Note: On August 17, substantial additions have been made to the end of the original posting below. And, on August 18, I posted an additional discussion on my Federal Tax Procedure Blog, titled: What is the Date of Filing for Returns Solicited by and Delivered to an Agent (8/18/15), here, discussing inter alia returns submitted in OVDP.
In United States v. Boitano, 796 F.3d 1160 (9th Cir. 2015), here, the Ninth Circuit panel held that filing is an element of the tax perjury crime (§ 7206(1), here). The Court held that, although filing is not a textual element of the crime in the statute, its precedent required that filing is an element of the crime. Under the facts, Boitano had merely presented the false return to the agent, but that presentation was not a filing. The conviction was therefore reversed.
Let's look first at the statute defining the crime. The statute defines the crime as being committed by any person who:
Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter.There is no textual filing requirement. Of course, a fair reading of the statue would require that the return signed under penalties of perjury be at least presented in some manner to the IRS. That is normally done by sending the return in to the Service Center whereupon it is deemed filed. If the taxpayer signed such a return and kept it in a drawer in his home, I don't think anyone would believe that he had committed the crime of tax perjury.
In Boitano, however, the taxpayer had been delinquent for a number of years' returns. That drew the attention of a Special Enforcement Agent. During a meeting with the agent:
Boitano handed Connors income tax returns for 2001, 2002, and 2003. The returns were signed under penalty of perjury by Boitano and his wife. Connors stamped the first page of the returns "Internal Revenue Service, SB/SE - Compliance Field, Sep 04, 2009, Area, 7, San Francisco, CA," and hand wrote "delinquent return secured by exam" on the first page of each. Per Boitano's request, Connors copied the first page of the returns and gave the copies to Boitano as receipts.The returns falsely claimed estimated tax payments in material amounts. The Agent quickly realised the discrepancy and, rather than sending the returns to the service center for processing, confronted Boitano. Things went down from there. There is no indication in the opinion that the returns were ever processed and filed, at least in the usual sense of that term for IRS procedure.
Boitano's argument was that "his act of handing the returns to Agent Connors did not constitute 'filing' within the applicable IRS statute and regulations." The Government countered that, although "filing is an element of the charged offense," "the filing element was satisfied by the uncontradicted evidence showing that Boitano handed fraudulent returns to Agent Connors."
Botano lost the issue at the trial level. On appeal, the arguments were:
Boitano's opening appellate brief reiterates the position he argued unsuccessfully in the district court—that the evidence did not show the subject returns were "filed" within the meaning of the applicable IRS statutes and regulations when he handed them to Agent Connors. n2 The government's response brief takes an unusual twist. Reversing its prior position, the government now concedes that "there is a single definition of 'filing' that applies in both the civil and criminal context," and that "the record does not support that the returns here were filed." The government agrees with Boitano that Connors's testimony that the returns were "filed" when Boitano handed them to him was incorrect. The government's new argument is that filing is not an element of the charged offense because, "by its own terms, [§] 7206(1) does not require the government to prove 'filing' as defined by the IRS regulations to establish a violation of the statute." The government reasons, "under a correct understanding of Section 7206(1), [Boitano's] actions violated the statute by his completing a return, signing it, and taking actions by which he gave up any right of self-correction." (Emphasis added.) Notably, the government concedes that if it had to prove the returns were filed within the meaning of the IRS regulations, then Boitano's convictions must be reversed. Binding precedent supports Boitano's position.The Court disposed of the arguments by saying that binding precedent in the Ninth Circuit required a filing of the return. The key holding was:
n2 The government asserts that under 26 U.S.C. § 6091(b)(4) and 26 C.F.R. § 1.6091-2, returns are deemed filed if they are electronically filed, mailed to the appropriate IRS service center, or hand-delivered to an agent authorized to receive them.
