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United States District Court, Eastern District of Pennsylvania

April 15, 1952


The opinion of the court was delivered by: McGRANERY, District Judge.

Each of the two defendants in these cases has been indicted on three counts under Sec. 145(b) of the Internal Revenue Code, 26 United States Code, § 145(b).*fn1 It is charged in Counts I and III of the bills that each defendant willfully and knowingly attempted to defeat and evade part of the income tax due and owing by him to the United States for the calendar years 1945 and 1947 by filing with the Collector of Internal Revenue for the First Internal Revenue Collection District of Pennsylvania false and fraudulent returns covering those years. It is further charged, in Count II of each indictment, that as to the year 1946, each defendant attempted to evade a large part of the tax due both by submitting to the person preparing the respective returns false and fraudulent books and records and by failing to file any tax return whatever.

The present motion by the defendants seeks the dismissal of Count I of each indictment, pleading in bar the statute of limitations fixed by the Internal Revenue Code for the bringing of criminal prosecutions. The pertinent portion of that statute, Sec. 3748(a) of the Internal Revenue Code, 26 U.S.C.A. § 3748(a) reads:

"§ 3748. Periods of limitation

    "(a) Criminal prosecutions. No person shall be
  prosecuted, tried, or punished, for any of the
  various offenses arising under the internal revenue
  laws of the United States unless the indictment is
  found or the information instituted within three
  years next after the commission of the offense,
  except that the period of limitation shall be six
  years —

    "(2) for the offense of willfully attempting in any
  manner to evade or defeat any tax or the payment
  thereof, * * *."

The indictment in each case was found on February 15, 1952.

The defendants filed income tax returns for the calendar year 1945 on or about January 15, 1946. The returns were executed upon Form 1040, the so-called long form, and defendants certified them as true, correct and complete. They were prepared by an accountant for defendants, and bear date of January 11, 1946 on the originals signed by such accountant. These returns were the only returns for the calendar year 1945 submitted by defendants, and were filed on January 15, 1946, to avoid penalties that would otherwise accrue by reason of defendants' failure, in the Declaration of Estimated Tax for 1945, to gauge the sum to be paid by them with anything like precision: the estimated tax in each case was less than one-third of the total tax liability ultimately reported.

Defendants made part payment of the amount of tax due for 1945 as calculated in the returns submitted by them by delivery of bonds of the United States Treasury, remitting the balance by check. In each case, the check bears date of January 14, 1946, the Collector's endorsement of January 30, 1946.

Whether Count I of the indictments can stand depends upon which of two dates is taken as the date of the commission of the offense charged therein: January 15, 1946, when defendants in fact filed their returns for the year 1945, or March 15, 1946, the last permissible date for such filing. The indictments charge that it is the latter date that is the date of the offense. The Government urges that consequently the statute of limitations is no bar to prosecution, since only five years and eleven months from the date of the alleged crime had elapsed at the time that the grand jury found the indictments. With this contention the Court cannot agree. The crime, if any, was committed on the filing of the returns on January 15, 1946; and prosecution is barred by the statute.

The decision in Cave v. United States, 8 Cir., 1947, 159 F.2d 464, certiorari denied 331 U.S. 847, 67 S.Ct. 1732, 91 L.Ed. 1856, is dispositive of the instant motion. There, the fourth count of the indictment had charged defendant with attempting to defeat and evade tax for the year 1944 by filing a false and fraudulent return on January 15, 1945. On appeal, defendant contended that since his tax payment was not due until March 15, 1945, there could be no criminal attempt to defeat or evade it prior to that time. The Court rejected that argument in these words, 159 F.2d at page 467:

    "The argument is fallacious. A taxpayer whose
  returns are made on the basis of the calendar year
  may file his return with the collector `on or
  before the 15th day of March following the close of
  the calendar year,' § 53(a)(1) Internal Revenue
  Code, 26 U.S.C.A. Int.Rev.Code, § 53(a)(1); and the
  tax `shall be paid on the fifteenth day of March
  following the close of the calendar year,' § 56(a);
  and it `may be paid * * * prior to the date
  prescribed for its payment,' § 56(d). The crime
  denounced by § 145(b) of willfully attempting to
  defeat or evade the tax is complete when the taxpayer
  willfully and knowingly files a false and fraudulent
  return with intent to defeat or evade any part of the
  tax due the United States. Guzik v. United States, 7
  Cir., 54 F.2d 618, 619, certiorari denied
  285 U.S. 545, 52 S.Ct. 395, 76 L.Ed. 937; Bowles v. United
  States, 4 Cir., 73 F.2d 772, 774." (Emphasis added.)

