111 S. Ct. 604; 112 L. Ed. 2d 617; 1991 U.S. LEXIS 348; 59 U.S.L.W. 4049; 91-1 U.S. Tax Cas. (CCH) ¶ 50,012; 67 A.F.T.R.2d (RIA) 344; 91 Cal. Daily Op. Service 305; 91 Daily Journal DAR 371
Case history
Prior
Certiorari to the United States Court of Appeals for the Seventh Circuit
Holding
(1) A genuine, good faith belief that one is not violating the Federal tax law based on a misunderstanding caused by the complexity of the tax law is a defense to a charge of "willfulness", even though that belief is irrational or unreasonable; (2) a belief that the Federal income tax is invalid or unconstitutional is not a misunderstanding caused by the complexity of the tax law, and is not a defense to a charge of "willfulness", even if that belief is genuine and is held in good faith.
Cheek v. United States, 498 U.S. 192 (1991), was a United States Supreme Court case in which the Court reversed the conviction of John L. Cheek, a tax protester, for willful failure to file tax returns and tax evasion. The Court held that an actual good-faith belief that one is not violating the tax law, based on a misunderstanding caused by the complexity of the tax law, negates willfulness, even if that belief is irrational or unreasonable. The Court also ruled that an actual belief that the tax law is invalid or unconstitutional is not a good faith belief based on a misunderstanding caused by the complexity of the tax law, and is not a defense.
The defendant, John L. Cheek, became a pilot for American Airlines in 1973. Through the tax year 1979, Cheek filed Federal income tax returns. Beginning with the 1980 tax year, Cheek stopped filing Federal income tax returns.[1] He began claiming up to sixty allowances on his Form W-4 withholding statement submitted to his employer.[2]
From 1982 to 1987, Cheek was also involved in at least four civil cases challenging the Federal income tax.[3] Among the arguments raised in those cases were: (1) the argument that he was not a taxpayer within the meaning of the law; (2) the argument that wages are not income; (3) the argument that the Sixteenth Amendment does not authorize an income tax on individuals; and (4) the argument that the Sixteenth Amendment is unenforceable. In all four cases, the courts stated that these arguments were erroneous. Cheek also attended two criminal trials of individuals charged with tax crimes.[4]
John Cheek himself was eventually charged with six counts of willfully failing to file Federal income tax returns under 26U.S.C.§7203 for 1980, 1981, 1983, 1984, 1985 and 1986. He was also charged with tax evasion under 26U.S.C.§7201 for years 1980, 1981, and 1983.[5]
Trial court
At his own criminal trial, Cheek represented himself.[6][7] He also testified that around 1978 he had begun attending seminars conducted by a group that believed that the Federal income tax system was unconstitutional.[8] Cheek stated that based on the seminars and his own study, he sincerely believed that the tax laws were being unconstitutionally enforced, and that his actions were lawful. Cheek specifically testified about his own interpretations of the U.S. Constitution, court opinions, common law and other materials. He testified that he had relied on those materials in concluding that he was not required to file tax returns, that he was not required to pay income taxes, and that he could claim refunds of the money withheld from his pay. Cheek also contended that his wages from a private employer (American Airlines) did not constitute income under the internal revenue laws. Cheek argued that he therefore had acted without the "willfulness" that was required for a criminal tax conviction.[9]
Ignorance of law
Under U.S. criminal law, the general rule is that ignorance of the law or a mistake of law is not a valid defense to criminal prosecution[10][11] (see also Ignorantia juris non excusat). However, there are exceptions to that rule. Some U.S. criminal statutes provide for what are known as "specific intent" crimes, where ignorance of the law may be a valid defense. The federal criminal tax statutes are examples of statutes for specific intent crimes, where actual ignorance of the law is a valid defense.[12]
Erroneous jury instructions
Cheek was convicted, but during the jury deliberations, the jury asked the trial judge for a clarification on the law. The judge instructed the jury that an "honest but unreasonable belief is not a defense, and does not negate willfulness." The trial court also instructed the jury 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."[13]
Appeals
Cheek appealed his conviction to the United States Court of Appeals for the Seventh Circuit, which upheld the conviction. The United States Supreme Court issued a writ of certiorari to review the case. At the Court, Cheek contended that the trial court had erred by instructing the jury that a misunderstanding of the law had to be objectively reasonable to negate willfulness.
