting instructions which allow a good

faith defense to these charges.

The model jury instruction con-

cerning "willfulness" in a §7203 charge

out of Devitt and Blackmar, §35.31, comes

from a Ninth Circuit case. Cooley v. U.S.

501 F2d 1249 (9th Cir. 1974), cert. denied.

419 US 1123 (1975) stands for the pro-

position that a person cannot be con-

21

victed under §7203, if he is honestly

mistaken about the requirements of the law.

And, if a person believes that he has done

all that the law requires he cannot be

guilty of the criminal intent to willfully

file a tax return; and it is for the jury

to decide whether he acted in good faith

or whether he willfully intended to file

a tax return. This is also set out in

U.S. v. Carlson, 617 F2d 518 (9th Circ.

1980) at page 523.

This merely states the law as it has

come down from this Court in Murdock but

the Fifth Circuit has declined to accept

this definition of "willful".

III.

Since, as described in II. above,

the Petitioner had a right to a "good

faith" defense to the charges, he had a

right to testity in his own behalf about

that good faith.

However, the trial Court not only

22

denied the jury instructions on good

faith, the attempts of the Defendant to

show what he had relied upon in forming

his beliefs, both as to case law and as

to other material, were denied by thc

Court.

The Court even sustained objections

on behalf of the government to the Peti-

tioner giving even the citation to a par-

ticular Court case he had relied upon

and instructed the jury to disregard it.

(See Transcript of Trial, Volume II, page

326). The Bishop case cited above gives

taxpayers at least the right to rely on

decisions of this Court in their actions.

This right includes the right to explain

to a jury exactly what was relied upon.

However, the trial Court denied the Feti-

tioner this right, and the Court of

Appeals refused to even discuss the issue.

IV.

The basic principles that this

23

Court has set forth that apply to this

question are as follows:

One of the primary requirements of

statutory crimes is that the crime be

defined with appropriate defiteness. As

a matter of due process, no one may be

required, at the peril of life, liberty

or property to speculate as to the meaning

of penal statutes; all are entitled to be

informed as to what the government commands

or forbids. Haynes v. Oradell, 425 US 610,

96 SCt 1755, 48 LEd2d 243 (1976). The

practice of a court's resolving questions

concerning the ambit of a criminal statute

in favor of lenity does not merely reflect

a convenient maxim of statutory construc-

tion, but rather, is rooted in fundamental

principals of due process, which mandate

that no individual be forced to speculate,

at peril of indictment, whether his conduct

is prohibited; thus, to insure that the

legislature speaks with special clarity

24

when marking the boundaries of criminal

conduct, courts must decline to impose

punishment for actions that are not

plainly and unmistakably proscribed.

Dunn v. U.S., 442 US 100, 99 SCt 2190,

60 LEd2d 743 (1979).

The Court is bound to accept that

definition which is more lenient to the

Defendant, Simpson v. U.S., 435 US 6,

95 SCt 909, 55 LEd2d 70 (1978).

A. The §7203 Count

The specific ambiguity in regard to:

the §7203 Count has to do with 25 USC

§6012. That section is the one which de-

tails when you must file a return and

thereby be subject to §7203 for failure to

do so.

There are two possible constructions

for §6012, and this is an issue which

needs to be settled, but so far has not

explicitly been so by this Court. They

are, first, that in §6012 the word "gross

25

income" includes ordinary wages; and

second, that "gross income" includes

only income derived from a privilege or

license granted by the government.

The first construction comes from

common usage by the Internal Revenue Ser-

vice, and a reading of the Sixteenth

Amendment without regard to either its

intent or construction given to it by

this Court.

The second construction flows from

the intent of the Sixteenth Amendment,

and the case law before and after it.

To understand the meaning of this pro-

vision of the Constitution, it must be

placed in the context of its enactment.

Congress had previously enacted an in-

cume tax in 1894, This was found to be

unconstitutional in the famous case of

Pollock v. Farmers Loan & Trust Co., 157

US 15 SCt 673, 39 LEd 759, later on reh,

158 US 601, 15 SCt 912, 39 LEd 1108 (1894).

26

It failed because it was held to be a di-

rect tax on property or income derived

from property and in want of apportion-

ment in contravention of Article I,

§2,cl1.3, and Article 1,§9, cl.4. "We ad-

here to the opinion already announced,

that, taxes on real estate being indis-

putably direct taxes, taxes on the rents

or income of real estate are equally

‘direct taxes... We are of the opinion

that taxes on personal property, or on

the income of personal property, are

likewise direct taxes... The tax... so

far as it falls on the income of real

estate and of personal property, being

a direct tax within the meaning of the

Constitution, and, therefore, unconstitu-

tional and void because not apportioned

according to representation." Pollock v.

