United States v. Ellett, No. 07-3682 (2d Cir. 2008)
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07-3682-cr United States v. Ellett 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term 2007 (Argued: May 16, 2008 Decided: May 23, 2008) Docket No. 07-3682-cr - - - - - - - - - - - - - - - - - - - -x UNITED STATES OF AMERICA, Appellee, - v.JAMES ELLETT, Defendant-Appellant. - - - - - - - - - - - - - - - - - - - -x Before: JACOBS, Chief Judge; MINER, Circuit Judge; MCAVOY, District Judge.1 Defendant-Appellant James Ellett appeals from the 32 judgment of the United States District Court for the 33 Northern District of New York (Hurd, J.), convicting him, 34 after a jury trial, of four counts of income tax evasion and 35 one count of failure to file an income tax return . 1 We hold The Honorable Thomas J. McAvoy of the United States District Court for the Northern District of New York, sitting by designation. 1 that due process did not require that Ellett be given the 2 opportunity to litigate his tax position civilly or 3 administratively before being prosecuted for tax evasion. 4 Affirmed. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 RONALD JAY COHEN, Cohen, Estis & Associates, LLP, Goshen, NY, for Defendant-Appellant. PAUL D. SILVER, Assistant United States Attorney (Glenn T. Suddaby, United States Attorney, Northern District of New York, on the brief; Sara Lord, Brenda K. Sannes, Assistant United States Attorneys, of counsel), United States Attorney s Office for the Northern District of New York, Albany, NY, for Appellee. PER CURIAM: Defendant-Appellant James Ellett appeals from the 24 judgment of the United States District Court for the 25 Northern District of New York (Hurd, J.), convicting him, 26 after a jury trial, on five tax counts. 27 contends that due process required that he be given the 28 opportunity to litigate his tax position civilly or 29 administratively before being prosecuted for tax evasion. 30 We reject that argument in this opinion. 31 summary order filed today, we reject Ellett s other 2 On appeal, Ellett In a separate 1 challenges to his conviction.2 2 judgment below. We therefore affirm the 3 4 BACKGROUND 5 Ellett was indicted in the Northern District of New 6 York on September 14, 2006 for three counts of income tax 7 evasion for tax years 2000-2002, in violation of 26 U.S.C. § 8 7201. 9 added two counts: tax evasion for tax year 2003, in A superseding indictment filed on February 2, 2007 10 violation of 26 U.S.C. § 7201, and misdemeanor failure to 11 file for tax year 2004, in violation of 26 U.S.C. § 7203. 12 The district court rejected Ellett s requests to dismiss the 13 superseding indictment. 14 The evidence at trial showed that beginning in 1989 15 Ellett worked as a skilled mechanic at a public gas and 16 utility company. He received wages and overtime 2 In the summary order we reject arguments concerning: (1) the exclusion of legal materials that Ellett claims to have relied upon in forming the view that tax laws were invalid; (2) the exclusion of an IRS agent s tax worksheets and the denial of an adjournment to allow the defense to review another agent s calculations; (3) the admission of evidence of Ellett s prior federal and state tax history; (4) the alleged violation of Brady v. Maryland, 373 U.S. 83 (1963); (5) the delayed filing of the superseding indictment; and (6) the tone and volume used in delivering the jury charge. 3 1 compensation and regularly filed federal and state income 2 tax returns until 1994. 3 Ellett read Vultures in Eagle s Clothing: Lawfully Breaking 4 Free From Ignorance Related Slavery (1997), a publication by 5 Lynne Meredith that instructs readers how to LAWFULLY 6 STOP!!! PAYING INCOME TAXES based on fanciful analyses of 7 the tax laws. 8 9 That year, at a co-worker s urging, From May 1996 through tax year 2004, Ellett filed an In Lieu of Form W-4 form (modeled after a sample form 10 included in Vultures), which directed his employer to 11 withhold zero dollars from his income. 12 Ellett earned between $64,000 and $102,000 per year in the 13 period 2000-03, his federal withholding was zero. 14 latter half of 2004, at the IRS s instruction, Ellett s 15 employer began withholding taxes from his wages, with the 16 result that $8,251 was withheld for 2004 on income of 17 $73,376. 18 the 2003 and 2004 tax years. 19 over $64,000 in federal income taxes from 2000 through 2004. 