Code of Silence: Time for the IRS to Answer The Question!

I STILL HAVE DOUBTS WHETHER THE NAME OF VERNICE B. Kuglin, who lives in Memphis, Tenn., will someday leap off the pages of America's history books along with those of Patrick Henry, Nathan Hale, and Rosa Parks. I do know that Ms. Kuglin must be a woman of some personal courage.

Ms. Kuglin, a 58-year-old pilot for FedEx, made news a few days ago when a federal court jury found her not guilty on six charges of tax evasion and willful failure to file federal tax returns. During her testimony, Ms. Kuglin said that over the last eight years she had sent numerous letters to the Internal Revenue Service requesting that the agency tell her specifically which law in the federal code requires her to pay individual taxes.

To this day, she says, she has not received an answer to that simple question. It's not, mind you, that she has received an answer she considers unsatisfactory or unclear. It's that she hasn't received an answer of any kind.

The reason I still have doubts about Ms. Kuglin's durability as a true American heroine has to do with the methods she used to make her point. (Among other things, she claimed 99 exemptions on her W-4 form.) But after watching her case?and those of other tax protesters?for the last several months, I can't help thinking they have something of an argument. And I think the IRS continues to be extraordinarily dim-headed in its response on at least two important fronts.

First, if indeed the obligation of every U.S. citizen to pay federal taxes is legitimately codified, then it shouldn't be all that difficult for the IRS to demonstrate for a layman like Ms. Kuglin just exactly how those laws apply. For some years, some pretty smart people have put together a pretty persuasive argument that the tax laws are a sham, that they have been cobbled together in an extraconstitutional manner allowing Uncle Sam to collect huge sums of money without a clear basis in law.

If these folks are wrong, more and more taxpayers are asking, why should it be so hard for the IRS and the federal government to prove the case? Why, when a minister like Gene Chapman camps out for a "fast to the death" on the steps of an IRS building, demanding an answer to the question, "Where is my tax liability in the law?"?why doesn't the IRS just provide a simple and transparent answer?

Indeed, I have actually been skeptical in the other direction. I have regularly dismissed the so-called tax-protest movement as a group of crackpots who want so badly to prove the federal government wrong that they concoct harebrained theories that can't possibly hold water. But the longer the feds and the IRS stonewall, the less skeptical I get.

Second, why must the federal government be so heavy-handed in its response to a few of the more outspoken tax protesters? Protester Irwin Schiff finds himself in federal court in Nevada this week, fighting a possible six-month jail sentence for continuing to sell his book, The Federal Mafia. The government contends that he is engaged in commercial enterprise to encourage citizens to break the law?which means that every time Mr. Schiff does anything to sell another book, he finds himself in contempt of court.

Protester Larken Rose, meanwhile, says he isn't even trying to sell anything; without advocating any particular action, he just tells people through lectures and literature what he thinks the law really says?and for that, he claims, he has had his office and home ransacked by IRS agents.

WORLD and its board and management are not tax protesters. We take seriously Christ's command to "render unto Caesar the things that are Caesar's, and unto God the things that are God's." And we understand that in a secular society, that may often mean we end up paying taxes even for causes that we find repugnant to our consciences.

At the same time, it's altogether right for citizens in a free society to call on Caesar to tell us the truth about our obligations, and to do so in a civil manner.

In Memphis a couple of weeks ago, after the jury that had exonerated Ms. Kuglin had been dismissed, the U.S. attorney who had unsuccessfully prosecuted the case asked the presiding judge to order the defendant to file her forms, pay her taxes, and "obey the law." The judge responded discreetly by noting that such a response was outside his duties.

If the judge was simply saying, "Make your law clear, sir, and maybe the lady will obey," I think he had a pretty good point.

Wages are not income.

As unbelievable as it might sound, some tax protesters simply think that the income tax doesn't apply to wages.

Section 61(a) of the Internal Revenue Code says that "gross income" (which is the starting point for determining "taxable income") means "gross income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, fringe benefits, and similar items...."

Sometimes the claim is that "compensation for services" is not the same as "wages." Sometimes the claim is that "wages" are not the same as "gain" or "profit." (See the discussion below on the claim that wages represent an equal, nontaxable exchange of labor for money.) Sometimes the claim is something else. Regardless of the rationale, the result is always the same: Wages are income.

"[T]he earnings of the human brain and hand when unaided by capital ... are commonly dealt with as income in legislation." Stratton's Independence, Ltd. v. Howbert, 231 U.S. 399, 415 (1913).

"Every court which has ever considered the issue has unequivocally rejected the argument that wages are not income." United States v. Connor, 898 F.2d 942, 943-944 (3rd Cir. 1990).

"In our view, petitioner's wages are taxable as gross income..." Beard v. Commissioner, 793 F.2d 139, 140 (6th Cir. 1986), aff'g 82 T.C. 766 (1984);

"Wages are taxable income." Perkins v. Commissioner of Internal Revenue, 746 F. 2d 1187, 1188 (6th Cir. 1984); Beerbower v. Commissioner of Internal Revenue, 787 F.2d 588 (6th Cir. 1986).

"Wages are income, and the tax on wages is constitutional." Coleman v. Commissioner, 791 F.2d 68 (7th Cir. 1986), citing United States v. Thomas, 788 F.2d 1250 (7th Cir. 1986); Lovell v. United States, 755 F.2d 517 (7th Cir. 1984); Granzow v. Commissioner, 739 F.2d 265, 267 (7th Cir. 1984);

"Although not raised in his brief on appeal, the defendant's entire case at trial rested on his claim that he in good faith believed that wages are not income for taxation purposes. Whatever his mental state, he, of course, was wrong, as all of us are already aware. Nontheless, the defendant still insists that no case holds that wages are income. Let us now put that to rest: WAGES ARE INCOME. Any reading of tax cases by would-be tax protesters now should preclude a claim of good-faith belief that wages--or salaries--are not taxable." United States v. Koliboski, 732 F.2d 1328, 1329 n.1 (7th Cir. 1984), (emphasis in original; convictions for criminal failures to file affirmed).