Farmers' Loan & Trust Co., supra, at 637.

In 1913, the Sixteenth Amendment

became a part of the Constitution. In

27

a landmark decision following its enact-

ment, the Supreme Court explained the

meaning of that Amendment. Brushaber v.

Union Pacific R.R. Co., 240 US 1, 36 SCt

236, 60 LEd 493 (1915).

"(C)onfusion... arises from the con-

clusion that the Sixteenth Amendment pro-

vides for a hitherto unknown power of

taxation, that is, a power to levy an

income tax which although direct. should

not be subject to the regulation of

apportionment applicable to all other

direct taxes... (T)he far reaching effect

of the erroneous assumption... clearly

results that the proposition and the con-

tentions under it, if acceded to, would

cause one provision of the Constitution to

destroy another. That is, they would

result in bringing the provisions of the

Amendment exempting a direct tax from

apportionment into irreconcilable con-

flict with the general requirement that

28

all direct taxes be apportioned. This

result instead of simplifying the sit-

uation and making clear the limitations

on the taxing power, which obviously the

Amendment must have been intended to

accomplish, would create radical and

destructive changes in our Constitution

and multiply confusion."

(T)he contention that the Amendment

treats a tax on income as a direct

tax... is also wholly without found-

dation... The Amendment contains

nothing repudiating or challenging

the ruling in the Pollack case.

Brushaber v. Union Pacific R.R. Co.,

Supra, ll-le, 18-19.

What the amendment did accomplish

was to declare that the income from real

and personal property is to be considered

as falling within ambit of Article I,

Sec. 8, cl. 1. It operates to separate

the income from whatever real or personal

property source from which it is derived;

and thus the resulting excise tax was not

subject to apportionment. An income tax,

29

however, remains in its nature an excise

regardless of the Sixteenth Amendment.

Brushaber v. Union Pacific R.R. Co.,

supra, at 17. Therefore, as an excise

it can only be levied as rights bestowed

by the state.

The word “excise” means "... every

form of taxation which is not a burden

laid directly on person or property, or

every form of charge imposed by public

authority for the purpose of raising

revenue on the performance of an act,

the enjoyment of a privilege, or the

engaging in an occupation." 33 Corpus

Juris Secundum, "Excise." pp.110-lll.

"Excise" is defined to be an inland

imposition, sometimes on the manufacture,

sale, or consumption of a commodity and

sometimes on licenses to pursue certain

occupations and corporate privileges. A

charge for the privilege of following an

occupation or trade, or carrying on a

30

business, gives a fairly gov-d working idea

of what an excise tax is. 47 C.J.S.

"Internal Revenue", Section l, pp. 125-

126.

An “excise", then, is a charge or

tax levied upon the doing of a certain

specified act or upon the performance of

certain specified activities essociated

with privileges granted by the taxing

authority.

The terms “excise” tax and "priv-

lege" tax are synonymous, and the

two are often used interchangeably.

American Airways v. Wallace 57 F.

. 0. ee also: East Ohio

Gas Co. v. Tax Commission of Ohio

Further, the proper measure of such an

excise, once imposed is the income de-

rived from the privilege. Flint v. Stone

Trace Co., 31 SCt 342, 55 LEd 389 (1910).

The important distinction to be

maintained, however, is that an excise is

a charge for doing an activity under.

license from the sovereign or under

31

special privilege. It is not a tax on

an income per se, or all income, but the

only income resulting from the license

or privilege is the proper measure of the

excise tax. That this is the true

meaning of excise is shown by Penn Mutual

Indemnity Company (Dissolved) v. Commiss-

ioner. 32 Tax Court 653. There, peti-

tioner insurance company sought a ruling

of "no tax due" because it had suffered

losses greater than receipts and thus

argued that it had no “income” and that

to tax it would be unconstitutional.

Losses of the nature involved, however, are

not recognized by Section 207)a)(2) of

the Internal Revenue Code of 1939. The

tax was held constitutional as a proper

excise. This seemingly harsh result is

in accord with the constitutional basis

of taxation. As an excise on the busi-

ness of insurance and underwriting, the

tax power is unlimited. The mere power

32

to tax really is the power to destroy.

