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October 1, 1962

Pat DiPRIMIO and Daniel Panichella

The opinion of the court was delivered by: DUMBAULD

There is no better description of the Internal Revenue laws in general than that contained in the often-quoted language of Judge Learned Hand:

'In my own case the words of such an act as the Income Tax, for example, merely dance before my eyes in a meaningless procession: cross-reference to cross-reference, exception upon exception -- couched in abstract terms that offer no handle to seize hold of -- leave in my mind only a confused sense of some vitally important, but successfully concealed, purport, which it is my duty to extract, but which is within my power, if at all, only after the most inordinate expenditure of time. I know that these monsters are the result of fabulous industry and ingenuity, plugging up this hole and casting out that net, against all possible evasion; yet at times I cannot help recalling a saying of William James about certain passages of Hegel: that they were no doubt written with a passion of rationality; but that one cannot help wondering whether to the reader they have any significance save that the words are strung together with syntactical correctness.' *fn1"

 The same complexity carries over into the so-called 'gambling tax' provisions of the Internal Revenue laws.

 These provisions, it is well known, were added for the purpose of discouraging professional gambling rather than of raising revenue. Investigations conducted by Senator Estes Kefauver of Tennessee and by Robert F. Kennedy, the present Attorney General, have disclosed the widespread extent and the sinister influence of gambling in the nation's life. The public has been shocked to learn the magnitude of the tremendous revenue or 'take' therefrom which is at the disposal of criminals for purposes of political corruption or of obtaining control of legitimate business enterprises. Much of this enormous income, for the most part derived from activities carried on in defiance of State law, has escaped paying federal income tax because of the difficulties of enforcement. Consequently, Congress took action to protect the public interest, and enacted certain special 'gambling tax' provisions.

 But the courts are not concerned with the motives of Congress, whatever they may have been, so long as it does not transcend its legislative powers; and it is no objection to the exercise of the federal commerce power or taxing power that its exercise may be 'attended by the same incidents which attend the exercise of the police power.' United States v. Darby, 312 U.S. 100, 114, 61 S. Ct. 451, 457, 85 L. Ed. 609 (1941); United States v. Kahriger, 345 U.S. 22, 27-28, 73 S. Ct. 510, 97 L. Ed. 754 (1953). The latter case upheld the constitutionality of the 'gambling tax' provisions, although three Justices dissented, and Mr. Justice Frankfurter contended that the legislation sought to wrap in the 'verbal cellophane' of a revenue measure a statute intended 'not to raise revenue but to regulate conduct.' 345 U.S. at 37-38, 73 S. Ct. at 517.

 The 'gambling tax' provisions were further construed and clarified in United States v. Calamaro, 354 U.S. 351, 77 S. Ct. 1138, 1 L. Ed. 2d 1394 (1957).

 The information in the case at bar contained three counts. The first charged wilful failure to pay a federal tax, in violation of 26 U.S.C. § 7203 which reads as follows:

 'Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return (other than a return required under authority of section 6015 or section 6016), keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, 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, shall be fined not more than $ 10,000, or imprisoned not more than 1 year, or both, together with the costs of prosecution.'

 This is a general provision applicable to many kinds of tax (including income tax), and not limited to failure to pay taxes arising under the 'gambling tax' provisions of the Internal Revenue law.

 The second count charged each defendant with the offense of failure to register with the Internal Revenue Service as required by 26 U.S.C. § 4412, *fn2" such failure being subjected to a penalty of $ 50 by 26 U.S.C. § 7272. *fn3"

 The third count purported to charge violation of 26 U.S.C. § 7262 which provides that: 'Any person who does any act which makes him liable for special tax under (26 U.S.C. § 4411) without having paid such tax, shall, besides being liable to payment of the tax, be fined not less than $ 1,000 and not more than $ 5,000.'

 The special tax under 26 U.S.C. § 4411 (liability for which carries with it the duty of registration *fn4" ) is a flat annual tax of $ 50 payable by persons who are liable for tax under 26 U.S.C. § 4401, or who are 'engaged in receiving wagers for on on behalf of any person so liable.' *fn5"

 Turning now to 26 U.S.C. § 4401, we find that it imposes what is commonly called an 'excise' tax of 10% As distinguished from the 'special tax' imposed by 26 U.S.C. § 4411 which gives rise to the duty of registration prescribed by 26 U.S.C. § 4412.

 The 'excise tax' provision of 26 U.S.C. § 4401 reads as follows: 'There shall be imposed on wagers, as defined in section 4421, an excise tax equal to 10 percent of the amount thereof.' It is further provided that 'Each person who is engaged in the business of accepting wagers shall be liable for and shall pay the tax under this subchapter on all wagers placed with him. Each person who conducts any wagering pool or lottery ...

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