"[W]e have [repeatedly] held that wages are within the definition of income under the Internal Revenue Code and the Sixteenth Amendment, and are subject to taxation. Denison v. Commissioner, 751 F.2d 241, 242 (8th Cir.1984) (per curiam), cert. denied, 471 U.S. 1069, 105 S.Ct. 2149, 85 L.Ed.2d 505 (1985)." United States v. Gerads, 999 F.2d 1255 (8th Cir. 1993).

"Section 61 of the Internal Revenue Code imposes a tax on income, and under the Tax Code, wages are income." Grimes v. Commissioner, 806 F.2d 1451, 1453 (9th Cir. 1986).

"Compensation for labor or services, paid in the form of wages or salary, has been universally held by the courts of this republic to be income, subject to the income tax laws currently applicable." United States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981).

"Irrefutably, wages earned in compensation for services are "income" pursuant to the federal tax laws." Boubel v. United States, 86 AFTR2d ¸2000-5123, No. 1:99-cv-380 (U.S.D.C. E.D.Tenn. 6/22/2000).

"[I]f anything in our tax law is clear, it is that: 'WAGES ARE INCOME.' ... [A]ny contention to the contrary is patently frivolous...."" Hill v. United States, 599 F. Supp. 118, 120-22 (M.D. Tenn. 1984), (emphasis in original), (quoting United States v. Koliboski, 732 F.2d 1328, 1329 n.1 (7th Cir. 1984)).

"As the cited cases, as well as many others, have made abundantly clear, the following arguments alluded to by the Lonsdales are completely lacking in legal merit and patently frivolous: ... (5) wages are not income...." Lonsdale v. United States, 919 F.2d 1440, 1448 (10th Cir. 1990).

See also, Wilson v. United States, 412 F.2d 694, 695 (1st Cir. 1969); Schiff v. Commissioner, 751 F.2d 116, 117 (2d Cir. 1984); Commissioner v. Mendel, 351 F.2d 580, 582 (4th Cir. 1965); Simmons v. United States, 308 F.2d (4th Cir. 1962); Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th Cir. 1981); United States v. Burton, 737 F.2d 439 (5th Cir. 1984); Capps v. Eggers, 782 F.2d 1341 (5th Cir. 1986); Funk v. Commissioner, 687 F.2d 264, 265 (8th Cir. 1982); United States v. Ware, 608 F.2d 400 (10th Cir. 1979); United States v. Woodall, 255 F.2d 370, 372 (10th Cir. 1958), cert. den. 358 U.S. 824 (1958); Simanonok v. Commissioner, 731 F.2d 743, 744 (11th Cir. 1984); Ledford v. United States, 2002 TNT 153-6, NO. 02-5027 (Fed. Cir. 8/6/2002).

So where do tax protesters get the idea that wages might not be income? Often from a series of incomplete and misleading quotations from irrelevant cases.

"There is a clear distinction between 'profit' and 'wages' or compensation for labor. 'Compensation for labor' can not be regarded as profit within the meaning of the law. The word 'profit' as ordinarily used, means the gain made upon any business or investment--a different thing altogether from mere compensation for labor." Oliver v. Halstead, 196 Va. 992, 86 S.E.2d 859 (1955).

This is not a federal decision, but a decision of the Virginia Supreme Court. It is also not a tax decision, but a decision interpreting Virginia's nonprofit corporation law. Specifically, the issue before the court was whether compensation paid to an employee of the corporation was a private "profit" prohibited by the nonprofit corporation law. The court held that a payment of compensation for labor is not the same as a "profit" from the corporation. This is completely different from the question of whether the payment is taxable income to the employee. (Another decision sometimes cited by tax protesters is Lauderdale Cemetery Assoc. v. Mathews, 345 Pa. 239 (1946), which is a similar decision under Pennsylvania's nonprofit corporation laws.)

"One does not 'derive' income by rendering services and charging for them." Edwards v. Keith, 231 F. 110, 113.

The quotation is deceptive, because it omits a critical sentence appearing earlier in the same paragraph:

"But no instructions of the Treasury Department can enlarge the scope of this statute so as to impose the income tax upon unpaid charges for services rendered and which, for aught any one can tell, may never be paid."

Notice the word "unpaid"? The taxpayer had not yet received any payment for the services rendered. The issue before the court was not whether payment for services rendered was income, but whether the IRS could impose a tax on income that had not yet been received (which it couldn't under the tax law as it then existed).

"Congress has taxed income, not compensation." Connor v. United States, 803 F.Supp. 1187, 1191 (S.D. Tex. 1969), aff'd on this issue, 439 F.2d 974 (5th Cir. 1971).

The above "quotation" is a fabrication, because the court never wrote those words. And the issue in that case was whether insurance proceeds received by the taxpayer after the destruction of his home should be considered taxable income. That case has nothing to do with wages or compensation for labor.

UNITED STATES SUPREME COURT

JOHN L. CHEEK v. UNITED STATES.