That is why the Framers of the Constitu-

tion made it a requirement that unappor-

tioned internal taxation be limied to

excises.

Taxes being of practical necessity,

it was thoughtproper to tax activities

licensed by the sovereign or under sover-

eign privilege. The Sixteenth Amendment

allowed the measure of the taxation to

be income (broadly defined) from whatever

source derived, but, only that income

associated with the carrying on of li-

ecensed or privileged activities is

allowed.

This second construction, i.e., that

the Sixteenth Amendment allows only an

excise tax, is not strained, forced, il-

logical or unreasonable, rather it flows

freely from the law. Therefore, by

applying those three principals set forth

at the beginning of IV. above, the Peti-«

33

tioner cannot be held criminally liable

(although there is no restraint upon

the Internal Revenue pursuing this in a

civil proceeding) for construing the am-

biguity in the law in his favor.

B. The §7205 Counts

The same issue as set forth in A.

above applies here as well. Even though

under 26 USC §3402, the Petitioner must

file a W-4 form with his employer, if

his wages are not taxable under §6012.

he is entitled to file "exempt", and

again cannot be held criminally liable

for construing the ambiguity in the law

in his favor.

There is a second issue with the

§7205 charges which flows from the am-

biguity in the term "liability for taxes."

This comes from the W-4 form signed by

the Petitioner which states "I incurred

no liability for federal income tax for

the preceeding year and anticipate I will

34

incur no liability for income taxes this

year."

This can be construed two ways.

First, that you have incurred a liability

if at any time during the year you owed a

federal income tax to the government.

Second that you have not incurred a liabil-

ity for that year if you have paid all that

you owe, either before the year is out,

or when the return is filed.

The biggest problem is that the term

"liability for taxes" or "tax liability"

is not define” in the United States Code

at all. Since this forces taxpayers to

speculate, at peril of property or liber-

ty, as to its meaning, due process re-

quires that there be no criminal liability

attached to the speculation.

In addition, there is a problem with

the word “incurred” as well. The word

"incur" by Black's Law Dictionary, Re-

vised Fourth Edition, means to have lia-

35

bility cast upon one by act or operation

of law. Strictly speaking then, a tax-

payer does not have liability cast upon

him for income tax by operation of law un-

til the federal income tax is actually

assessed against him. 26 USC §6201 (a)

(1) provides that the Secretary (of the

Treasury) shall assess all taxes deter-

mined by the taxpayer or by the Secre-

tary as to which returns or lists are

made under this title. This means that

for income tax purposes, the Seoretary

has the authority to assess the tax, and

to assess it upon the amounts determined

to be due by the taxpayer, or on the

amount as determined by the Secretary.

The method of assessment is prescribed

in §6203 which says that the assessment

shall be made by recording the liability

of the taxpayer in the office of the Sec-

retary in accordance with rules or regu-

lations prescribed by the Secretary.

36

In this case the government intro-

duced Certificates of Assessments and Pay-

ments concerning the Petitioner for the

years in question. However, those certi-

ficates revealed that there had been no

assessments made against the Petitioner

for 1975, 1976 or 1977. Therefore, since

assessments have not yet been made for

those years, the Petitioner has not "in-

curred" any tax liability for those years,

and the statements made on the W-4 forms

are true, not false and fraudulent.

Again, applying those three princi-

pals outlined at the beginning of IV.

above the Petitioner cannot be held

criminally jiable for his W-4 forms as

filed.

V.

This Court, in a long line of de-

cisions, has established the rule that

illegally obtained evidence cannot be

used against an individual in a subse-

37

quent criminal trial.

The evidence introduced in this cause

concerning the bank records of the Peti-

tioner were all obtained under an IRS

summons. There was a petition to enforce

the summons filed in federal court. A

U.S. Magistrate, acting without the

authority to do so, ordered enforcement

of the summons. The Internal Revenue Ser-

vice then obtained the records on the im-

proper Order, as the Magistrate did not

have the jurisdiction to enter the Order.

When these issues were raised on

a Motion to Suppress, the trial Court en-

tered its Order affirming the enforcement

of the summons, but this was after the

fact. Indeed, at the time of the trial

herein, the action affirming the enforce-

ment was not final, as it was being ap-

pealed to the Fifth Circuit.

Since the Internal Revenue Service

obtained the material without a valid

38

Court Order, the evidence should have

been suppressed.