The Court of Appeals for this Circuit approved the quoted statement in United States v. Croessant, 3 Cir., 1949, 178 F.2d 96, certiorari denied, 1950, 339 U.S. 927, 70 S.Ct. 626, 94 L.Ed. 1348, although it must be pointed out that the question there involved was not the same as that in the case at bar. Defendant there urged, unsuccessfully, that proof of what he had done would not sustain a conviction for felony under Sec. 145(b) of the Internal Revenue Code, since the United States Supreme Court, in Spies v. United States, 1943, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418, had held that the failure to file the required return would not support such a conviction. Hence, he argued, a fortiori, filing a false return could be no graver offense than omission to file any return. In the course of its opinion, in sketching out the distinction between a mere default and a willful misrepresentation, the Court of Appeals declared, 178 F.2d at page 98:

    "The Eighth Circuit has passed twice upon this
  question. The proposition decided in the first case
  was restated in the latest case in language hardly to
  be improved upon for concise clarity. Here it is
  said: `The crime denounced by § 145(b) * * * is
  complete when the taxpayer willfully and knowingly
  files a false and fraudulent return with intent to
  defeat or evade any part of the tax due the United
  States." [Footnotes omitted.]

The view of the law taken in the Cave opinion also finds support in 9 Cyclopedia of Federal Procedure, Second Edition, § 3781, where it is said:

    "Ordinarily limitations begin to run from the
  commission of the offenses, but if the offense is
  continuous it is not barred where some portion of the

  crime is within the statutory period. Whenever the
  act or series of acts necessary to constitute a crime
  have transpired, the crime is complete, and
  limitations begin to run from that time. * * *

    "These rules have been applied among other cases,
  to prosecutions of a bankrupt for concealing property
  from his trustee, and to prosecutions for fraudulent
  use of the mails, for failing to file an income tax
  return, and for making false banking entries in
  reports to the comptroller of currency."

To the same effect is 22 C.J.S., Criminal Law, § 226.

United States v. Hall, D.Conn. 1943, 52 F. Supp. 796, also indicates that, in computing the running of the statute of limitations, attention is properly directed to the actual date of filing, and not to the last permissible legal date of such filing. Thus, it was held, 52 F. Supp. at page 797:

    "The motion to quash and the plea in bar are both
  based on a contention that more than six years have
  elapsed since the date established by law for the
  filing of tax returns for the calendar year 1936;
  that is to say, the indictment having been returned
  on July 6, 1943, was more than six years after March
  15, 1937, and, therefore, barred by the statute of
  limitations. This assumes that the crime charged
  must have been complete on March 15, 1937. However,
  the crime charged is not a false return on March 15,
  1937, nor a failure to make a return on that date,
  but rather a wilful attempt to evade the tax for the
  calendar year 1936 by means of an act which took
  place on September 15, 1937, within the six-year
  period prior to indictment — the filing of an
  alleged false and fraudulent return on that date.
  Whether we consider the crime charged as a continuing
  crime as contended by the government, completed by
  the last action taken by the defendant to carry out
  the alleged purpose to evade, in this court, the
  filing of the return on September 15, 1937 (see
  United States v. Johnson, 1943, 319 U.S. 503, 515, 63
  S.Ct. 1233 [87 L.Ed. 1546]), or whether we consider
  that the single act of filing a return known to be
  false for the purpose of evading the tax is in itself
  a separate offense under the statute, the allegations
  of the first count sufficiently set forth a violation
  of the statute by means of the filing of the
  allegedly false and fraudulent return on September
  15, 1937 within the six-year period." (Emphasis

An early annotation on the point here decided is found in 76 A.L.R. 1549.

It is important to note that the construction of the statute of limitations here adopted is the same as that usually applied to enactments of this kind. Thus, the Supreme Court held in Pendergast v. United States, 1943, 317 U.S. 412, 418, 63 S.Ct. 268, 271, 87 L.Ed. 368:

    "Statutes of limitations normally begin to run when
  the crime is complete."

See also 15 American Jurisprudence, Criminal Law, § 345.

Accordingly, the motion is granted in each case.

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