Case No. 89-658 Filed January 8, 1991

SYLLABUS

Certiorari to the United States Court of Appeals for the Seventh
Circuit

Petitioner Cheek was charged with six counts of willfully failing to
file a federal income tax return in violation of section 7203 of the
Internal Revenue Code (Code) and three counts of willfully attempting to
evade his income taxes in violation of section 7201. Although admitting
that he had not filed his returns, he testified that he had not acted
willfully because he sincerely believed, based on his indoctrination by a
group believing that the federal tax system is unconstitutional and his
own study, that the tax laws were being unconstitutionally enforced and
that his actions were lawful. In instructing the jury, the court stated
that an honest but unreasonable belief is not a defense and does not
negate willfulness, and that Cheek's beliefs that wages are not income and
that he was not a taxpayer within the meaning of the Code were not
objectively reasonable. It also instructed the jury that a person's
opinion that the tax laws violate his constitutional rights does not
constitute a good-faith misunderstanding of the law. Cheek was convicted,
and the Court of Appeals affirmed.

HELD: 1. A good-faith misunderstanding of the law or a good-faith
belief that one is not violating the law negates willfulness, whether or
not the claimed belief or misunderstanding is objectively reasonable.
Statutory willfulness, which protects the average citizen from prosecution
for innocent mistakes made due to the complexity of the tax laws, United
States v. Murdock, 290 U.S. 389, is the voluntary, intentional violation
of a known legal duty. United States v. Pomponio, 429 U.S. 10. Thus, if
the jury credited Cheek's assertion that he truly believed that the Code
did not treat wages as income, the Government would not have carried its
burden to prove willfulness, however unreasonable a court might deem such
a belief. Characterizing a belief as objectively unreasonable transforms
what is normally a factual inquiry into a legal one, thus preventing a
jury from considering it. And forbidding a jury to consider evidence that
might negate willfulness would raise a serious question under the Sixth
Amendment's jury trial provision, which this interpretation of the statute
avoids. Of course, in deciding whether to credit Cheek's claim, the jury
is free to consider any admissible evidence showing that he had knowledge
of his legal duties. Pp. 6-11.

2. It was proper for the trial court to instruct the jury not to
consider Cheek's claim that the tax laws are unconstitutional, since a
defendant's views about the tax statutes' validity are irrelevant to the
issue of willfulness and should not be heard by a jury. Unlike the claims
in the Murdock-Pomponio line of cases, claims that Code provisions are
unconstitutional do not arise from innocent mistakes caused by the Code's
complexity. Rather, they reveal full knowledge of the provisions at issue
and a studied conclusion that those provisions are invalid and
unenforceable. Congress could not have contemplated that a taxpayer,
without risking criminal prosecution, could ignore his duties under the
Code and refuse to utilize the mechanisms Congress provided to prevent his
invalidity claims to the courts and to abide by their decisions. Cheek was
free to pay the tax, file for a refund, and, if denied, present his claims
to the courts. Also, without paying the tax, he could have challenged
claims of tax deficiencies in the Tax Court. Pp. 11-14.

882 F.2d 1263, vacated and remanded.

WHITE, J., delivered the opinion of the court, in which REHNQUIST,
C.J., and STEVENS, O'CONNOR, and KENNEDY, JJ. joined. SCALIA, J., filed an
opinion concurring in the judgment. BLACKMUN, J., filed a dissenting
opinion, in which MARSHALL, J., joined. SOUTER, J., took no part in the
consideration or decision of the case.

OPINION

JUSTICE WHITE delivered the opinion of the court.

Title 26, section 7201 of the United States Code provides that any
person "who willfully attempts in any manner to evade or defeat any tax
imposed by this title or the payment thereof" shall be guilty of a felony.
Under 26 U.S.C. section 7203, "[a]ny person required under this title . .
. or by regulations made under authority thereof to make a return . . .
who willfully fails to . . . make such return" shall be guilty of a
misdemeanor. This case turns on the meaning of the word "willfully" as
used in sections 7201 and 7203.

I

Petitioner John L. Cheek has been a pilot for American Airlines since
1973. He filed federal income tax returns through 1979 but thereafter
ceased to file returns. ENDNOTE 1 He also claimed an increasing number
of withholding allowances -- eventually claiming 60 allowances by mid-1980
-- and for the years 1981 to 1984 indicated on his W-4 forms that he was
exempt from federal income taxes. In 1983, petitioner unsuccessfully
sought a refund of all tax withheld by his employer in 1982. Petitioner's
income during this period at all times far exceeded the minimum necessary
to trigger the statutory filing requirement.

As a result of his activities, petitioner was indicted for 10
violations of federal law. He was charged with six counts of willfully
failing to file a federal income tax return for the years 1980, 1981, and
1983 through 1986, in violation of 26 U.S.C. section 7203. He was further
charged with three counts of willfully attempting to evade his income
taxes for the years 1980, 1981, and 1983 in violation of 26 U.S.C. section
7201. In those years, American Airlines withheld substantially less than
the amount of tax petitioner owed because of the numerous allowances and
exempt status he claimed on his W-4 forms. ENDNOTE 2 The tax offenses
with which petitioner was charged are specific intent crimes that require
the defendant to have acted willfully.

At trial, the evidence established that between 1982 and 1986,
petitioner was involved in at least four civil cases that challenged
various aspects of the federal income tax system. ENDNOTE 3>> In all
four of those cases, the plaintiffs were informed by the courts that many
of their arguments, including that they were not taxpayers within the
meaning of the tax laws, that wages are not income, that the Sixteenth
Amendment does not authorize the imposition of an income tax on
individuals, and that the Sixteenth Amendment is unenforceable, were
frivolous or had been repeatedly rejected by the courts. During this time
period, petitioner also attended at least two criminal trials of persons
charged with tax offenses. In addition, there was evidence that in 1980 or
1981 an attorney had advised Cheek that the courts had rejected as
frivolous the claim that wages are not income. ENDNOTE 4>>

Cheek represented himself at trial and testified in his defense. He
admitted that he had not filed personal income tax returns during the
years in question. He testified that as early as 1978, he had begun
attending seminars sponsored by, and following the advice of, a group that
believes, among other things, that the federal tax system is
unconstitutional. Some of the speakers at these meetings were lawyers who
purported to give professional opinions about the invalidity of the
federal income tax laws. Cheek produced a letter from an attorney stating
that the Sixteenth Amendment did not authorize a tax on wages and salaries
but only on gain or profit. Petitioner's defense was that, based on the
indoctrination he received from this group and from his own study, he
sincerely believed that the tax laws were being unconstitutionally
enforced and that his actions during the 1980-1986 period were lawful. He
therefore argued that he had acted without the willfulness required for
conviction of the various offenses with which he was charged.

