United States v. Alan D. Amon, United States of America v. Gary W. Dunbar

669 F.2d 1351

Opinions

HOLLOWAY, Circuit Judge.

Both defendants were convicted in separate non-jury trials of filing false withholding allowance certificates in violation of 26 U.S.C. § 7205.¹ Defendant-appellant Alan D. Amon appeals from his conviction on each count of a two-count information charging him with violating § 7205.² Defendant-appellant Gary W. Dunbar appeals from his conviction on one count of a two-count information charging him with violating § 7205.³ These direct appeals were consolidated because the issues raised in each are basically the same.

As grounds for reversal the defendants essentially argue that the trial court erred: (1) in refusing to dismiss the informations due to premature filing by the Government; (2) in denying a motion to dismiss for lack of jurisdiction; (3) in refusing to dismiss the informations due to selective prosecution; (4) in admitting documents in evidence in violation of their constitutional rights under the Fourth and Fifth Amendments and their statutory rights under the Privacy Act; and (5) in admitting evidence concerning the amount of wages actually earned by them after they had filed their withholding allowance certificates. Defendant Dunbar also claims that the trial court erred in denying his motion for discovery.

I

Because neither defendant challenges the sufficiency of the evidence supporting their convictions, only a brief statement of the facts is necessary.

The evidence adduced at trial against defendant Amon shows that on February 23, 1979, Amon submitted to his employer, Cherne Construction Company, an Employee’s Withholding Allowance Certificate, form W-4, claiming an exemption from the withholding requirements and certifying that he incurred no liability for federal income tax for 1978 and that he expected to incur no federal tax liability for 1979. On June 15, 1979, Amon submitted another W — 4 form to a different employer, Peabody Process Systems, again claiming an exemption from the withholding requirements and certifying that he incurred no federal tax liability for 1978 and that he did not expect to incur any tax liability for 1979. (II R. 16-20, 22-24, 27). There was expert testimony and other evidence tending to show that these claims were false. (II R. 26-33).

The record shows that on February 22, 1979, Amon signed and filed his 1978 income tax return which indicated a tax liability of $1,621.00 for 1978. Thus at the time he submitted both W-4 forms to his employers it could be inferred that he knew that he had incurred federal tax liability for 1978 and that he was not entitled to an exemption from the withholding requirements. Moreover, when he filed his second W — 4 form in June 1979 it could be inferred that he knew that he had already been working for almost six months in 1979 and thus could reasonably anticipate a tax liability for that year. (II R. 28, 32-33, 50). The evidence was sufficient to support the inference that Amon knowingly, voluntarily, and intentionally supplied his employers with the false information contained in the W-4 forms, beyond a reasonable doubt. (II R. 10-11, 42-44, 47-48).

The evidence relating to defendant Dunbar shows that in February 1979 Dunbar signed and filed his 1978 federal income tax return which indicated that approximately $3,902 had been withheld from his wages for taxes and that his federal income tax liability for 1978 was $3,611. (II R. 44, 55-56, 62-65). The evidence further shows that in January 1979 Dunbar submitted to his employer, Ebasco Services, a W-4 form claiming an exemption from the withholding requirements. In July 1979 Dunbar and other Ebasco employees who were claiming an exemption from the withholding requirements received a form letter from the Internal Revenue Service (IRS) which outlined the legal requirements for claiming such an exemption. After a short lay-off in the summer of 1979 Dunbar was rehired by Ebasco in August 1979. At that time he filed another W-4 form with Ebasco, claiming an exemption from the withholding requirements and certifying that he incurred no federal tax liability for 1978 and anticipated no tax liability for 1979. (II R. 15, 21-24, 46, 64-68). It was this latter W-4 filing for which Dunbar was convicted.

There was expert testimony and other evidence tending to show that the statements in the latter W-4 form submitted by Dunbar to his employer in August 1979 were false. (II R. 44, 46-48). Moreover the evidence was sufficient to support the inference that Dunbar knowingly, voluntarily, and intentionally supplied his employer with false information, knowing that he had incurred a federal tax liability for 1978, beyond a reasonable doubt. (II R. 65-68).