CONCLUSION

As can be seen, the U.S. Court of

Appeals for the Fifth Circuit has decided

these questions of law in a way which con-

flicts with the applicable decisions of

this Court.

In addition, there exists a very

serious conflict between the Fifth Circuit

and the Ninth Circuit as to what consti-

tues a "good faith" defense to these

types of charges. The Ninth Circuit's

rulings appear to be in alignment with

the past decisions of this Court, however,

this Court needs to grant certiorari to

resolve this conflict, as personal liber-

ties are at stake.

Accordingly, the Court of Appeals

decision affirming Petitioner's convic-

tion should be reversed and the infor-

39

mation should be dismissed. Or, in the

alternative, a new trial should be or-

dered. Therefore, this petition for a

Writ of Certiorari should be granted.

Respectfully submitted,

KIMBROUGH G. MIDDLEBROOK

BY:

ichard LL. Stradley

Counsel for Petitioner

4515 Miller Creek Road

Missoula, Montana 59803

406-251-4034

AFFIDAVIT OF SERVICE

Personally appeared before me, the

undersigned authority in and for the

State of Montana, County of Missoula,

the within named Richard L. Stradley,

who after being by me first duly sworn

stated on oath that he had mailed, post-

age prepaid, by U.S. Mail, a true and

correct copy of the above. d foregoing

Petition to Counsel for the Respondent,

the Solicitor General, Depart of Justice,

40

Washington, D.C. 20530, on the 2lst day

of August, 1981, and a copy of the resub-

mitted Petition on the 4th day of Sep-

tember, 1981.

SWORN TO and subscribed before me

on this the Huh day of September, 1981.

ys Ke Mut

L

oh ¥

My Commission Expires:

7 al

et po

4]

APPENDIX

JUDGMENT TO BE REVIEWED:

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

UNIT A

NO. 80-3382

UNITED STATES OF AMERICA,

Plaintiff- Appellee

vs.

KIMBROUGH G. MIDDLEBROOK

Defendant- Appellant

Appeal from the United States

District Court for the

Southern District of Mississippi

(June 22, 1981)

Before BROWN and GARZA, Circuit Judges,

and SCHWARTZ, * District Judge.

PER CURIAM: AFFIRMED. See Local Rule

Rule 21. 2/

1/ See N.L.R.B. v. Amalagated Clothing

Workers of America, 1970, 430, F2d 966.

*District Judge of Eastern District of

Louisiana, Sitting by Designation.

Constitution of the United States, Fourth

Amendment

The right of the people to be se-

cure in their persons, houses, papers, and

effects, against unreasonable searches and

seizures, shall not be violated, and no

warrants shall issue but upon probably

cause, supported by oath or affirmation,

and particularly describing the place to

be searched, and the persons or things

to be seized.

Constitution of the United States, Fifth

Amendment

No person shall be held to answer

for a capital or other infamous crime,

unless on a presentment 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 and

A-3

and limb; nor shall be compelled in any

criminal case to be a witness against him-

self, nor be deprived of life, liberty,

or property, without due process of law;

nor shall private property be taken for

public use without just compenstaion.

Constitution of the United States, Six-

teenth Amendment

The Congress shall have the power

to lay and collect taxes on incomes,

from whatever source derived, without

apportionment among the several States,

and without regard to any census or

enumeration.

Constitution of the United States, Arti-

cle 1, §2, cl. 3.

Representatives and direct taxes

shall be apportioned among the several

States...

Constitution of the United States, Article

1, §$8,¢1.1

The Congress shall have power to lay

A-4

and collect taxes, duties, imposts and

excises...

Constitution of the United States, Article

2, Be. of.

No capitation, or other direct tax

shall be laid unless in proportion to the

census or enumeration herein before to be

taken.

26 USC §7203

Any person required under this title

to... make a return... who willfully

fails to... make such return... 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, together

with the costs of prosecution.

26 USC §7205

Any individual required to supply

information to his employer under section

3402 who willfully supplies false or

A-5

fraudulent information... shall, in lieu

sf any other penalty provided ty law

(except the penalty provided by section

6682), upon conviction thereof, be fined

not more than $500, or imprisoned not

more than 1 year, or both.