In the course of its instructions, the trial court advised the jury
that to prove "willfulness" the Government must prove the voluntary and
intentional violation of a known legal duty, a burden that could not be
proved by showing mistake, ignorance, or negligence. The court further
advised the jury that an objectively reasonable good-faith
misunderstanding of the law would negate willfulness but mere disagreement
with the law would not. The court described Cheek's beliefs about the
income tax system ENDNOTE 5>> and instructed the jury that if it found
that Cheek "honestly and reasonably believed that he was not required to
pay income taxes or to file tax returns," App. 81, a not guilty verdict
should be returned.

After several hours of deliberation, the jury sent a note to the judge
that stated in part:

"'We have a basic disagreement between some of us as to if Mr. Cheek
honestly & reasonably believed that he was not required to pay income
taxes.

* * * * *

"'Page 32 [the relevant jury instruction] discusses good faith
misunderstanding & disagreement. Is there any additional clarification you
can give us on this point?'" Id., at 85.

The District Judge responded with a supplemental instruction containing
the following statements:

"[A] person's opinion that the tax laws violate his constitutional rights
does not constitute a good faith misunderstanding of the law. Furthermore,
a person's disagreement with the government's tax collection systems and
policies does not constitute a good faith misunderstanding of the law."
Id., at 86.

At the end of the first day of deliberation, the jury sent out another
note saying that it still could not reach a verdict because "'[w]e are
divided on the issue as to if Mr. Cheek honestly & reasonably believed
that he was not required to pay income tax.'" Id., at 87. When the jury
resumed its deliberations, the District Judge gave the jury an additional
instruction. This instruction stated in part that "[a]n honest but
unreasonable belief is not a defense and does not negate willfulness,"
id., at 88, and that "[a]dvice or research resulting in the conclusion
that wages of a privately employed person are not income or that the tax
laws are unconstitutional is not objectively reasonable and cannot serve
as the basis for a good faith misunderstanding of the law defense." Ibid.
The court also instructed the jury that "[p]ersistent refusal to
acknowledge the law does not constitute a good faith misunderstanding of
the law." Ibid. Approximately two hours later, the jury returned a verdict
finding petitioner guilty on all counts. ENDNOTE 6>>

Petitioner appealed his convictions, arguing that the District Court
erred by instructing the jury that only an objectively reasonable
misunderstanding of the law negates the statutory willfulness requirement.
The United States Court of Appeals for the Seventh Circuit rejected that
contention and affirmed the convictions. 882 F.2d 1263 (1989). In prior
cases, the Seventh Circuit had made clear that good-faith misunderstanding
of the law negates willfulness only if the defendant's beliefs are
objectively reasonable; in the Seventh Circuit, even actual ignorance is
not a defense unless the defendant's ignorance was itself objectively
reasonable. See, e.g., United States v. Buckner, 830 F.2d 102 (1987). In
its opinion in this case, the court noted that several specified beliefs,
including the beliefs that the tax laws are unconstitutional and that
wages are not income, would not be objectively reasonable. ENDNOTE 7>>
Because the Seventh Circuit's interpretation of "willfully" as used in
these statutes conflicts with the decisions of several other Courts of
Appeals, see, e.g., United States v. Whiteside, 810 F.2d 1306, 1310-1311
(CA5 1987); United States v. Phillips, 775 F.2d 262, 263-264 (CA10 1985);
United States v. Aitken, 755 F.2d 188, 191-193 (CA1 1985), we granted
certiorari, 493 U.S. ____ (1990).

II

The general rule that ignorance of the law or a mistake of law is no
defense to criminal prosecution is deeply rooted in the American legal
system. See, e.g., United States v. Smith, 5 Wheat. 153, 182 (1820)
(Livingston, J., dissenting); Barlow v. United States, 7 Pet. 404, 411
(1833); Reynolds v. United States, 98 U.S. 145, 167 (1879);
Shevlin-Carpenter Co. v. Minnesota, 218 U.S. 57, 68 (1910); Lambert v.
California, 355 U.S. 225, 228 (1957); Liparota v. United States, 471 U.S.
419, 441 (1985) (White, J., dissenting); O. Holmes, The Common Law 47-48
(1881). Based on the notion that the law is definite and knowable, the
common law presumed that every person knew the law. This common-law rule
has been applied by the court in numerous cases construing criminal
statutes. See, e.g., United States v. International Minerals & Chemical
Corp., 402 U.S. 558 (1971); Hamling v. United States, 418 U.S. 87, 119-124
(1974); Boyce Motor Lines, Inc. v. United States, 342 U.S. 337 (1952).

The proliferation of statutes and regulations has sometimes made it
difficult for the average citizen to know and comprehend the extent of the
duties and obligations imposed by the tax laws. Congress has accordingly
softened the impact of the common-law presumption by making specific
intent to violate the law an element of certain federal criminal tax
offenses. Thus, the court almost 60 years ago interpreted the statutory
term "willfully" as used in the federal criminal tax statutes as carving
out an exception to the traditional rule. This special treatment of
criminal tax offenses is largely due to the complexity of the tax laws. In
United States v. Murdock, 290 U.S. 389 (1933), the court recognized that:

"Congress did not intend that a person, by reason of a bona fide
misunderstanding as to his liability for the tax, as to his duty to make a
return, or as to the adequacy of the records he maintained, should become
a criminal by his mere failure to measure up to the prescribed standard of
conduct." Id., at 396.