II

After criminal charges were filed against them, each defendant submitted to the IRS refund claims for all taxes paid by them in 1978 and 1979.⁴ Both defendants filed pro se pretrial motions arguing that the criminal charges should be dismissed because they were entitled to have their civil refund claims properly adjudicated before the Government could validly charge and prove criminal activity on their part. The district court’s denial of these motions is challenged by both defendants in these appeals.

The refund claims were submitted after the criminal charges were filed and long after the acts of the defendants which form the basis of the criminal charges against them. Resolution of any civil claim for a refund of taxes already paid is clearly collateral, and not essential to the disposition of the criminal charges. See United States v. Peister, 631 F.2d 658, 664-65 (10th Cir.); see also United States v. Hinderman, 625 F.2d 994, 995 (10th Cir.) (per curiam). The criminal charges are primarily concerned with whether the defendants willfully supplied information on W-4 forms that they knew at the time was false. United States v. Peister, supra. We hold that the Government did not need to resolve the pending refund matters before pursuing criminal charges against the defendants.

Ill

Defendants argue that the district court, “under the rules of criminal procedure, has no jurisdiction over matters arising under the Internal Revenue Code.” The argument is mainly premised on assertions that the Internal Revenue Code is unintelligible and that it was not shown that defendants intended to or did harm society. (Brief of Appellant Amon at 4; Brief of Appellant Dunbar at 5). The argument is frivolous and without merit. See 18 U.S.C. § 3231; United States v. Callow, Nos. 79-2197 & 80-1068, slip op. at 3-4 (10th Cir. May 22, 1980, unpublished). United States v. Brown, 600 F.2d 248, 259 (10th Cir.), cert. denied, 444 U.S. 917, 100 S.Ct. 233, 62 L.Ed.2d 172.

IV

Prior to trial both defendants moved to dismiss the criminal charges pending against them on the grounds that the Government’s prosecution of them was unconstitutionally selective. These motions were denied by the district court. Following their trials, defendants renewed the motions. After evidentiary hearings the district judge denied the motions.

On appeal, both defendants claim that the trial court erred by failing to dismiss the informations due to selective prosecution. More specifically they argue that the evidence is clear that many people continue to file for exemptions from the withholding requirement even though they are not legally entitled to claim them, that only a selected few are being prosecuted, and that those individuals being prosecuted are selected because they have exercised their First Amendment right of free speech or have been singled-out as illegal tax protestors by the IRS. With respect to their own cases, they claim that they were selected for prosecution by the Government because they were “outspoken.” (Brief of Appellant Amon at 5-7; Brief of Appellant Dunbar at 7-9).

It is fundamental that “[sjelectivity in the enforcement of criminal laws is . . . subject to constitutional constraints.” United States v. Batchelder, 442 U.S. 114, 125, 99 S.Ct. 2198, 2204, 60 L.Ed.2d 755. Nevertheless, “ ‘the conscious exercise of some selectivity in enforcement is not in itself a federal constitutional violation’ so long as ‘the selection was [not] deliberately based upon an unjustifiable standard such as race, religion, or other arbitrary classification.’” Bordenkircher v. Hayes, 434 U.S. 357, 364, 98 S.Ct. 663, 668, 54 L.Ed.2d 604, quoting Oyler v. Boles, 368 U.S. 448, 456, 82 S.Ct. 501, 506, 7 L.Ed.2d 446. “Moreover, there is a presumption that prosecution for violation of the criminal law is in good faith,” United States v. Bennett, 539 F.2d 45, 54 (10th Cir.), cert. denied, 429 U.S. 925, 927 S.Ct. 327, 50 L.Ed.2d 293; accord, Barton v. Malley, 626 F.2d 151, 155 (10th Cir.). Here the district judges, after evidentiary hearings in both cases, found that no unconstitutionally selective prosecution of the defendants had occurred. We are satisfied that the findings are supported by the record and are not clearly erroneous and thus should not be set aside.⁵ See United States v. Ganter, 436 F.2d 364, 368 (7th Cir.).