26 USC §3402

--- On or before the date of commen-

cement of employment with an employer,

the employee shall furnish the employer

with a signed withholding exemption cer-

tificate relating to the number of with-

holding exemptions which he claims, which

Shall in no event exceed the number to

which he is entitled. ... Notwithstanding

any other provision of this section, an

employer shall not be required to deduct

and withhold any tax under this chapter

upon a payment of wages to an employee if

there is in effect with respect to such

payment a withholding exemption certificate

(in such form and containing such other

A-6

information as the Secretary may pre-

scribe) furnished to the employer by the

employee certifying that the employee---

(1) incurred no liability for income

tax imposed under subtitle A for his pre-

ceding taxable year, and

(2) anticipates that he will incur

no liability for income tax imposed

under subtitle A for his current taxable

year. ...

26 USC §6012

...- Returns with respect to income

taxes under subtitle A shall be made by

the following:

(1)(A) Every individual having for

the taxable year a gross income of $750

or more, except that a return shall not

be required of an individual... who is

entitled to make a joint return under

section 6013 and whose gross income, when

combined with the gross income of his

spouse, is, for the taxable year, less

A-7

than $4,700...

26 USC §6201

... The Secretary shall assess all

taxes determined by the taxpayer or by

the Secretary as to which returns or

lists are made under this title...

26 USC §6203

The assessment shall be made by

recording the liability of the taxpayer

in the office of the Secretary in accor-

dance with rules or regulations pre-

scribed by the Secretary...

A-8

U.S. v. Middlebrook

Crim. No. J79-00003(N)

GOVERNMENT'S INSTRUCTION NO.

As I stated earlier, the third ele-

ment which the government must prove be-

yond a reasonable doubt is that the De-

fendant's failure to make the return in

question was willfully committed.

The term willfully for purposes

of these instructions as to Count I means

voluntarily, deliberately and intentionally,

as distinguished from accidentally, in-

advertently or negligently.

The failure to make a timely return

is willful if the Defendant's failure to

act was voluntary and purposeful and with

the specific intent to fail to do that

which he knew the law required, that is to

say, with the purpose to disobey or dis-

regard the law which requires him to make

a timely return.

The willfulness which the govern-

A-9

ment must prove beyond a reasonable doubt

does not require the government to prove

that the Defendant had a purpose to evade

a tax or to defraud the government.

The intentional refusal by a tax-

payer to reflect little or no information

on a tax return form as *9) his income or

expenses with the excuse that to do so

would violate his right against self-

incrimination under the Fifth Amendment

to the Constitution is no legal justifi-

cation for not filing a timely complete

income tax return reflecting the amounts

of income for 1976. The same is true for

an excuse that Federal Reserve notes are

not legal tender or that the Federal Re-

serve system is unconstitutional. These

are not legal justifications for willful

failure to file.

The only justification for not filing

a tax return when it is required by law

to be filed is a good faith misunderstand-

A-10

ing by the taxpayer as to his legal obli-

gation to actually file the return or an

inadvertent or careless or negligent

failure to actually file such a return.

What the government must prove, to

the element of willfulness is a voluntary,

intentional violation by Defendant of his

known legal duty to file a true, correct

and complete return of his income, i.e.,

the Defendant deliberately and specifically

intended not to make a return of his in-

come which he knew ought to be made and

filed.

A-1ll

U.S. v. Middlebrook

Crim. No. J79-00003(N)

GOVERNMENT'S INSTRUCTION NO.

You are further instructed that a

taxpayer may not refuse to enter on his

return the necessary information as to his

income and expenses by claiming a pri-

vilege against self-incrimination. The

Fifth Amendment to the Constitution of

the United States does not protect or

shield a taxpayer from revealing the

required financial information or amount

of his income on his income tax return.

Therefore, Defendant's claim of a Fifth

Amendment privilege against disclosing his

income on a tax return should not be con-

Sidered by the jury as good faith defense

to the charge of willful failure to file.

A-le2

U.S. v. Middlebrook

Crim. No. J79-00003(N)

GOVERNMENT'S INSTRUCTION NO.

You are further instructed tiat it is

no defense to the willful failure to

file charge for Defendant to say that

Federal Reserve Notes do not constitute

dollars or income for tax purposes or

that the Federal Reserve System is

unconstitutional. Federal Reserve Notes

are the common medium of exchange in all

financial affairs of this country. They

are legal tender for tax purposes or

income or otherwise.

A-13

Office - Supreme Court, U.S.

ILED

HOV a8 1981

ALEXANDE® L. STevas.

RK

In the Supreme Court of the Hnited States

OcTOBER TERM, 198!