In United States v. Hanson [here], we affirmed a conviction for making false statements in violation of § 7206(1) where the defendant "fil[ed] false IRS forms that reported payments [defendant] had never made and claimed a tax refund [defendant] was not due." 2 F.3d 942, 944 (9th Cir. 1993). In so ruling, we stated that "[t]o prove a violation of § 7206(1), making false statements, the government must prove that the defendant (1) filed a return, statement, or other document that was false as to a material matter . . . ." n3 Id. at 945.
n3 The Ninth Circuit's pattern jury instructions, which were used here, reflect this rule: "In order for the defendant to be found guilty of [violating 26 U.S.C. § 7206(1)], the government must prove each of the following elements beyond a reasonable doubt: . . . Third, in filing the false tax return, the defendant acted willfully." See Ninth Circuit Pattern Criminal Jury Instruction § 9.39.
The government cites numerous reasons for its new contention that § 7206(1) does not require filing, but it offers no intervening authority for its argument that it should only be required to show that Boitano gave up the right of self-correction. It argues: (1) the statute, by its own terms, does not require proof of filing; (2) the Supreme Court has not identified filing as an element of the offense; (3) interpreting the statute not to require filing makes [9] sense because the statute is not limited in its scope to tax returns; (4) the statute's legislative history does not establish that filing is an element of the offense; and (5) filing a document is one way, but not the only way, to satisfy the statute.
We are bound, however, by Hanson's plain and explicit identification of "filing" as an element of a § 7206(1) offense. Id. ("To prove a violation of § 7206(1) . . . the government must prove that the defendant (1) filed a return. . . ."); see also United States v. Tucker, 133 F.3d 1208, 1218 (9th Cir. 1998). The government's argument that this language is either unnecessary to the decision or is dictum is unpersuasive. Dictum is "an unnecessary statement in a published opinion that is not the result of reasoned consideration." Sinotes-Cruz v. Gonzales, 468 F.3d 1190, 1203 (9th Cir. 2006) (internal quotation marks omitted); see also United States v. Johnson, 256 F.3d 895, 914 (9th Cir. 2001) (en banc) ("We hold that . . . where a panel confronts an issue germane to the eventual resolution of the case, and resolves it after reasoned consideration in a published opinion, that ruling becomes the law of the circuit, regardless of whether doing so is necessary in some strict logical sense."). Hanson's language reflects our court's reasoned consideration of a matter that was both germane to the case and necessary to the decision. Hanson specifically argued that his tax returns were not "filed" because the IRS never processed them. 2 F.3d at 946. The question on appeal was whether the evidence was sufficient to sustain the conviction. See id. at 945-46. We concluded it was because "[a] return is 'filed' at the time it is delivered to the IRS," and the government showed "that Hanson personally mailed the forms and that the IRS received them." Id. at 946.
Even if we disagreed with Hanson's itemization of a § 7206(1) offense's elements, as a three-judge panel we are bound by prior panel opinions and can only reexamine them when "the reasoning or theory of our prior circuit authority is clearly irreconcilable with the reasoning or theory of intervening higher authority." Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003) (en banc). There is no such intervening authority here. The government argues that a Supreme Court case that preceded Hanson, United States v. Bishop, 412 U.S. 346, 93 S. Ct. 2008, 36 L. Ed. 2d 941 (1973), indicates that the Court has not included filing as an element of a § 7206(1) offense. But in Bishop, filing was not contested. See id. at 350 ("The incorrectness of the returns as filed . . . was not disputed at trial."). We know of no Supreme Court case holding that "filing" is not a required element under § 7206(1).
In sum, because circuit precedent establishes that "filing" is an element of a conviction under § 7206(1), and the government now concedes "the record does not support that the returns here were filed," Boitano's felony convictions must be reversed.Just a few comments:
1. The Government could have prosecuted Boitano under other statutes for the conduct charged. Thus, the submission of the false returns could have easily been charged as tax obstruction (§ 7212(a), here) or as false statements (28 USC 1001(a), here). Moreover, the conduct could likely have been charged as tax evasion (§ 7201, here). And the original return delinquencies could have been charged as failure to file (§ 7203, here).
2. It is not uncommon in delinquent return investigations for the agent to request that the delinquent returns be prepared, signed and delivered to the agent. In cases where I have felt that it was important to assure filing of the delinquent returns, I have declined to give the originals to the agent but have filed with the service center and given the agent a copy. So far, nothing bad has happened. But Boitano did not do that and has now gotten some benefit from delivering to the agent.
