People v. Kim

Annotate this Case
No. 2--95--1177

________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
________________________________________________________________

THE PEOPLE OF THE STATE ) Appeal from the Circuit Court
OF ILLINOIS, ) Du Page County.
)
Plaintiff-Appellee, )
) No. 93--CF--1531
v. )
)
YUNG S. KIM, ) Honorable
) Eugene A. Wojcik,
Defendant-Appellant. ) Judge, Presiding.
________________________________________________________________

PRESIDING JUSTICE McLAREN delivered the opinion of the court:

Defendant, Yung S. Kim, brings this interlocutory appeal (145
Ill. 2d R. 604(f)) from the circuit court's denial of his motion to
dismiss, on the basis of former jeopardy, the multiple-count
indictment against him for filing fraudulent retailer's occupation
tax returns (35 ILCS 120/13 (West 1992)). Defendant claims that
the State's criminal prosecution against him is barred on double
jeopardy grounds because, in February 1994, the State also issued
against him a civil tax assessment and 10-day demand for payment of
taxes in the amount of $306,200.90. Of this amount, $123,129.90
is for penalties and interest. (The penalty amounts to $54,921,
and the interest amounts to $68,208.90.) He contends that he has
been previously "punished" since the demand is a "final" notice for
payment, and, should the defendant refuse to make payment within 10
days, the State may take execution upon the assessment or take
other actions including, inter alia, the garnishment of his wages,
the filing of a tax lien against his property, the seizure and sale
of his assets, the revocation of various licenses, and the
nonrenewal of his corporate charter. We affirm and remand for
further proceedings.
The State has maintained both here and in the trial court that
the purportedly "final" assessment does not amount to a criminal
punishment for double jeopardy purposes, because the State has not
yet made any attempt to enforce the tax against defendant or have
a judgment entered against him, and defendant has not yet paid any
tax. The State points out that defendant did not avail himself of
the statutory procedures to protest the tax assessment, or request
a hearing, or obtain judicial review. See 35 ILCS 120/4, 5 (West
1992); 735 ILCS 5/3--101 (West 1992). In sum, the State argues
that no jeopardy has yet attached and the tax assessment does not
constitute "punishment" for double jeopardy purposes. We find
merit in the State's position.
I. NO JEOPARDY ATTACHED
The constitutional protections against double jeopardy are
designed to protect against three distinct abuses by government:
(1) a second prosecution for the same offense after acquittal; (2)
a second prosecution for the same offense after conviction; and (3)
multiple punishments for the same offense when sought in separate
proceedings. People v. Krizek, 271 Ill. App. 3d 533, 536 (1995).
The bar against multiple punishments is the subject of the present
appeal. It is obvious that there can be no double jeopardy without
a former jeopardy. People v. Delatorre, 279 Ill. App. 3d 1014,
1019 (1996).
Here, although the threat of punishment may be said to exist
in the form of a final assessment and demand, no punishment has in
fact been imposed. For example, in a civil in rem forfeiture
proceeding, the initial seizure of a defendant's property, where
there is no final judgment of forfeiture, does not constitute
punishment for double jeopardy purposes. See Krizek, 271 Ill. App.
3d at 537, quoting United States v. Stanwood, 872 F. Supp. 791, 799
(D. Or. 1994) ("Common sense compels the conclusion that punishment
occurs when meted out by the court, not before").
We recognize that a tax proceeding is not quite analogous to
a civil in rem forfeiture proceeding. However, the principle that
a punishment must in fact be imposed in order for jeopardy to
attach is the same in each instance when the question of multiple
punishments is considered. This is so particularly where, as here,
the defendant still has the opportunity to challenge the tax in a
civil proceeding and no final judgment has been entered. Despite
defendant's attempt to characterize the final notice of assessment
and demand for payment as a punishment, we do not believe this
notice has sufficient indicia of finality to qualify as a former
jeopardy based on a theory of multiple punishments--particularly
where defendant has not appeared in the administrative proceedings,
no exaction or sanction has yet been imposed, and defendant still
has the opportunity to challenge the tax and the penalties.
II. TAX ASSESSMENT WAS NOT CRIMINAL PUNISHMENT
In attempting to characterize the tax assessment as a criminal
punishment, defendant's reliance on Wilson v. Department of
Revenue, 169 Ill. 2d 306 (1996), is misplaced. That case is
readily distinguishable. Following the analysis of Department of
Revenue v. Kurth Ranch, 511 U.S. 767, 128 L. Ed. 2d 767, 114 S. Ct. 1937 (1994), our state supreme court in Wilson concluded that
a large tax imposed on an alleged "dealer" of contraband drugs