No. 81-557

KIMBROUGH G. MIDDLEBROOK, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

MEMORANDUM FOR THE UNITED STATES IN OPPOSITION

Rex E. Lee

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

TABLE OF AUTHORITIES

Cases:

Brown v. Walker, 161 U.S. 591) ........ eee:

Brushaber v. Union Pacific R.R.,

PE cccucccvcccccancscccevnceooses

Clark v. United States, 289 U.S. 1 ...........

Cooley \. United States, 501 F.2d 1249,

cert. denied, 419 U.S. 1123 ...........e00e-

Commissioner v. Smith, 324 U~ 177 ........

Garner v. United States,424U 648 ........

Mason v. United States, 244 U.S. 362 ........

Roberts v. United States, 445 U.S. 552 .......

Rogers v. United States, 340 U.S. 367 ........

United States v. Brown, 591 F. 2d 307,

enst. Games, 645 UB. GIS ccoccccccccoecess

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

cert. denied, 449 U.S. 1010 ............045-

United States v. Hawk, 497 F.2d 365 ........

United States v. LaSalle National Bank,

EE eee eee cccedeéaneakedvens

United States v. Johnson, 577 F. 2d 1304 .....

United States v. Malinowski, 472 F. 2d 850,

Se Gs ED vb docceececscnses

United States v. Matosky, 421 F.2d 410 ......

United States v. Pomponio, 429 U.S. 10 ......

United States v. Powell, 379 U.S. 48 .........

Page

Cases—(Continued):

United States v. Quilty, 541 F.2d 172 .......... 5

United States v. Sullivan, 274 U.S. 259 ....... 4,6

United States v. Wellendorf, 574 F.2d 1289 ..... 7

United States v. Wolters, 656 F.2d 483 ........ 3

Constitution and statutes:

United States Constitution, Fifth

PEE SGN ebb cncsccevscssceenevess 3,4

SP: HEED: Gandebne 6b ucceéenebenneteoeceds l

Us CE déeesndecdecnecusadusnsccbas 1,6

In the Supreme Court of the Hnited States

OcTOBER TERM, 1981

No. 81-557

KiMBROUGH G. MIDDLEBROOK, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

MEMORANDUM FOR THE UNITED STATES IN OPPOSITION

The questions presented by the petition in this criminal

tax case are: (1) whether petitioner's assertion of his Fifth

Amendment privilege against compulsory self-incrimi-

nation with respect to his 1976 federal income tax return

precluded his conviction for willfully failing to file a return

for that year; and (2) whether the trial judge properly

instructed the jury on the element of willfulness.

The pertinent facts may be summarized as follows: fol-

lowing a jury trial in the United States District Court for the

Southern District of Mississippi, petitioner was convicted

on one count of willfully failing to file a federal income tax

return for 1976 and two counts of willfully filing false and

fraudulent withholding exemption certificates, in violation

of 26 U.S.C. 7203 and 7205. He was sentenced to six

months’ imprisonment and a $1 ,000 fine on Count I. On the

remaining two counts, the court suspended imposition of

2

sentence and petitioner was placed on two years’ probation

to commence upon release from confinement. The court of

appeals affirmed (Pet. App. A-1; Appellee’s Br. 4).

The evidence at trial established that petitioner received

wages and interest income in 1976 of $30,177.08 (1 Tr. 208).'

On April 14, 1977, he filed an Individual Income Tax

Return Form 1040 for 1976, which he signed, but which

contained no financial data from which his tax liability

could be computed (Exh. G-5; I Tr. 33-34). Instead, peti-

tioner’s Form 1040 contained asterisks in places calling for

information about income, tax payments, and credits (I Tr.

33). At the bottom of the Form 1040, petitioner stated (II

Tr. 324):

Ido not understand this return nor the laws that may

apply to me. Signature involuntarily given under

threat of statutory punishment. I request complete

immunity per 18 U.S.C. §6002 & §6004 before waiving

any constitutional or natural rights, including the Fifth

Amendment guarantee of not being a witness against

myself.

In the margin of his Form 1040, petitioner also had written,

“This return consists of 32 attached pages plus a four page

insert. I offer to amend or refile this return exactly as you

wish it if you will please show me how to do so without

waiving my constitutional rights” (I Tr. 51-52). Petitioner

had filed valid income tax returns for 1972, 1973 and 1974(I

Tr. 44).