Opinion of the Court
Justice Souter took no part in the case, as it was argued the week before he joined the Court. [14]
In its judgment, the Court produced two essential holdings:
A genuine, good faith belief that one is not violating the Federal tax law based on a misunderstanding caused by the complexity of the tax law (e.g., the complexity of the statute itself) is a defense to a charge of "willfulness", even though that belief is irrational or unreasonable.[15][16]
A belief that the Federal income tax is invalid or unconstitutional is not a misunderstanding caused by the complexity of the tax law,[17] and is not a defense to a charge of "willfulness", even if that belief is genuine and is held in good faith.[18][19]
The Supreme Court reiterated that a finding of willfulness in a federal criminal tax case requires proof (1) that the law imposed a duty on the defendant, (2) that the defendant knew of this duty, and (3) that the defendant voluntarily and intentionally violated that duty.[20] In explaining how the willfulness element must be proven, the Court distinguished arguments about constitutionality of the tax law from statutory arguments about the tax law.
In an opinion by Justice Byron White, the Court ruled that the defendant's belief that the tax laws were unconstitutional was not a defense, no matter how honestly that belief might have been held. To the contrary, Cheek's acknowledgement that his failure to file tax returns was based on a belief about constitutionality was viewed by the Supreme Court as possible evidence (1) of Cheek's awareness of the tax law itself (the Court stating that constitutional arguments reveal the taxpayer's "full knowledge of the provisions at issue and a studied conclusion, however wrong, that those provisions are invalid and unenforceable"),[21] and (2) of the voluntary, intentional violation of a known legal duty imposed by the tax law.
However, Cheek's statutory argument—his asserted belief that his wages were not income under the statute (the Internal Revenue Code itself)—was ruled by the Supreme Court to be a possible ground for a valid defense even though that belief was not objectively reasonable, provided that the belief was actually held in good faith. The Supreme Court ruled that by instructing the jury that the defendant's statutory argument had to be based on a belief that was "objectively reasonable," the trial judge had erroneously transformed what should have been treated as a factual issue (for the jury to decide) into a legal issue. The Supreme Court stated that whether the defendant acted willfully is a factual issue to be determined by the jury, and that a valid defense of lack of willfulness could be found even though the defendant's belief is not "objectively reasonable." The Supreme Court remanded the case to the trial court for a retrial. The Court also provided guidelines that could be used by the jury at the retrial:
[...] 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.[22]
Dissent
Justice Harry Blackmun, joined by Justice Thurgood Marshall, agreed with the Court's ruling that a belief that the federal income tax is unconstitutional is not a defense to a charge of willfulness. These two justices complained, however, about the Court's ruling that a genuine, good faith belief based on a misunderstanding of the Internal Revenue Code is a valid defense. In dissent, Blackmun wrote:
It seems to me that we are concerned in this case not with "the complexity of the tax laws," ante, at 200, but with the income tax law in its most elementary and basic aspect: Is a wage earner a taxpayer and are wages income? [...] [I]t 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 of 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.
