Tax evasion

“ No tax shall have a confiscatory effect.
No tax obligations payable in personal services shall be established. Tax evasion may be punished as a criminal offense, without prejudice to other penalties established by law. ”

“ This would do full justice as far as the charges of tax evasion are concerned and if perjury has been committed it can be prosecuted as a separate crime.
I think this case is a dangerous precedent which should not be launched needlessly into the stream of the law. ”

“ If, as the opinion below suggests, the only question that can properly be submitted to the jury is whether the entire deduction is fabricated, an unconscionable taxpayer can immunize himself from the criminal sanctions for tax evasion by the simplest of expedients. He need only find a legitimate item of deduction and then pad it as much as his purpose requires. ”

“ We do not imply that a question of tax evasion or avoidance is involved. Section 129 (a) of the 1939 Code, as amended, does contain provisions which may vitiate a tax deduction that was made possible by the acquisition of corporate property for the 'principal purpose' of tax evasion or avoidance. ”

“ It follows that, except for the possible adverse effect on rightful owners, the only substantial result that one can foresee from today's holding is that the Federal Government will, under the guise of a tax evasion charge, prosecute people for a simple embezzlement. But the Constitution grants power to Congress to get revenue not to prosecute local crimes. And if there is any offense which under our dual system of government is a purely local one which the States should handle, it is embezzlement or theft. ”

“ United States, 390 U.S. 39, 42, 88 S.Ct. 697, 699, 19 L.Ed.2d 889 (1968) ; Grosso v. United States, 390 U.S. 62, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968) . This case present the question what, if any, use the Government is entitled to make of wagering excise tax returns, filed pursuant to the statutory scheme, in a prosecution for income tax evasion. Since I believe the Fifth Amendment does not prevent the use of such returns to show a likely source of unreported income in a criminal prosecution for income tax evasion, I concur in the judgment of the Court. ”

“ Evasion is too simple a process to be unused, and the heavier the rate of tax the greater will be the resort to evasion and even to perjury, express or implied. The fundamental cause of the failure lies in this, "the endeavor to tax securities, which are no more than evidences of ownership or interest in property, and which offer the easiest means of concealment and evasion, by the same methods and at the same rate as tangible property situated on the spot." ”

“ Despite § 253's addition of the words 'in any manner' to the 'attempts' clause of the 1917 Act, petitioner contends that the failure of § 253 to single out the making of false returns with intent to evade must be attributed to a congressional determination that this particular mode of imcome tax evasion should be punished under § 3179. Plainly enough, such a reading of the Act is untenable. We cannot hold that the classic method of evading the income tax, the filing of a false return, did not constitute an attenpt 'in any manner to defeat or evade' that tax. ”

“ The honest, realistic, and really economical way to run this Government is to collect the present taxes efficiently, intensively. We must go after tax evaders without favoritism and drive home the lesson on that they deserve no mercy. To this end, I recommend that Congress make the penalties for tax evasion more severe. ”

“ It is clearly possible to apply to a particular state of facts either one or the other remedy, and to give to the government the choice. To hold that where the tax-unpaid spirits were illegally distilled, there could be forfeiture of the vehicle only under section 26 while in case of tax-unpaid legally distilled liquor the vehicle could be forfeited under section 3450, would involve holding that where the crime of tax evasion is preceded by the offense of illegal distillation, a less severe forfeiture is inflicted than if tax evasion alone were involved. ”

“ There is great danger that the jury may assume that once the Government has established the figures in its net worth computations, the crime of tax evasion automatically follows. The possibility of this increases where the jury, without guarding instructions, is allowed to take into the jury room the various charts summarizing the computations; bare figures have a way of acquiring an existence of their own, independent of the evidence which gave rise to them. ”

“ To hold as the Court does that this transaction constitutes a 'sale' within the terms of I.R.C. § 1222 (3) , thereby giving rise to capital gain for the income received, legitimates considerable tax evasion. Even if the Court restricts its holding, allowing only those transactions to be § 1222 (3) sales in which the price is not excessive, its decision allows considerable latitude for the unwarranted conversion of ordinary income into capital gain. Valuation of a closed corporation is notoriously difficult. ”

“ We have one of the lowest tax to GNP ratios of any country in the world. No longer can we tolerate tax evasion as a national pastime, especially of the rich, when indeed our economic future is at stake. The place for tax evaders is not high society but behind bars.
As regards external financing resources, except for one component we have installed a financing structure which will support sustained growth. ”

“ Any person who has committed the acts mentioned in the first paragraph, but has paid the taxes in arrears and the surcharge thereon upon receipt of a recovery notice issued by the tax authorities in accordance with the law, and has been subject to administrative penalty, shall not be investigated for criminal responsibility unless the person has been previously undergone criminal punishment or imposed twice or more administrative sanctions by the tax authorities due to tax evasion within the last five years. ”

“ Since the Government's complaint stated the essential facts constituting the offense of attempted tax evasion and was made upon oath before a Commissioner, the Government contends that regardless of the complaint's adequacy for any other purposes, it was valid for the purpose of triggering the nine-month extension of the limitation period whether or not it showed probable cause. ”

“ During these same years petitioner's declared income exceeded his living expenses by less than $3,000. These substantial expenditures, savings and investments might not, of themselves, suffice to support a conviction of tax evasion without evidence of a starting point indicating a lack of funds from which these payments might have come. ”