On January 20, 1976, petitioner presented his employer,

Southern Railway Company, witha Form W-4E, withhold-

ing exemption certificate, stating under penalty of perjury

that he had no tax liability for 1975 and that he anticipated

1 Tr.” and “II Tr.” refer to the two-volume transcript of the trial;

“Exh.” refers to the exhibits submitted in that proceeding; Appeliee’s

Br. refers to the brief for the United States in the Court of Appeals.

3

no tax liability for 1976? (1 Tr. 107). P.titioner gave a

similar Form W-4E to Southern Railway on April 15, 1977

(1 Tr. 110). Based on these withholding exemption certifi-

cates, Southern Railway stopped withholding federal in-

come taxes from petitioner's salary (1 Tr. 108).

1. Petitioner argues (Pet. 5-12) that if he had filed a valid

income tax return for 1976, showing wages as gross income,

then that return would have been testimony that the Form

W-4E (filed earlier in 1976 and again in 1977) was false and

fraudulent. Petitioner claims that this “conflict” violates his

Fifth Amendment privilege against compulsory self-incrimi-

nation.

This claim was properly rejected in United States v.

Carlson, 617 F. 2d 518 (9th Cir.), cert. denied, 449 U.S. 1010

(1980), upon which we rely. There, the court held “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 requirement by asser-

tion of the Fifth Amendment, is not entitled to the amend-

ment's protection” (617 F. 2d 523). The court reasoned that

the taxpayer had attempted to take advantage of the privi-

lege’s protective capacity in furtherance of a calculated

effort to avoid the payment of taxes. /d. at 522. The asser-

tion of the privilege in Carlson, like petitioner's assertion

here, was used “more as a sword than a shield.” /bid.

Accord, United States v. Wolters, 686 F. 2d 483 (9th Cir.

1981).

The Ninth Circuit's reliance in Car/son on the history and

purpose of the privilege against self-incrimination, and its

?For 1975, petitioner had filed a purported tax return, similar to the

one he filed for 1976, which said at the bottom of the Form 1040, “This

(*] means specific objection is made under the Sth Amendment, U.S

Constitution, to the question as to Federal Reserve Note, and that

similar objection is made to the question under the Ist, 4th, 7th, 8th, 9th.

10th, 13th, 14th and 16th Amendments” (II Tr. 311).

4

finding that the defendant was raising the privilege not in

good faith, but rather as a subterfuge to avoid payment of

his taxes, is entirely consistent with this Court's repeated

holding that “{i]t is the duty of a court to determine the

legitimacy of a [party's] reliance upon the Fifth Amend-

ment.” Roberts vy. United States, 445 U.S. 552, 560 n.7

(1980). An individual may not invoke the privilege if his real

purpose is to avoid giving information that “he simply

would prefer not to give” (ibid.). See also Mason v. United

States, 244 U.S. 362, 364-367 (1917); Garner v. United

States, 424 U.S. 648, 658-659 n.11 (1976); Rogers v. United

States, 340 U.S. 367, 371-375(1951); Brown v. Walker, 161

U.S. 591, 599-600 (1896). See also Clark v. United States,

289 U.S. 1, 14 (1933).3

Acceptance of petitioner's contentions here would mean

that any tax protestor could avoid filing income tax returns

by adopting the simpie expedient of claiming complete

exem ation or an inflated number of allowances on his Form

W-4E in a given tax year sufficient to avoid withholding

from his wages, and thereafter refusing to file annual tax

returns on the ground that the information on his return

might tend to reveal his earlier misconduct. As the court

stated in United States v. Carlson, supra, 617 F. 2d at

522-523, “the character and urgency of the public interest in

raising revenue through self-reporting weight heavily

against affording the privilege [under such circumstances].

The federal government's power to raise revenue is its life-

blood. Were taxpayers permitted to employ [petitioner's]

‘Moreover, petitioner did not invoke the privilege with respect to

particular questions, but rather asserted a blanket privilege with respect

to all financial information that was sought. The Fifth Amendment

does not permit a taxpayer “to 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.” United States v.

Sullivan, 274 U.S. 259, 263-264 (1927).

5

scheme, they could avoid filing completed tax returns and

thereby severely impair the government's ability to deter-

mine tax liability.” Accord, United States v. Brown, 591 F.