Cheek defense
Some tax protesters have cited this case for the argument that it is possible to avoid paying taxes without punishment by using the kind of defense raised by Cheek about a good faith misunderstanding of the tax law itself. The Cheek defense is available, however, only in a criminal trial, and not as a method to avoid the payment of tax.[23] In addition, attorney Daniel B. Evans points out that the Cheek defense is logically self-defeating:
...[I]f you plan ahead to use it, then it is almost certain to fail, because your efforts to establish your "good faith belief" are going to be used by the government as evidence that you knew that what you were doing was wrong when you did it, which is why you worked to set up a defense in advance.[24]
Later developments
In the case of John Cheek:
The 48-year-old airline pilot said in a telephone interview that he had changed his views about paying taxes and was now "straightened out with the I.R.S." after paying the money he owed the Government and "substantial" penalties. From now on, he said, he intended to pay taxes.[25]
Immediately after the ruling, Cheek's lawyer, William R. Coulson, stated that Cheek had "learned his lesson". Coulson described Cheek as a "gullible victim of the tax protest movement".[26]
Further, the case was remanded for a re-trial. In the re-trial, the jury rejected Cheek's argument that he actually "believed" that wages were not taxable. He was again convicted. On March 13, 1992, Cheek was sentenced to one year and one day imprisonment, and he was placed on five years of probation. The conditions of probation were that he would cooperate with the Internal Revenue Service and pay his back taxes, and pay a fine of $62,000. The second conviction was upheld by the United States Court of Appeals for the Seventh Circuit, and the United States Supreme Court let that decision stand by denying review.[27] Cheek was released from prison in December 1992.[28]
At least one federal district court has indicated that, in the absence of either testimony by the defendant about his own belief or some other evidence that provides a link to the "taxpayer's mindset", the defendant's lawyer cannot require a court to give a "Cheek defense instruction" to a jury.[29] That decision has been affirmed by the United States Court of Appeals for the Seventh Circuit.[30]
↑ Dan M. Kahan, "Ignorance of Law Is An Excuse -- But Only for the Virtuous," 96 Michigan Law Review 127, 145 (Oct. 1997).
↑ Mark C. Winings, "Ignorance Is Bliss Especially for the Tax Evader," 84 Journal of Criminal Law and Criminology 575, 582 (Northwestern Univ. School of Law, Fall 1993), at .
↑ See, e.g., Schaut v. United States, 585 F. Supp. 137, 84-1 U.S. Tax Cas. (CCH) paragr. 9308 (N.D. Ill. 1984); Cheek v. Doe, 110 F.R.D. 420, 421 (N.D. Ill. 1984); Cheek v. Commissioner, 53 T.C.M. (CCH) 111, T.C. Memo. 1987-84 (1987). After 1987, see Pleasant v. Lovell, 974 F.2d 1222 (10th Cir. 1992).
↑ Cheek, 498 U.S. 192 at 194-95 (1991) (hereinafter Cheek).
↑ Nicholas A. Mirkay III, "The Supreme Court's Decision in Cheek: Does It Encourage Willful Tax Evasion," 56 Missouri Law Review 1119, 1121 (Fall 1991), at .
↑ Dwight W. Stone II, "Cheek v. United States: Finally, a Precise Definition of the Willfulness Requirement in Federal Tax Crimes," 51 Maryland Law Review 224, 225 (1992), at .
↑ Steven R. Toscher, Dennis L. Perez, Charles P. Rettig & Edward M. Robbins, Jr., Tax Crimes, Tax Management Portfolio, Volume 636, Bloomberg BNA (3d ed. 2012).
↑ See generally Dan M. Kahan, "Ignorance of Law Is An Excuse -- But Only for the Virtuous," 96 Michigan Law Review 127, 146 (Oct. 1997).
↑ Lyle Denniston, "Court widens use of ignorance plea in tax cases," Baltimore Sun, Jan. 9, 1991, at .
↑ Cheek, 498 U.S. at 206. John Cheek's arguments about the constitutionality of the tax law in various prior court cases were expressly labeled "frivolous" by the Supreme Court. See Cheek, 498 U.S. at 204-205. For example, Cheek had specifically contended prior to his conviction that the Sixteenth Amendment did not authorize a tax on wages and salaries, but only on gain or profit. See Cheek, 498 U.S. at 196.
↑ "The ruling does not shield people from being required to pay taxes and any civil penalties that might be imposed for nonpayment." William Grady, "High Court Overturns Conviction Of Chicago-area Tax Protester," Jan. 9, 1991, Chicago Tribune, at .