The court held that the defendant was entitled to an instruction with
respect to whether he acted in good faith based on his actual belief. In
Murdock, the court interpreted the term "willfully" as used in the
criminal tax statutes generally to mean "an act done with a bad purpose,"
id., at 394, or with "an evil motive." Id., at 395.

Subsequent decisions have refined this proposition. In United States v.
Bishop, 412 U.S. 346 (1973), we described the term "willfully" as
connoting "a voluntary, intentional violation of a known legal duty," id.,
at 360, and did so with specific reference to the "bad faith or evil
intent" language employed in Murdock. Still later, United States v.
Pomponio, 429 U.S. 10 (1976) (per curiam), addressed a situation in which
several defendants had been charged with willfully filing false tax
returns. The jury was given an instruction on willfulness similar to the
standard set forth in Bishop. In addition, it was instructed that "'[g]ood
motive alone is never a defense where the act done or omitted is a
crime.'" Id., at 11. The defendants were convicted but the Court of
Appeals reversed, concluding that the latter instruction was improper
because the statute required a finding of bad purpose or evil motive.
Ibid.

We reversed the Court of Appeals, stating that "the Court of Appeals
incorrectly assumed that the reference to an 'evil motive' in United
States v. Bishop, supra, and prior cases," ibid., "requires proof of any
motive other than an intentional violation of a known legal duty." Id., at
12. As "the other Courts of Appeals that have considered the question have
recognized, willfulness in this context simply means a voluntary,
intentional violation of a known legal duty." Ibid. We concluded that
after instructing the jury on willfulness, "[a]n additional instruction on
good faith was unnecessary." Id., at 13. Taken together, Bishop and
Pomponio conclusively establish that the standard for the statutory
willfulness requirement is the "voluntary, intentional violation of a
known legal duty."

III

Cheek accepts the Pomponio definition of willfulness, Brief for
Petitioner 5, and n. 4, 13, 36; Reply Brief for Petitioner 4, 6-7, 11, 13,
but asserts that the District Court's instructions and the Court of
Appeals' opinion departed from that definition. In particular, he
challenges the ruling that a good-faith misunderstanding of the law or a
good-faith belief that one is not violating the law, if it is to negate
willfulness, must be objectively reasonable. We agree that the Court of
Appeals and the District Court erred in this respect.

A

Willfulness, as construed by our prior decisions in criminal tax cases,
requires the Government to prove that the law imposed a duty on the
defendant, that the defendant knew of this duty, and that he voluntarily
and intentionally violated that duty. We deal first with the case where
the issue is whether the defendant knew of the duty purportedly imposed by
the provision of the statute or regulation he is accused of violating, a
case in which there is no claim that the provision at issue is invalid. In
such a case, if the Government proves actual knowledge of the pertinent
legal duty, the prosecution, without more, has satisfied the knowledge
component of the willfulness requirement. But carrying this burden
requires negating a defendant's claim of ignorance of the law or a claim
that because of a misunderstanding of the law, he had a good-faith belief
that he was not violating any of the provisions of the tax laws. This is
so because one cannot be aware that the law imposes a duty upon him and
yet be ignorant of it, misunderstand the law, or believe that the duty
does not exist. In the end, the issue is whether, based on all the
evidence, the Government has proved that the defendant was aware of the
duty at issue, which cannot be true if the jury credits a good-faith
misunderstanding and belief submission, whether or not the claimed belief
or misunderstanding is objectively reasonable.

In this case, if Cheek asserted that he truly believed that the
Internal Revenue Code did not purport to treat wages as income, and the
jury believed him, the Government would not have carried its burden to
prove willfulness, however unreasonable a court might deem such a belief.
Of course, in deciding whether to credit Cheek's good-faith belief claim,
the jury would be free to consider any admissible evidence from any source
showing that Cheek was aware of his duty to file a return and to treat
wages as income, including evidence showing his awareness of the relevant
provisions of the Code or regulations, of court decisions rejecting his
interpretation of the tax law, of authoritative rulings of the Internal
Revenue Service, or of any contents of the personal income tax return
forms and accompanying instructions that made it plain that wages should
be returned as income. ENDNOTE 8>>

We thus disagree with the Court of Appeals' requirement that a claimed
good-faith belief must be objectively reasonable if it is to be considered
as possibly negating the Government's evidence purporting to show a
defendant's awareness of the legal duty at issue. Knowledge and belief are
characteristically questions for the factfinder, in this case the jury.
Characterizing a particular belief as not objectively reasonable
transforms the inquiry into a legal one and would prevent the jury from
considering it. It would of course be proper to exclude evidence having no
relevance or probative value with respect to willfulness; but it is not
contrary to common sense, let alone impossible, for a defendant to be
ignorant of his duty based on an irrational belief that he has no duty,
and forbidding the jury to consider evidence that might negate willfulness
would raise a serious question under the Sixth Amendment's jury trial
provision. Cf. Francis v. Franklin, 471 U.S. 307 (1985); Sandstrom v.
Montana, 442 U.S. 510 (1979); Morissette v. United States, 342 U.S. 246
(1952). It is common ground that this court, where possible, interprets
congressional enactments so as to avoid raising serious constitutional
questions. See, e.g., Edward J. DeBartolo Corp. v. Florida Gulf Coast
Building and Construction Trades Council, 485 U.S. 568, 575 (1988);
Crowell v. Benson, 285 U.S. 22, 62, and n. 30 (1932); Public Citizen v.
United States Dept. of Justice, 491 U.S. ____, ____ (1989) (slip op., at
24-25).