In both cases there are particular findings in the district judges’ rulings which we should discuss. At the conclusion of Amon’s evidentiary hearing, the judge specifically found that the selection of Amon for prosecution “was in compliance with the directives and the policies” of the IRS, that he saw no “pattern or practice of attempting to silence Mr. Amon on any given occasion where he chooses to exercise his First Amendment rights by the institution of investigation, arrest or prosecution”, but that Amon was “selected for prosecution because he is an active and outspoken protestor.” (II Supp. R. 30-32). After enunciating the proper two-prong test for establishing an unconstitutionally selective prosecution,⁶ the district court concluded that it was unable to determine if Amon had been “singled out” for prosecution since the statute of limitations had not yet run for others who were similarly situated.⁷ Citing United States v. Stout, 601 F.2d 325 (7th Cir.), the district court did hold, however, that “the defendant’s status as an active protestor was insufficient to establish selective prosecution,” and that no “invidious” discrimination occurs when, as here, the IRS prosecutes individuals “for actions which they take in failing to comply with the tax laws where the transgential [sic] [tangential] effect is to dissuade others from engaging in that kind of tax protest.” The court concluded that (II Supp. R. 32):

Accordingly, I am going to deny the motion to dismiss even though I find that the defendant has been selected for prosecution because he is an active and outspoken protestor. That will present the issue of law squarely, but I do think that United States v. Stout is the existing law on the subject.

We agree with the trial court’s ruling. Defendant Amon’s asserted claim of a First Amendment infringement is not sufficient. Merely showing that the Government elected, under established IRS directives, to prosecute an individual because he was vocal in opposing voluntary compliance with the federal income tax law, without also establishing that others similarly situated were not prosecuted and that the prosecution was based on racial, religious or other impermissible considerations, does not demonstrate an unconstitutionally selective prosecution. See United States v. Rickman, 638 F.2d 182, 183 (10th Cir.); United States v. Stout, 601 F.2d 325, 328 (7th Cir.), cert. denied, 444 U.S. 979, 100 S.Ct. 481, 62 L.Ed.2d 406; United States v. Catlett, 584 F.2d 864, 866-867 (8th Cir.); United States v. Johnson, supra, 577 F.2d at 1309. We uphold the trial court’s ruling on the ground that the defendant Amon did not satisfy the second requirement — that the prosecution was based on racial, religious or other impermissible considerations.

Footnotes

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7a

In the Dunbar case the district judge reached a similar conclusion without making all the findings stated in the Amon case.⁸ The judge said that it would be anomalous if an individual were immunized from prosecution merely because his protest is against the very law which he is violating or because the Government has not prosecuted everyone who has violated the same law. (I Supp. R. 16-17). We must agree again that the showing made did not establish an unconstitutionally selective prosecution. See United States v. Rickman, supra, 638 F.2d at 183.

In sum, in neither case can we agree that an unconstitutionally selective prosecution was demonstrated.

V

The defendants argue that the district court committed “gross error” by permitting the Government to introduce in evidence certain documents which were required by law to be filed by the defendants with their employers and the Government.⁹ They claim that the Government’s use of these documents to prove the case against them violated their constitutional rights under the Fourth and Fifth Amendments and their statutory rights under the Privacy Act, 5 U.S.C. § 552a, because the documents contained no Miranda warnings and no warnings required under the Privacy Act which would indicate that the documents could be used against them in a criminal case. (Brief of Appellant Amon at 8; Brief of Appellant Dunbar at 9-10).

Initially we note that the defendants failed to object at trial to the admission of these documents on the grounds now asserted.¹⁰ Ordinarily where an objection to the admission of evidence is not made at trial the issue may not be raised on appeal unless there is plain error involved which affects the substantial rights of the defendant. See, e. g., United States v. Popejoy, 578 F.2d 1346, 1350 (10th Cir.), cert. denied, 439 U.S. 896, 99 S.Ct. 257, 58 L.Ed.2d 243; United States v. Stevens, 452 F.2d 633, 635 (10th Cir.).