↑ Linda Greenhouse, "Supreme Court Ruling Supports Tax Protester", January 9, 1991, New York Times, at .
↑ William Grady, "High Court Overturns Conviction Of Chicago-area Tax Protester," Jan. 9, 1991, Chicago Tribune, at .
↑ United States v. Cheek, 3 F.3d 1057, 93-2 U.S. Tax Cas. (CCH) paragr. 50,473 (7th Cir. 1993), at cert. denied, 510 U.S. 1112, 114 S. Ct. 1055 (1994).
In criminal law, mens rea is the mental state of the crime committed and the legal determination of a crime may depend upon both a mental state and actus reus, like the designation of a homicide as murder is a matter of intention to commit a crime or in some jurisdictions knowledge that one's action would cause a crime to be committed. The mitigation of culpability under some established legal doctrines may reduce the severity of some criminal charges, and so mental state is an element of most crimes, other than crimes of strict liability.
Tax noncompliance is a range of activities that are unfavorable to a government's tax system. This may include tax avoidance, which is tax reduction by legal means, and tax evasion which is the criminal non-payment of tax liabilities. The use of the term "noncompliance" is used differently by different authors. Its most general use describes non-compliant behaviors with respect to different institutional rules resulting in what Edgar L. Feige calls unobserved economies. Non-compliance with fiscal rules of taxation gives rise to unreported income and a tax gap that Feige estimates to be in the neighborhood of $500 billion annually for the United States.
Willful blindness is a term used in law to describe a situation in which a person seeks to avoid civil or criminal liability for a wrongful act by intentionally keeping themselves unaware of facts that would render them liable or implicated. In United States v. Jewell, the court held that proof of willful ignorance satisfied the requirement of knowledge as to criminal possession and importation of drugs.
Irwin Allen Schiff was an American libertarian and tax resistance advocate known for writing and promoting literature in which he argued that the income tax in the United States is illegal and unconstitutional. Judges in several civil and criminal cases ruled in favor of the federal government and against Schiff. As a result of these judicial rulings Schiff was in a hospital prison serving a sentence of 162 months at the time of his death at the age of 87. The Federal Bureau of Prisons reported that Schiff died on October 16, 2015.
James v. United States, 366 U.S. 213 (1961), was a case in which the United States Supreme Court held that the receipt of money obtained by a taxpayer illegally was taxable income even though the law might require the taxpayer to repay the ill-gotten gains to the person from whom they had been taken.
A tax protester, in the United States, is a person who denies that he or she owes a tax based on the belief that the Constitution of the United States, statutes, or regulations do not empower the government to impose, assess or collect the tax. The tax protester may have no dispute with how the government spends its revenue. This differentiates a tax protester from a tax resister, who seeks to avoid paying a tax because the tax is being used for purposes with which the resister takes issue.
America: Freedom to Fascism is a 2006 American film by filmmaker and activist Aaron Russo, covering a variety of subjects that Russo contends are detrimental to Americans. Topics include the Internal Revenue Service (IRS), the income tax, Federal Reserve System, national ID cards, human-implanted RFID tags, Diebold electronic voting machines, globalization, Big Brother, taser weapons abuse, and the use of terrorism by the government as a means to diminish the citizens' rights.
Tax protesters in the United States have advanced a number of arguments asserting that the assessment and collection of the federal income tax violates statutes enacted by the United States Congress and signed into law by the President. Such arguments generally claim that certain statutes fail to create a duty to pay taxes, that such statutes do not impose the income tax on wages or other types of income claimed by the tax protesters, or that provisions within a given statute exempt the tax protesters from a duty to pay.
Tommy Keith Cryer, also known as Tom Cryer, was an attorney in Shreveport, Louisiana who was charged with and later acquitted of willful failure to file U.S. Federal income tax returns in a timely fashion. In a case in United States Tax Court, Cryer contested a determination by the U.S. Internal Revenue Service that he owed $1.7 million in taxes and penalties. Before the case could come to trial, Cryer died June 4, 2012. He was 62.