It was therefore error to instruct the jury to disregard evidence of
Cheek's understanding that, within the meaning of the tax laws, he was not
a person required to file a return or to pay income taxes and that wages
are not taxable income, as incredible as such misunderstandings of and
beliefs about the law might be. Of course, the more unreasonable the
asserted beliefs of misunderstandings are, the more likely the jury will
consider them to be nothing more than simple disagreement with known legal
duties imposed by the tax laws and will find that the Government has
carried its burden of proving knowledge.

B

Cheek asserted in the trial court that he should be acquitted because
he believed in good faith that the income tax law is unconstitutional as
applied to him and thus could not legally impose any duty upon him of
which he should have been aware. ENDNOTE 9>> Such a submission is
unsound, not because Cheek's constitutional arguments are not objectively
reasonable or frivolous, which they surely are, but because the
Murdock-Pomponio line of cases does not support such a position. Those
cases construed the willfulness requirement in the criminal provisions of
the Internal Revenue Code to require proof of knowledge of the law. This
was because in "our complex tax system, uncertainty often arises even
among taxpayers who earnestly wish to fellow the law" and "'[i]t is not
the purpose of the law to penalize frank difference of opinion or innocent
errors made despite the exercise of reasonable care.'" United States v.
Bishop, 412 U.S. 346, 360-361 (1973), (quoting Spies v. United States, 317
U.S. 492, 496 (1943)).

Claims that some of the provisions of the tax code are unconstitutional
are submissions of a different order. ENDNOTE 10>> They do not arise
from innocent mistakes caused by the complexity of the Internal Revenue
Code. Rather, they reveal full knowledge of the provisions at issue and a
studied conclusion, however wrong, that those provisions are invalid and
unenforceable. Thus in this case, Cheek paid his taxes for years, but
after attending various seminars and based on his own study, he concluded
that the income tax laws could not constitutionally require him to pay a
tax.

We do not believe that Congress contemplated that such a taxpayer,
without risking criminal prosecution, could ignore the duties imposed upon
him by the Internal Revenue Code and refuse to utilize the mechanisms
provided by Congress to present his claims of invalidity to the courts and
to abide by their decisions. There is no doubt that Cheek, from year to
year, was free to pay the tax that the law purported to require, file for
a refund and, if denied, present his claims of invalidity, constitutional
or otherwise, to the courts. See 26 U.S.C. section 7422. Also, without
paying the tax, he could have challenged claims of tax deficiencies in the
Tax Court, 26 U.S.C. section 6213, with the right to appeal to a higher
court if unsuccessful. Section 7482(a)(1). Cheek took neither course in
some years, and when he did was unwilling to accept the outcome. As we see
it, he is in no position to claim that his good-faith belief about the
validity of the Internal Revenue Code negates willfulness or provides a
defense to criminal prosecution under sections 7201 and 7203. Of course,
Cheek was free in this very case to present his claims of invalidity and
have them adjudicated, but like defendants in criminal cases in other
contexts, who "willfully" refuse to comply with the duties placed upon
them by the law, he must take the risk of being wrong.

We thus hold that in a case like this, a defendant's views about the
validity of the tax statutes are irrelevant to the issue of willfulness,
need not be heard by the jury, and if they are, an instruction to
disregard them would be proper. For this purpose, it makes no difference
whether the claims of invalidity are frivolous or have substance. It was
therefore not error in this case for the District Judge to instruct the
jury not to consider Cheek's claims that the tax laws were
unconstitutional. However, it was error for the court to instruct the jury
that petitioner's asserted beliefs that wages are not income and that he
was not a taxpayer within the meaning of the Internal Revenue Code should
not be considered by the jury in determining whether Cheek had acted
willfully. ENDNOTE 11>>

IV

For the reasons set forth in the opinion above, the judgment of the
Court of Appeals is vacated, and the case is remanded for further
proceedings consistent with this opinion.

It is so ordered.

JUSTICE SOUTER took no part in the consideration or decision of this
case.

JUSTICE SCALIA, concurring in the judgment.

I concur in the judgment of court because our cases have consistently
held that the failure to pay a tax in the good-faith belief that it is not
legally owing is not "willful." I do not join the court's opinion because
I do not agree with the test for willfulness that it directs the Court of
Appeals to apply on remand.

As the court acknowledges, our opinions from the 1930s to the 1970s have
interpreted the word "willfully" in the criminal tax statutes as requiring
the "bad purpose" or "evil motive" of "intentional[ly] violat[ing] a known
legal duty." See, e.g., United States v. Pomponio, 429 U.S. 10, 12 (1976);
United States v. Murdock, 290 U.S. 389, 394-395 (1933). It seems to me
that today's opinion squarely reverses that long-established statutory
construction when it says that a good-faith erroneous belief in the
unconstitutionality of a tax law is no defense. It is quite impossible to
say that a statute which one believes unconstitutional represents a "known
legal duty." See Marbury v. Madison, 1 Cranch 137, 177-178 (1803).