“ The fifth count of the indictment does refer to 'all of the moneys * * * paid * * * by virtue of the * * * so-called 'Employment Contracts" as 'in truth and in fact, distributions of profits and dividends.' But the gravamen of the charge is distribution of dividends in the guise of commissions, and the respondents cannot fairly claim that they were not adequately apprised of the nature of the offense. Any variance which existed, at most a matter of the extent of the alleged tax evasion, involves no elements of surprise prejudicial to the respondents' efforts to prepare their defense. ”

“ There will emerge uniformity of law, rates, interpretation and administration of all federal fiscal measures resulting in uniform policies, principles and practice in the levy, assessment, and collection of Central taxes and duties. And tax-evasion, always a serious evil, will be more effectively checked. ”

“ No defense to a § 7201 evasion charge is made out by showing that the defendant willfully and fraudulently understated his tax liability for the year involved but intended to report the income and pay the tax at some later time. As this Court has recognized, § 7201 includes the offense of willfully attempting to evade or defeat the assessment of a tax as well as the offense of willfully attempting to evade or defeat the payment of a tax. ”

“ Yet the existence of corruption on one side of the state’s activities is thus made the excuse for corruption on another side whereby the state is mulcted of much revenue which it might receive. Of course evasion results in higher tax rates, which, by the way, fall crushingly upon the citizen who makes full and honest returns, and thus part of the loss in income to the government is made up. ”

“ Such opportunities will not go unused unless the courts are vigilant to protect the rights of persons who find themselves faced with such coaction of federal and state prosecuting agencies. Such vigilance becomes increasingly required as the Federal Government, through prosecuions for tax evasion, moves into the criminal areas regulated by the States. ”

“ The annual reports of the British Commissioners of the Inland Revenue always mention extensive evasions of the income tax. For the year 1864-'65 the amount of such evasion was estimated to have been equal to about one sixth of the revenue collected under it. The demoralizing effects which are inevitably produced by the habit of making false returns respecting income are regarded by many British authorities as far more deplorable than those resulting from any inequality contingent on this form of taxation ”

“ The correct theory, we believe, was indicated by the indictment, i.e., that the conspiracy was a continuing one extending from 1942 to 1953 and its principal object was to evade the taxes of Seijas and his wife for 1942-1945, inclusive, by concealing their 'holdout' income. This object was not attained when the tax returns for 1945 concealing the 'holdout' income were filed. As was said in Grunewald, this was but the first step in the process of evasion. The concealment of the 'holdout' income must continue if the evasion is to succeed. ”

“ It might appear to Congress that the adoption of a rule against State taxes measured by interstate commerce gross receipts would deprive the States of a potent weapon useful in preventing evasion of State taxes.
This Court's rule would permit Washington to tax appellant's net income. But determination and collection of taxes on net incomes are often very difficult because corporate profits and income may be isolated or hidden by accounting methods, holding companies and intercorporate dealings. ”

“ The tax of two dollars per proof gallon (amounting to more than 1,500 per cent on the average cost of production) and the enormous profits contingent upon the evasion of the law, coupled with the abundant opportunity which the law through its imperfections, and the vast territorial area of the country, offered for evasion, created a temptation which it was impossible for human nature as ordinarily constituted to resist. This view was taken by the Revenue Commission in a report to Congress through the Secretary of the Treasury in February, 1866 ”

“ The moment goods are imported, which are subject to such exactions, the amount of the tax is a debt due to the state, the evasion or denial of which is a fraud. The penalty is not an alternative at your option; it is a punishment, and that always presupposes an offence. ”

“ This second method of evasion would not constitute a serious danger, because of the equally severe inheritance laws of foreign countries. The tax at its highest level could be placed without danger of evasion at as much as twenty per cent. The United Kingdom now raises almost $100,000,000 of revenue from the source; and a slightly increased scale of taxation might yield double that amount to the American Treasury, a part of which could be turned into the state Treasuries. ”

“ Fourthly, by subjecting the people to the frequent visits and the odious examination of the tax-gatherers it may expose them to much unnecessary trouble, vexation, and oppression”: to which may be added that the restrictive regulations to which trades and manufactures are often subjected, to prevent evasion of a tax, are not only in themselves troublesome and expensive, but often oppose insuperable obstacles to making improvements in the processes. ”

“ If Congress ever did manifest an intention to select the mere fact of embezzlement as the basis for imposing a double tax on the owner, we think a serious question of confiscation in violation of the Fifth Amendment would be raised. All of us know that with the strong lien provisions of the federal income tax law an owner of stolen funds would have a very rocky road to travel before he got back, without paying a good slice to the Federal Government, such funds as an embezzler who had not paid the tax might, perchance, not have dissipated. ”

“ Thirdly, by the forfeitures and other penalties which those unfortunate individuals incur who attempt unsuccessfully to evade the tax, it may frequently ruin them, and thereby put an end to the benefit which the community might have derived from the employment of their capitals. An injudicious tax offers a great temptation to smuggling. ”

“ However, in my judgment it stretches provious tax interpretations too far to classify the sporadic loot of an embezzler, an extortioner or a robber as taxable earnings derived from a business, trade or a profession. I just do not think Congress intended to treat the plunder of such criminals as theirs.
It seems illusory to believe, as the majority apparently does, that the burden on honest American taxpayers will be lightened by a governmental policy of pursuing extortioners in futile efforts to collect income taxes. ”

“ Whatever room for argument there may be as to the competency of State legislation to extinguish material products, as sources of internal revenue to the United States, by proscription of their legal use while their actual use continues, it can never be tolerated that personal vice and guilt constitute a fund for Federal taxation, which ousts the States of police and penal regulation of the personal conduct of their inhabitants. ”