In any event Miranda warnings are not constitutionally required where, as here, the information requested by the Government on the tax forms is not obtained from the defendants in a custodial setting. See, e. g., Beckwith v. United States, 425 U.S. 341, 345-47, 96 S.Ct. 1612, 1615-1617, 48 L.Ed.2d 1; United States v. Brown, supra, 600 F.2d at 252 & n.3. It is also clear that defendants’ Fourth Amendment rights have not been violated by the Government since they could not legitimately claim an expectation of privacy in documents which they submitted voluntarily to the IRS and their employers. See Couch v. United States, 409 U.S. 322, 335-36, 93 S.Ct. 611, 619-20, 34 L.Ed.2d 548; Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576. Moreover, as to the W-4’s there was no violation of defendants’ rights under the Privacy Act of 1974, 5 U.S.C. § 552a, since the instructions accompanying the forms submitted by the defendants contain the necessary admonition.¹¹ See United States v. Rickman, supra, 638 F.2d at 183. There is no record evidence to indicate whether information forms relating to the tax returns or other documents containing a Privacy Act notice were received by defendants, but the objection is nevertheless unavailable since it was not made at trial, as noted above.

VI

Defendants’ final contention concerns the admission in evidence of testimony and documents relating to the total amount of wages earned by them during the 1979 tax year. Specifically they argue that evidence concerning the amount of wages earned after they submitted their W-4 forms to their employers is irrelevant to a determination of whether they knew at the time they submitted the forms that they would have a tax liability for 1979. (Brief of Appellant Amon at 8-9; Brief of Appellant Dunbar at 10).

There was expert testimony indicating that an individual must be able to certify that he had no tax liability for the previous tax year and that he anticipated no tax liability for the current year in order to be entitled to claim the exemption. Evidence concerning the amount of wages earned after the submission of the W-4 form to the employer is clearly relevant within the meaning of Rule 401, Fed.R.Evid., since it tends to establish a motive for falsely claiming an exemption from the withholding requirements. Moreover, such evidence tends to rebut the taxpayer’s claim that he could not reasonably anticipate tax liability for the current year. Consequently the trial court did not err in admitting such evidence.

Even assuming, however, that the trial court erred in admitting the evidence, we think that it would be harmless error within the meaning of Rule 52, Fed.R.Crim.P. Here there was sufficient evidence in the record, as we noted in Part I, supra, showing that each defendant incurred a tax liability for 1978 thereby precluding any legal claim for an exemption from the withholding requirements. Accordingly this eviden-tiary contention lacks any logical force.

VII

We have examined the remaining appellate contentions of the defendants and find that they are without merit and require no further discussion. We are satisfied that no reversible error is demonstrated and the judgments are

AFFIRMED.

1

. 26 U.S.C. § 7205 states in part that

Any individual required to supply information to his employer under section 3402 who willfully supplies false or fraudulent information, or who willfully fails to supply information thereunder which would require an increase in the tax to be withheld under section 3402, shall ... upon conviction thereof, be fined not more than $500, or imprisoned not more than 1 year, or both.

2

. Amon was sentenced to one (1) year of confinement on Count 1 of the information. Imposition of sentence was suspended as to Count 2 and the defendant placed on probation for two (2) years to begin when he was released from confinement under Count 1. (I R. 19).

3

. Dunbar was sentenced to one (1) year of confinement on Count 2 of the information. (I R. 17).

4

. The separate informations charging Amon and Dunbar were filed by the Government on February 20, 1980. Amon’s refund claims were received by the IRS on March 31, 1980. (II R. 6, 45-46). There was testimony that Dunbar’s refund claims were never received by the IRS, but he testified at trial that he mailed them on April 12, 1980. (II R. 41, 71).

5

. The evidence presented at both evidentiary hearings was similar. Defendant Dunbar testified that he filed for an exemption from the withholding requirement as a form of protest against the way the Government was being operated and that he discussed his views with other employees. (I Supp. R. 8-9). Referring to the Government’s support of a foreign war, Dunbar said that his refusal was “not just not to pay a tax. It is to tell them that what they do with our money was wrong.” (Id. at 9).

Defendant Amon testified that he was very outspoken in his views concerning the tax collection system and noncompliance with tax laws. (II Supp. R. 5-6, 9). Further evidence was presented at both evidentiary hearings tending to show that the IRS has a formal policy of prosecuting individuals who are outspoken in their criticism of federal income tax laws.