The Fifth Amendment to the United States Constitution creates several constitutional rights, limiting governmental powers focusing on criminal procedures. It was ratified, along with nine other articles, in 1791 as part of the Bill of Rights.
The 861 argument is a statutory argument used by tax protesters in the United States, which interprets a portion of the Internal Revenue Code as invalidating certain applications of income tax. The argument has uniformly been held by courts to be incorrect, and persons who have cited the argument as a basis for refusing to pay income taxes have been penalized, and in some cases jailed.
Tax protester Sixteenth Amendment arguments are assertions that the imposition of the U.S. federal income tax is illegal because the Sixteenth Amendment to the United States Constitution, which reads "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration", was never properly ratified, or that the amendment provides no power to tax income. Proper ratification of the Sixteenth Amendment is disputed by tax protesters who argue that the quoted text of the Amendment differed from the text proposed by Congress, or that Ohio was not a State during ratification, despite its admission to the Union on March 1, 1803, more than a century prior. Sixteenth Amendment ratification arguments have been rejected in every court case where they have been raised and have been identified as legally frivolous.
In law, ignorantia juris non excusat, or ignorantia legis neminem excusat, is a legal principle holding that a person who is unaware of a law may not escape liability for violating that law merely by being unaware of its content.
Tax protesters in the United States advance a number of constitutional arguments asserting that the imposition, assessment and collection of the federal income tax violates the United States Constitution. These kinds of arguments, though related to, are distinguished from statutory and administrative arguments, which presuppose the constitutionality of the income tax, as well as from general conspiracy arguments, which are based upon the proposition that the three branches of the federal government are involved together in a deliberate, on-going campaign of deception for the purpose of defrauding individuals or entities of their wealth or profits. Although constitutional challenges to U.S. tax laws are frequently directed towards the validity and effect of the Sixteenth Amendment, assertions that the income tax violates various other provisions of the Constitution have been made as well.
A tax protester is someone who refuses to pay a tax claiming that the tax laws are unconstitutional or otherwise invalid. Tax protesters are different from tax resisters, who refuse to pay taxes as a protest against a government or its policies, or a moral opposition to taxation in general, not out of a belief that the tax law itself is invalid. The United States has a large and organized culture of people who espouse such theories. Tax protesters also exist in other countries.
Tax protester arguments are arguments made by people, primarily in the United States, who contend that tax laws are unconstitutional or otherwise invalid.
First National Bank of Montgomery v. Jerome Daly, Dec. 9, 1968, also known as the Credit River Case, was a case tried before a justice of the peace in Minnesota in 1968. The decision in that case is sometimes cited by opponents of the United States banking system.
Under the federal law of the United States of America, tax evasion or tax fraud, is the purposeful illegal attempt of a taxpayer to evade assessment or payment of a tax imposed by Federal law. Conviction of tax evasion may result in fines and imprisonment. Compared to other countries, Americans are more likely to pay their taxes on time and law-abidingly.
McFadden v. United States, 576 U.S. 186 (2015), was a United States Supreme Court case in which the Court held that section 841 of the Controlled Substances Act requires the government to prove that to be in criminal violation, a defendant must be aware that an analogue defined by the Controlled Substance Analogue Enforcement Act with which he was dealing was a controlled substance.
United States v. Haymond, 588 U.S. ___ (2019), is a case in which the U.S. Supreme Court struck down 18 U.S.C. § 3583(k)'s five-year mandatory minimum prison sentence for certain sex offenses committed by federal supervised releasees as unconstitutional unless the charges are proven to a jury beyond a reasonable doubt. Justices Ginsburg, Sotomayor, and Kagan joined Gorsuch's plurality opinion, while Breyer provided the necessary fifth vote with his narrow concurrence that began by saying he agreed with much of Justice Alito's dissent, which was joined by Justices Roberts, Thomas, and Kavanaugh.
This page is based on this Wikipedia article Text is available under the CC BY-SA 4.0 license; additional terms may apply. Images, videos and audio are available under their respective licenses.
