CHEEK V. United States

This is an audio case brief of Cheek v. United States, 498 U.S. 192 (1991).. The audio brief provides a full case analysis. However a written summary of the case is provided below.

Table of Contents

FACTS

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. 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, Cheek unsuccessfully sought a refund of all tax withheld by his employer in 1982. Cheek ‘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, Cheek 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. § 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 § 7201. In those years, American Airlines withheld substantially less than the amount of tax Cheek owed because of the numerous allowances and exempt status he claimed on his W-4 forms. The tax offenses with which Cheek was charged are specific intent crimes that require the defendant to have acted willfully.

The statutes under which Cheek was charged reads in relevant parts as follows:

 Title 26, § 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. § 7203, “any 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.

At trial, the evidence established that between 1982 and 1986, Cheeks was involved in at least four civil cases that  challenged various aspects of the federal income tax system. 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, Cheeks 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. 

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 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. Cheeks’’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 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,” a not guilty verdict should be returned.

Cheeks was convicted of the charges. He appealed his conviction:

ISSUES

The issue is whether Cheek, by refusing to pay his taxes willfully avoided his tax responsibilities.

RULE

Willful avoidance of a tax responsibility requires a proof that the defendant voluntarily, and intentionally violated a known legal duty. A defendants good faith misunderstanding or belief must be subjectively reasonable.

APPLICATION / ANALYSIS

The district court in ruling against Cheek found that a good-faith misunderstanding of the law or a good-faith belief that one is not violating the law negates willfulness. But this good faith misunderstanding or belief must be objectively reasonable.

Cheek argued that his good faith misunderstand or belief must not be objectively reasonable. Instead it must be subjectively reasonable.

And the court of appeals agreed with him.

The court explained that :

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.

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 fact finder, 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.

Cheek further asserted 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.

But the court disagreed with him.

The court stated that

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. 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.

CONCLUSION

The court held that it was error for the district court to instruct the jury that Cheek’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.

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