20 Ellett sought to persuade the jury that the prosecution Thus, although In the Ellett did not file federal income tax returns for In all, Ellett failed to pay 21 did not prove the willfulness element of tax evasion, 22 because he sincerely believed that, as a native of one of 4 1 the 50 states who worked for a private employer, he was 2 exercising a nontaxable right to engage in labor. 3 testified that he formulated this belief by reading portions 4 of Vultures in Eagle s Clothing at least one hundred times 5 and by spending hours researching the topic in a law 6 library. 7 any tax professional would have disagreed with him (so he 8 never consulted one) and that he was aware that the Supreme 9 Court has upheld the constitutionality of the federal income 10 11 Ellett On cross-examination Ellett conceded that he knew tax. The government undertook to prove willfulness by 12 showing that the IRS had notified Ellett that his legal 13 position had been rejected repeatedly as frivolous and 14 without merit by the federal courts. 15 that the New York State Department of Taxation informed 16 Ellett that his legal position was obviously incorrect and 17 that it has been rejected and deemed frivolous by the Tax 18 Appeals Tribunal and federal courts. 19 Other evidence showed The jury found Ellett guilty on all five counts of the 20 superseding indictment. 21 motions for judgment of acquittal and for a new trial, and 22 on August 10, 2007, sentenced Ellett principally to 18 The district court denied Ellett s 5 1 months imprisonment. 2 3 DISCUSSION 4 Ellett argues that due process required that he be 5 given the opportunity to litigate his tax position civilly 6 or administratively before being prosecuted for tax evasion. 7 The elements of tax evasion [under 26 U.S.C. § 7201] 8 are willfulness, the existence of a tax deficiency and an 9 affirmative act of evasion, all of which the government must 10 prove. 11 1999); see United States v. Helmsley, 941 F.2d 71, 97 (2d 12 Cir. 1991) (explaining that the jury must find a 13 substantial tax deficiency ). 14 United States v. Plitman, 194 F.3d 59, 65 (2d Cir. The government therefore was required to establish the 15 existence of a substantial tax deficiency beyond a 16 reasonable doubt. 17 government was first required to adjudicate his income tax 18 exemption claim either civilly or administratively. 19 undisputed that the Internal Revenue Service never formally 20 audited Ellett and that the United States Tax Court 21 therefore has never ruled on what Ellett believes to be the 22 central legal issue of this case, namely, whether a citizen To do that, Ellett contends, the 6 It is 1 of one of the 50 states who works for a private employer is 2 subject to the federal income tax. 3 Ellett misunderstands the tax deficiency element of tax 4 evasion. 5 date a tax return is due but not filed; no formal demand or 6 assessment is required. 7 return of tax is required under this title or regulations, 8 the person required to make such return shall, without 9 assessment or notice or demand from the Secretary . . . pay 10 such tax at the time and place fixed for filing the return . 11 . . . (emphasis added)); id. § 6072(a) (requiring annual 12 tax returns to be filed on or before April 15). 13 liability therefore comes into being as of April 15. 14 deficiency notice merely reminds the taxpayer of his duty 15 to pay a tax debt already due[, it] does not create that 16 liability. 17 (9th Cir. 1981) (internal quotation marks and alterations 18 omitted). A tax deficiency arises by operation of law the See 26 U.S.C. § 6151(a) ( [W]hen a Tax A tax United States v. Voorhies, 658 F.2d 710, 714 19 Accordingly, the government is not required to obtain a 20 civil or administrative determination of a tax deficiency in 21 order to establish the existence of a substantial tax 22 deficiency beyond a reasonable doubt. 7 We join the First, 1 Sixth, Seventh and Ninth Circuits in holding that due 2 process does not require the government to adjudicate tax 3 disputes civilly or administratively before proceeding to 4 criminal prosecution for tax evasion. 5 Daniel, 956 F.2d 540, 542 (6th Cir. 1992); United States v. 6 Hogan, 861 F.2d 312, 315-16 (1st Cir. 1988); United States 7 v. Dack, 747 F.2d 1172, 1174-75 (7th Cir. 1984); Voorhies, 8 658 F.2d at 715 (per curiam). 9 was not unlawfully premature. See United States v. Ellett s criminal prosecution 10 11 12 CONCLUSION For the foregoing reasons, and for the additional 13 reasons discussed in our accompanying summary order, we 14 affirm the judgment of conviction below. 8
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