Although the facts of the present case involve erroneous reliance upon
the Constitution in ignoring the otherwise "known legal duty" imposed by
the tax statutes, the court's new interpretation applies also to erroneous
reliance upon a tax statute in ignoring the otherwise "known legal duty"
of a regulation, and to erroneous reliance upon a regulation in ignoring
the otherwise "known legal duty" of a tax assessment. These situations as
well meet the opinion's crucial test of "reveal[ing] full knowledge of the
provisions at issue and a studied conclusion, however wrong, that those
provisions are invalid and unenforceable," ante, at 13. There is,
moreover, no rational basis for saying that a "willful" violation is
established by full knowledge of a statutory requirement, but is not
established by full knowledge of a requirement explicitly imposed by
regulation or order. Thus, today's opinion works a revolution in past
practice, subjecting to criminal penalties taxpayers who do not comply
with Treasury Regulations that are in their view contrary to the Internal
Revenue Code, Treasury Rulings that are in their view contrary to the
regulations, and even IRS auditor pronouncements that are in their view
contrary to Treasury Rulings. The law already provides considerable
incentive for taxpayers to be careful in ignoring any official assertion
of tax liability, since it contains civil penalties that apply even in the
event of a good-faith mistake, see, e.g., 26 U.S.C. sections 6651, 6653.
To impose in addition CRIMINAL penalties for misinterpretation of such a
complex body of law is a startling innovation indeed.

I find it impossible to understand how one can derive from the lonesome
word "willfully" the proposition that belief in the nonexistence of a
textual prohibition excuses liability, but belief in the invalidity (i.e.,
the legal nonexistence) of a textual prohibition does not. One may say, as
the law does in many contexts, that "willfully" refers to consciousness of
the act but not to consciousness that the act is unlawful. See, e.g.,
American Surety Co. of New York v. Sullivan, 7 F.2d 605, 606 (CA2 1925)
(L. Hand, J.); cf. United States v. International Minerals and Chemical
Co., 402 U.S. 558, 563-565 (1971). Or alternatively, one may say, as we
have said until today with respect to the tax statutes, that "willfully"
refers to consciousness of both the act AND its illegality. But it seems
to me impossible to say that the word refers to consciousness that some
legal text exists, without consciousness that that legal text is binding,
i.e., with the good-faith belief that it is not a valid law. Perhaps such
a test for criminal liability would make sense (though in a field as
complicated as federal tax law, I doubt it), but some text other than the
mere word "willfully" would have to be employed to describe it -- and that
text is not ours to write.

Because today's opinion abandons clear and long-standing precedent to
impose criminal liability where taxpayers have had no reason to expect it,
because the new contours of criminal liability have no basis in the
statutory text, and because I strongly suspect that those new contours
make no sense even as a policy matter, I concur only in the judgment of
the court.

JUSTICE BLACKMUN, with whom JUSTICE MARSHALL joins, dissenting.

It seems to me that we are concerned in this case not with "the
complexity of the tax laws," ante, at 7, but with the income tax law in
its most elementary and basic aspect: Is a wage earner a taxpayer and are
wages income?

The court acknowledges that the conclusively established standard for
willfulness under the applicable statutes is the "voluntary, intentional
violation of a known legal duty." Ante, at 8. See United States v. Bishop,
412 U.S. 346, 360 (1963), and United States v. Pomponio, 429 U.S. 10, 12
(1976). That being so, it is incomprehensible to me how, in this day, more
than 70 years after the institution of our present federal income tax
system with the passage the Revenue Act of 1913, 38 Stat. 166, any
taxpayer of competent mentality can assert as his defense to charges of
statutory willfulness the proposition that the wage he receives for his
labor is not income, irrespective of a cult that says otherwise and
advises the gullible to resist income tax collections. One might note in
passing that this particular taxpayer, after all, was a licensed pilot for
one of our major commercial airlines; he presumably was a person of at
least minimum intellectual competence.

The District Court's instruction that an objectively reasonable and
good faith misunderstanding of the law negates willfulness lends further,
rather than less, protection to this defendant, for it added an additional
hurdle for the prosecution to overcome. Petitioner should be grateful for
this further protection, rather than be opposed to it.

This court's opinion today, I fear, will encourage taxpayers to cling
to frivolous views of the law in the hope of convincing a jury of their
sincerity. If that ensues, I suspect we have gone beyond the limits of
common sense.

While I may not agree with every word the Court of Appeals has
enunciated in its opinion, I would affirm its judgment in this case. I
therefore dissent.

ENDNOTES>>

1/ Cheek did file what the Court of Appeals described as a frivolous
return in 1982.

2/ Because petitioner filed a refund claim for the entire amount
withheld by his employer in 1982, petitioner was also charged under 18
U.S.C. section 287 with one count of presenting a claim to an agency of
the United States knowing the claim to be false and fraudulent.

3/ In March 1982, Cheek and another employee of the company sued
American Airlines to challenge the withholding of federal income taxes. In
April 1982, Cheek sued the IRS in the United States Tax Court, asserting
that he was not a taxpayer or a person for purposes of the Internal
Revenue Code, that his wages were not income, and making several other
related claims. Cheek and four others also filed an action against the
United States and the CIR in Federal District Court, claiming that
withholding taxes from their wages violated the Sixteenth Amendment.
Finally, in 1985 Cheek filed claims with the IRS seeking to have refunded
the taxes withheld from his wages in 1983 and 1984. When these claims were
not allowed, he brought suit in the District Court claiming that the
withholding was an unconstitutional taking of his property and that his
wages were not income. In dismissing this action as frivolous, the
District Court imposed costs and attorneys fees of $1,500 and a sanction
under Rule 11 in the amount of $10,000. The Court of Appeals agreed that
Cheek's claims were frivolous, reduced the District Court sanction to
$5,000 and imposed an additional sanction of $1,500 for bringing a
frivolous appeal.

4/ The attorney also advised that despite the Fifth Amendment, the
filing of a tax return was required and that a person could challenge the
constitutionality of the system by suing for a refund after the taxes had
been withheld, or by putting himself "at risk of criminal prosecution."

5/ "The defendant has testified as to what he states are his
interpretations of the United States Constitution, court opinions, common
law and other materials he has reviewed. . . . He has also introduced
materials which contain references to quotations from the United States
Constitution, court opinions, statutes, and other sources.