3. I must confess that I have not heard the standard articulated by the Government -- "taking actions by which he gave up any right of self-correction." I have not attempted LEXIS-NEXIS searches yet, but will do so to see if that is a standard that is otherwise meaningful.
4. Of course, the issue could arise in other circuits, but with the panoply of alternative charges, I doubt that the Government will force the issue except as a last resort where it has not chosen to pursue the alternative charges.
Addendum 8/17/15:
The parties' briefs are here:
- Boitano's Appellant Opening Brief, here.
- U.S. Appellee Answering Brief, here.
- Boitano's Appellant Reply Brief, here.
- Boitano's Supplemental Authorities, here.
At trial, the main testimony that the returns had been filed came from Agent Connors. When asked on direct examination what had happened in the course of his September 4, 2009, meeting with defendant, Agent Connors stated, “[t]he defendant filed 2001, 2002, and 2003 delinquent returns with me.” SER 301-02. Defense counsel immediately objected and moved to strike “the witness saying that the returns were filed” on the grounds that the question called for a legal conclusion and lacked foundation. SER 302. The objection was overruled, although the district court asked the government to establish a foundation for that testimony. Id. Government counsel then asked Agent Connors if the defendant had handed him the returns, and Agent Connors testified that:
He did. We went into the same conference room that we had met at before, and he handed the returns to me. I stamped them as received on that date, September 4th, and he asked for a receipt of my receiving the returns. So I made a copy of the first page of the return, which has the I.R.S. received stamp on it, and I returned it to him.
SER 302. Agent Connors identified the Form 1040 defendant had given him for 2001, and confirmed that he had written “delinquent return secured by exam” on the top of the first page. SER 303. When asked why defendant wanted a copy of the first page,
Connors testified that defendant “wanted a receipt that I had actually received the return. I remember talking with him that oftentimes documents get sent into the I.R.S. and they get lost. So he wanted to receive that.” Id.
Government counsel then asked Agent Connors whether it was “fair to say that eventually you realized that these [returns] were fraudulent.” SER 304. Agent Connors responded “yes.” Id. When asked if he treated the returns differently than he would have treated “a return that didn’t have a fraudulent entry in them,” Agent Connors testified that he did. Id. Specifically, Agent Connors testified that “typically, in non-filer cases if we receive a return in the middle of an audit, we will send it to the I.R.S. to be partially processed.” SER 305. “That means,” Agent Connors testified, that the IRS “will process it as accepted as filed,” and then “the revenue agent at the point either has the discretion to continue working on the exam and make adjustments or we can accept the return as filed.” Id. “If the return was inaccurate, as was the case here, then . . . you would not send it to the service center because they would process it.” SER 305. And, if they processed the returns, “the service center would have issued a check.” Id.
Accordingly, instead of forwarding the forms for processing, Agent Connors submitted a form to the service center reflecting his belief that the time for collections would begin to run on September 4, 2009, the day defendant gave him the returns. SER 358-59.
Q. Okay. For the purposes of calculating penalties, what date do the I.R.S. computers consider these returns filed?
A. The date that I received it, September 4th.
Q. And for the purpose of calculating interest, what date do the I.R.S. computers treat these returns as having been filed?
A. September 4th.
Q. And for purposes of determining when the statute of limitations may run on potential enforcement action on these returns, what date does the I.R.S. treat them as having been filed?
A. September 4th.
SER 305-06. n4
n4 Agent Connors, however, was mistaken as to the legal effect of those acts; the IRS would not have treated the returns as filed on that date. Defendant’s handing the returns to Agent Connors did not constitute filing, and Agent Connor’s forwarding the form (but not the returns) to the service center did not result in the returns being filed. See 26 U.S.C. § 6501; 26 U.S.C. § 6091(b)(4); 26 C.F.R. § 1.6091-2.