2d 307, 308, 311 (Sth Cir.), cert. denied, 442 U.S. 913 (1979);

United States v. Johnson, 577 F. 2d 1304, 1310-1311 (Sth

Cir. 1978).4

2. Petitioner also asserts (Pet. 12-22) that the district

court erred in its refusal to use petitioner's proposed

instructions on willfulness and the defense of good faith,

and that this refusal has created a conflict between circuits

(see Pet. 21-22).

The district court, however, correctly instructed the jury.

It stated that what the government must prove “is the

voluntary intentional violation by the defendant of his

known legal duty to file a true, correct and complete return

of his income * * * that he deliberately and specifically

intended not to make a return of his income, and more

specifically the amount of his income on the return which he

knew ought to be made and filed” (II Tr. 399). As for

petitioner's good faith defense, the court instructed the jury

that a good faith misunderstanding by petitioner of his legal

obligation actually to file a return would be a justification

for not doing so. The court also stated that the claim of

Fifth Amendment privilege could be a defense only if the

jury concluded from the evidence that the claim, though

erroneous, was made in good faith (II Tr. 399). Factors that

the jury could consider in this regard included evidence, if

*Petitioner’s remaining arguments ( Pet. 24-39), that the income tax ts

unconstitutional as a direct tax, that wages are not income, and that

evidence gathered in a civil tax investigation may not be used in a

criminal tax investigation, are without merit and do not warrant further

review. See, e.g., United States v. LaSalle National Bank ,437 U.S. 298

(1978); United States v. Powell, 379 U.S. 48 (1964), Commissioner v.

Smith, 324 U.S. 177, 181(1945); Brushaber v. Union Pacific R.R., 240

U.S. 1 (1916); United States v. Quilty, $41 F. 2d 172 (7th Cir. 1976).

6

any, that petitioner was afforded an opportunity to recon-

sider and ignored it, or that he was aware of the inadequacy

of such a return and deliberately and intentionally pro-

ceeded to file the return anyway (II Tr. 399-400).

These jury instructions are substantially the same as

those approved by this Court in United States v. Pompo-

nio, 429 U.S. 10 (1976). The district court was not required

to use the words “evil motive” or “bad intent,” as petitioner

sought (Pet. 18-19). All that is required is instructions that

communicate the proper notion of specific intent in under-

standable terms. United States v. Hawk, 497 F. 2d 365, 369

(9th Cir. 1974). This intent is the deliberate intention not to

file returns that the taxpayer knew ought to be filed. United

States v. Matosky, 421 F. 2d 410, 412 (7th Cir.), cert.

denied, 398 U.S. 964 (1970).5 The instructions here ade-

quately met these requirements.

As for petitioner's “good faith” arguments (Pet. 22-23),

the district court’s instructions (I1 Tr. 399-400) were con-

sistent with the Fifth Circuit's statement that this defense

“assumes that a good faith claim of the privilege is not made

at one’s peril and that erroneous taxpayers will be afforded

the opportunity to reconsider their responses * * *.” United

States v. Johnson, 577 F. 2d 1304, 1311 (Sth Cir. 1978). But

as the Court stated in United Staies v. Sullivan, supra, 274

U.S. at 263, “If the form of return provided called for

answers that the defendant was privileged from making he

could have raised the objection in the return, but could not

on that account refuse to make any return at all.” Petition-

er’s blanket claim was tantamount to filing no return at all.

‘This reasoning also applies to the element of willfulness required for

a conviction under 26 U.S.C. 7205 for willfully filing a false withholding

certificate. A “bad purpose” or “evil motive” instruction is not neces-

sary. United States vy. Malinowski, 472 F. 2d 850, 855 (3d Cir.), cert.

denied, 411 U.S. 970 (1973).

5

Indeed, his acknowledged reason for his blanket claim was

to prevent discovery of his false withholding form—a pur-

pose quite inconsistent with any “good faith” defense. See

also United States v. Wellendorf, 574 F. 2d 1289 (Sth Cir.

1978).6

It is therefore respectfully submitted that the petition for

a writ of certiorari should be denied.

Rex E. Lee

Solicitor General

NOVEMBER 198]

*Contrary to petitioner's assertion, the decision below does not con-

flict with Cooley v. United States, 501 F. 2d 1249 (9th Cir. 1974), cert.

denied, 419 ''.S. 1123 (1975). This claim rests upon his contention that

Cooley allows for a good faith defense. But as we have noted, the district

court gave an instruction on good faith (Il Tr. 399) which closely

parallels that given in Cooley, supra, $01 F. 2d at 1253 n.4.

DOJ-1981-11