6

. Relying on United States v. Johnson, 577 F.2d 1304, 1308 (5th Cir.), the district court held that Amon had the burden of proving (1) that he had been singled out for prosecution while others similarly situated had not generally been proceeded against for the type of conduct forming the basis of the charge against him and (2) that the Government’s discriminatory selection of him for prosecution has been invidious or in bad faith and has been based on impermissible considerations such as race, religion or the desire to prevent the exercise of constitutional rights. (II Supp. R. 29, 31-32). This test has been recognized in our prior decisions. See, e. g., Barton v. Malley, supra, 626 F.2d at 155.

7

. There was testimony by Amon and stipulated exhibits showing a substantial number of other “exempt” filings where Amon had worked, and he testified that he knew of no other prosecutions in those groups. (II Supp. R. 7-9; Def. Exhs. A and B). The Government developed the fact that similar prosecutions had occurred in the case of Dunbar and one Lyle Bert. (II Supp. R. 10-11). In the Amon record it was not established where Dunbar and Bert were employed or prosecuted.

. See note 6, supra. We express no opinion on the reasoning of the trial court noted earlier that the judge was unable to determine if Amon had been singled out for prosecution because the statute of limitations had not yet run for others who were similarly situated. This presents a question which we need not reach in the Amon or Dunbar cases.

8

. In passing on the correctness of the trial court’s conclusion that an unconstitutionally selective prosecution of the defendant did not occur, this court may consider any evidence properly presented at trial, even though that evidence might not have been introduced at the post-trial evidentiary hearing. Cf. United States v. Smith, 527 F.2d 692, 694 (10th Cir.). Hence, we are noting here some other matters brought out at trial which have some pertinence to the selective prosecution issue.

As the district court noted at trial, there was undisputed testimony from Dunbar’s employer that a third of its employees, approximately 400 persons, were claiming an exemption from the withholding requirements. (II R. 18, 31, 81; I Supp. R. 6-7). Additionally Dunbar testified that “everybody” in his craft was filing for exempt status. (II R. 63). The district court found this evidence sufficient to establish a reasonable doubt as to whether Dunbar “acted in knowing and willful violation of a known legal duty” with respect to the W-4 form he submitted to his employer in January, 1979. (II R. 81).

As noted in Part I, supra, the Ebasco employees who were claiming exemptions from the withholding requirement received a letter from the IRS outlining the legal prerequisites for properly claiming an exemption. The trial testimony of Ebasco’s representative indicates that after receiving this letter “quite a few people” resubmitted W-4 forms and dropped their claims for exemptions. (II R. 21). The evidence presented at trial clearly shows that after receiving the IRS letter Dunbar continued to claim an exemption from the withholding requirements. Dunbar stated at trial that he personally knew only one other person from his craft, one Lyle Bert, who was being prosecuted. (II R. 63).

9

. These documents were identified at argument as being the various W-4 and federal income tax forms in evidence.

10

. At oral argument counsel for the defendants-appellants stated that the district court did not permit him to make a specific objection to the documents being offered by the Government. At argument Government counsel did refer to testimony concerning the Privacy Act having been given at trial. After reviewing the record in both cases, we must disagree with the contentions that a specific objection was prevented by the trial judge and that the substance of the objection was made. Defense counsel was provided ample opportunity to raise an objection to the Government’s use of the documents now challenged. (II R. 28, 39, 54 (Dunbar); II R. 8-9, 18-19, 23-24 (Amon)).

Only during Amon’s trial did defense counsel object to the Government’s use of these documents. The objection, however, did not relate to the constitutional and Privacy Act claims now asserted, but instead related to the contention discussed in Part VI, infra, of this opinion.

11

. Amon admitted at trial that he had read the Privacy Act notice concerning the W-4 forms. (II R. 37-38, 41-42). Dunbar admitted receiving a letter from IRS, and the letter was accompanied by the W-4 instruction form with the Privacy Act notice. (Pl. Ex. 3; II R. 65-66).