With respect to filing, the government took the position before the district court that, consistent with this Court’s language in United States v. Hanson, 2 F.3d 942, 946 (9th Cir. 1993), superseded by statute on other grounds as stated in United States v. McEnry, 659 F.3d 893 (9th Cir. 2011), and Ninth Circuit Model Jury Instruction § 9.39, “filing” was an element of Section 7206(1). The government referred to “filing” both in questioning and argument, and contended that the “filing” requirement was satisfied here by defendant handing the fraudulent returns to Agent Connors. SER 72, 512-14. The government also proposed a jury instruction that read “[a] tax return is filed at the time it is delivered to the Internal Revenue Service.” CR 72. The court did not give that instruction to the jury. Instead, the district court instructed the jury in relevant part that it had to find beyond a reasonable doubt the following:
First, the defendant made and signed a tax return for the years 2001, 2002 or 2003 that he knew contained false information as to a material matter; [s]econd, the return contained a written declaration that it was being signed subject to the penalties of perjury; and [t]hird, in filing the false tax return, the defendant acted willfully.
SER 551. Although the instruction referenced filing, it did not explain it.
* * * *
SUMMARY OF ARGUMENT
First, defendant is not entitled to reversal of his convictions based on his claim of insufficient proof that his returns were filed with the IRS. Although the agent accurately testified about how he handled the returns and the fact that they were not processed by the IRS, the legal conclusion he drew from those steps – namely, that the returns had been filed – was not correct: what happened to those returns in this case was not a filing within the meaning of IRS regulations. If the government had to prove that the returns were filed in accord with IRS regulations – either because it is an element of the offense or because the government is bound by its position below – then defendant’s convictions must be reversed. But, by its own terms, Title 26, United States Code Section 7206(1) does not require the government to prove “filing” as defined by the IRS regulations to establish a violation of the statute. Although the government agreed – incorrectly – that “filing” was an element of the offense before the district court, it is not, and neither law of the case nor any unsubstantiated claim of prejudice to defendant precludes the government from correctly arguing that position on appeal.
While this Court, as well as others, has previously stated that “filing” – without further elaboration – is an element of Section 7206(1), it cannot have intended to limit Section 7206(1)’s applicability to only those returns that are filed within the meaning of IRS regulations. In other words, while a proper filing is
sufficient to establish a violation of Section 7206(1), it is not necessary. Instead, the offense of “mak[ing] and subscrib[ing] any return” is satisfied by proof that the individual took some act demonstrating that he has finalized the document and intends it to be his true return, i.e., the form to be submitted to the IRS. This provides an individual with the opportunity to self-correct an erroneous document before submission to the IRS.
Under a correct understanding of Section 7206(1)’s elements, a rational factfinder could have found defendant guilty: Defendant repeatedly told the IRS agent conducting his audit that he wanted to file his delinquent returns, he handed his fraudulent 2001, 2002, and 2003 Forms 1040 to the agent at a meeting, and defendant asked the agent to stamp those forms, and to give him photocopies of the front pages of those forms. That intentional delivery of the forms to an IRS agent is sufficient to sustain defendant’s convictions.
Defendant’s claim that the statute does not apply unless the form is given to an IRS agent authorized to accept returns for filing would create a safe harbor for any individual who during the course of an audit gives fraudulent Forms 1040 to an agent not eligible by regulation to accept those forms for filing. It would also create an unwarranted disparity: an individual who gave an agent ineligible to receive returns for filing some other false or fraudulent document identified by Section 7206(1) would be culpable, while an individual who gave that agent a false or fraudulent return would not. Indeed, an individual who gave the agent a return and another document, each containing the same false statement, would be liable for the statement in the other document, but not for the same statement in the return.
Neither law of the case, nor estoppel, nor any claim of potential prejudice to defendant precludes the government from advancing the correct argument here: first, that filing is not an element of the offense; and second, that to the extent courts have articulated such a requirement, it describes a sufficient, but not a necessary, condition for finding that a person “ma[de] and subscribe[d] any return.” The statute does not specify that a return be “filed,” and the act of making a “return” is satisfied by delivery of the return to the IRS (or, more generally, by any act showing that the defendant intends the return to be his true return).I include only the summary of the argument which shows the thrust of the Government's argument. The details may be reviewed in the argument section of the brief.
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