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January 11, 1957


The opinion of the court was delivered by: LORD

Defendant has moved for a judgment of acquittal and in the alternative for a new trial following a jury verdict of guilty of willful failure to file Federal Income Tax Returns for the years 1953 and 1954 within the time required by law.

The principal statutes involved are Title 26 U.S.C.A. 145(a), applicable to the tax year 1953, and Title 26 U.S.C.A. 7203, applicable to the tax year 1954. The latter provision, for all purposes here concerned, is similar to the former, 145(a), which provided:

 'Any person required under this chapter to pay any * * * tax * * * or * * * to make a return * * * who willfully fails to * * * make such return * * * at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, he fined not more than $ 10,000, or imprisoned for not more than one year, or both, together with the costs of prosecution.'

 Other statutes are involved, such as the requirement that anyone whose annual income exceeds $ 600 must make a return, and the provisions as to times of filing. It was stipulated, however, that defendant's income exceeded $ 600 during the years in question. As to the times of filing, defendant testified that the returns were filed on December 7, 1955, and it is undisputed that the returns should have been filed March 15, 1954, and April 15, 1955, respectively. These statutes are therefore not called into question.

 Defendant pleaded not guilty to the information which charged in Count I that defendant's gross income in 1953 was $ 11,165, and in Count II that his gross 1954 income was $ 11,155. The named amounts of gross income are not in issue, being the defendant's own figures.

 Defendant claims that as to willfulness the evidence is insufficient, especially -- he argues -- in view of its circumstantial nature. He also claims that questions asked by the prosecution on cross examination were prejudicial, that misleading statements were made by the government in its closing address, and that a new trial is warranted in the alternative if a judgment of acquittal be not granted.

 There is little dispute as to the facts. Defendant is a practicing attorney in the City of Philadelphia. Although admitted to the bar in 1941, he was in the United States Coast Guard from January of 1942 to the summer of 1946. Since his discharge from the service in 1946 to the present he has been practicing law, having entered an office established by his father, but from which the parent retired in 1947. Testifying in his own defense, he recounted his financial difficulties from 1947 to the present, and stated that he has been insolvent during that entire period.

 It is undisputed that in addition to the years 1953 and 1954 upon which the information is based, there was a failure to file returns for the years 1948 to 1952, inclusive, until the winter of 1955. At that time, in the face of a pending Internal Revenue investigation, defendant reported his income for the years 1948 through 1954, without making any remittance at the time. Early in 1956, upon receipt of a computation of liability from the Internal Revenue office, the defendant borrowed money from his father and paid the liability in full.

 The evidence of failure to make timely returns for the years 1948 through 1952 was admitted for its bearing upon intent or motive, since the crime in question was one in which state of mind is an element. United States v. Fawcett, 3 Cir., 1940, 115 F.2d 764, 768, 132 A.L.R. 404.

 The defense was simply that defendant did not have the money with which to pay his taxes, and that he believed one could not file a tax return without simultaneous payment. He freely admitted that he had long been aware that he was violating the law by thus failing to report his income, and had lived in dread of the consequences during the years in question.

 To show that his conduct was not willful within the statute, he testified as to his scanty acquaintance with tax law, and told of his disclosures of the defaults to a number of persons. For example, he had confessed his derelictions to a doctor client, to his law associate, his legal secretary, and to his wife. He admitted, however, that he had not secured professional advice. In that direction he had nevertheless made a veiled inquiry of an Internal Revenue agent, Mr. Walkenstein, in 1953. Both defendant and Mr. Walkenstein testified that the latter had advised, in response to defendant's question (which did not disclose whose default was involved), that late filing, on the taxpayer's voluntary disclosure, was treated with leniency so long as payment accompanied the disclosure.

 Through his law associate, the defendant had made another attempt to secure advice from a former Collector of Internal Revenue. This query likewise did not disclose that the information was sought on behalf of defendant. It proved fruitless, since for some reason the parties lost contact before definite recommendation or advice was secured.

 Various plans made by defendant from time to time for raising money to meet the tax liabilities were described as indications of absence of bad faith.

 In the present motion, the defendant argues that, in the face of the foregoing evidence, the jury was not justified in reaching a verdict which necessarily comprehended statutory willfulness. He adds that since the evidence of willfulness was entirely circumstantial, it cannot support the verdict unless it excludes any ...

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