"He testified he relied on his interpretations and on these materials
in concluding that he was not a person required to file income tax returns
for the year or years charged, was not required to pay income taxes and
that he could claim exempt status on his W-4 forms, and that he could
claim refunds of all moneys withheld." App. 75-76.

"Among other things, Mr. Cheek contends that his wages from a private
employer, American Airlines, does not constitute income under the Internal
Revenue Service laws." Id., at 81.

6/ A note signed by all 12 jurors also informed the judge that although
the jury found petitioner guilty, several jurors wanted to express their
personal opinions of the case and that notes from these individual jurors
to the court were "a complaint against the narrow & hard expression under
the constraints of the law." Id., at 90. At least two notes from
individual jurors expressed the opinion that petitioner sincerely believed
in his cause even though his beliefs might have been unreasonable.

7/ The opinion stated, 882 F.2d 1263, 1268-1269, n. 2 (CA7 1989), as
follows:

"For the record, we note that the following beliefs, which are stock
arguments of the tax protester movement, have not been, nor ever will be,
considered 'objectively reasonable' in this circuit:

"(1) the belief that the sixteenth amendment to the constitution was
improperly ratified and therefore never came into being;

"(2) the belief that the sixteenth amendment is unconstitutional
generally;

"(3) the belief that the income tax violates the takings clause of the
fifth amendment;

"(4) the belief that the tax laws are unconstitutional;

"(5) the belief that wages are not income and therefore are not subject
to federal income tax laws;

"(6) the belief that filing a tax return violates the privilege against
self-incrimination; and

"(7) the belief that Federal Reserve Notes do not constitute cash or
income.

"Miller v. United States, 868 F.2d 236, 239-41 (7th Cir. 1989);
Buckner, 830 F.2d at 102; United States v. Dube, 820 F.2d 886, 891 (7th
Cir. 1987); Coleman v. Comm'r, 791 F.2d 68, 70-71 (7th Cir. 1986); Moore,
627 F.2d at 833. We have no doubt that this list will increase with time."

8/ Cheek recognizes that a "defendant who knows what the law is and who
disagrees with it . . . does not have a bona fide misunderstanding
defense" but asserts that "a defendant who has a bona fide
misunderstanding of [the law] does not 'know' his legal duty and lacks
willfulness." Brief for Petitioner 29, and n. 13. The Reply Brief for
Petitioner, at 13, states: "We are in no way suggesting that Cheek or
anyone else is immune from criminal prosecution if he knows what the law
is, but believes it should be otherwise, and therefore violates it." See
also Tr. of Oral Arg. 9, 11, 12, 15, 17.

9/ In his opening and reply briefs and at oral argument, Cheek asserts
that this case does not present the issue of whether a claim of
unconstitutionality would serve to negate willfulness and that we need not
address the issue. Brief for petitioner 13; Reply Brief for Petitioner 5,
11, 12; Tr. of Oral Arg. 6, 13. Cheek testified at trial, however, that
"[i]t is my belief that the law is being enforced unconstitutionally."
App. 60. He also produced a letter from counsel advising him that
"'Finally you make a valid contention . . . that Congress' power to tax
comes from Article I, Section 8, Clause 1 of the U.S. Constitution, and
not from the Sixteenth Amendment and that the [latter], construed with
Article I, Section 2, Clause 3, never authorized a tax on wages and
salaries, but only of gain and profit." Id., at 57. We note also that the
jury asked for "the portion [of the transcript] wherein Mr. Cheek stated
he was attempting to test the constitutionality of the income tax laws,"
Tr. 1704, and that the trial judge later instructed the jury that an
opinion that the tax laws violate a person's constitutional rights does
not constitute a good faith misunderstanding of the law. We also note that
at oral argument Cheek's counsel observed that "personal belief that a
known statute is uncontitutional smacks of knowledge with existing law,
but disagreement with it." Tr. of Oral Arg. 5. He also opined that:

"If the person believes as personal belief that known -- law known to
them [sic] is unconstitutional, I submit that would not be a defense,
because what the person is really saying is I know what the law is, for
constitutional reasons I have made my own determination that it is
invalid. I am not suggesting that that is a defense.

"However, if the person was told by a lawyer or by an accountant
erroneously that the statute is unconstitutional, and it's my professional
advice to you that you don't have to follow it, then you have got a little
different situation. This is not that case." Id., at 6.

Give this posture of the case, we receive no reason not to address the
significance of Cheek's constitutional claims to the issue of willfulness.

10/ In the United States v. Murdock, 290 U.S. 389 (1933), discussed
supra, at 7-8, the defendant Murdock was summoned to appear before a
revenue agent for examination. Questions were put to him, which he refused
to answer for fear of self-incrimination under state law. He was indicted
for refusing to give testimony and supply information contrary to the
pertinent provisions of the Internal Revenue Code. This court affirmed the
reversal of Murdock's conviction, holding that the trial court erred in
refusing to give an instruction directing the jury to consider Murdock's
asserted claim claim of a good-faith, actual belief that because of the
Fifth Amendment he was privileged not to answer the questions put to him.
It is thus the case that Murdock's asserted belief was grounded in the
Constitution, but it was a claim of privilege not to answer, not a claim
that any provision of the tax laws were unconstitutional, and not a claim
for which the tax laws provided procedures to entertain and resolve.
Cheek's position at a trial, in contrast, was that the tax laws were
unconstitutional as applied to him.

11/ Cheek argues that applying to him the Court of Appeals' standard of
objective reasonableness violates his rights under the First, Fifth, and
Sixth Amendments in the Constitution. Since we have invalidated the
challenged standard on statutory grounds, we need not address these
submissions.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.