violated the constitutional protection against double jeopardy
because of the tax's obvious punitive aspects and because it was
conditioned on the commission of a crime. In that case, the
defendant pleaded guilty to the criminal charges and was sentenced.
He also filed a protest in the tax proceeding after he received a
notice of assessment and intent to seize his assets. When the
Department of Revenue proceeded to levy on his property without
affording him the hearing he had requested, Wilson commenced an
action for declaratory and injunctive relief on the basis that the
tax could not be enforced against him because he had already been
prosecuted and sentenced on the criminal charges. Wilson, 169 Ill. 2d at 308-09. It is clear that, in Wilson, the defendant had
already been punished once by the imposition of the criminal
sentence. The tax could not be enforced because of its
unmistakable punitive characteristics under the Kurth Ranch
analysis. Wilson, 169 Ill. 2d at 317. As we shall explain, those
punitive characteristics are not present here.
In Kurth Ranch, the Supreme Court concluded that a Montana tax
imposed on the defendants for the possession of illegal drugs after
the state imposed a criminal penalty on the defendants amounted to
a successive punishment in violation of the constitutional
protection against double jeopardy. In determining whether the tax
could be fairly characterized as punitive rather than as remedial,
the Court first observed that "neither a high rate of taxation nor
an obvious deterrent purpose automatically marks [a tax] as a form
of punishment." 511 U.S. at___, 128 L. Ed. 2d at 779, 114 S. Ct.
at 1946; see People v. Dvorak, 276 Ill. App. 3d 544, 548 (1996).
In Dvorak, we summarized the factors leading to this conclusion as
follows:
"Among the features the Court found unusual were these:
(1) the tax was conditioned on the commission of a crime; (2)
it was exacted only after the taxpayer had been arrested for
the conduct which gave rise to the tax obligation and had paid
all related State or Federal fines and all forfeitures had
been satisfied; and (3) the tax was levied on goods that the
taxpayer neither owned nor possessed when the tax was imposed
(because presumably the contraband was destroyed by the State)
so that it had 'an unmistakable punitive character.' (511
U.S. at ___, 128 L. Ed. 2d at 781, 114 S. Ct. at 1947-48.)
The Court explained: 'Taken as a whole, this drug tax is a
concoction of anomalies, too far-removed in crucial respects
from a standard tax assessment to escape characterization as
punishment for the purpose of Double Jeopardy analysis.'
(Kurth Ranch, 511 U.S. at ___, 128 L. Ed. 2d at 781, 114 S. Ct. at 1948.)" Dvorak, 276 Ill. App. 3d at 548-49.
The Supreme Court also concluded that, because the tax was
fairly characterized as punishment rather than as a remedial civil
sanction, any such punishment would have to be imposed in the first
criminal prosecution or not at all, and Montana's proceeding to
collect the tax was the functional equivalent of a successive
criminal prosecution that placed the defendants in jeopardy a
second time for the same offense. 511 U.S. at ___, 128 L. Ed. 2d
at 781-82, 114 S. Ct. at 1948.
Here, the tax and the resulting sanctions for the failure to
pay the tax, in a timely manner and in accordance with the
statutory revenue provisions, do not amount to a criminal
punishment for double jeopardy purposes. Rather, the tax has a
legitimate revenue raising purpose which defendant has not
disputed, and the penalties and interest serve to compensate the
State for its revenue collection efforts. The civil penalties
result from defendant's attempts to avoid paying the tax when due.
The penalties are civil and remedial in nature even though they
have an obvious deterrent effect in discouraging evasive tactics by
taxpayers--and even though, in this case, they may arise from
allegedly fraudulent conduct.
In Helvering v. Mitchell, 303 U.S. 391, 82 L. Ed. 917, 58 S. Ct. 630 (1938), the Supreme Court held that a 50% civil tax penalty
("addition") imposed on defendant for filing a fraudulent tax
return served only a remedial purpose and did not violate the
protection against double jeopardy where the defendant had also
been acquitted in a criminal prosecution for willful tax evasion.
The Court viewed the civil sanction as a remedial safeguard to
protect revenue and to reimburse the government for the heavy
expense of investigation and the loss resulting from the taxpayer's
fraud. The Court noted that the Congress may impose both a
criminal and a civil sanction with respect to the same act or
omission. 303 U.S. at 399-401, 82 L. Ed. at 922, 58 S. Ct. at 633-
34.
Helvering remains good law, and we adhere to the rule
established there. See United States v. Alt, 83 F.3d 779 (6th Cir.
1996) (explaining the Court's implicit approval of Helvering in the
recent cases of Kurth Ranch, and United States v. Halper, 490 U.S. 435, 104 L. Ed. 2d 487, 109 S. Ct. 1892 (1989); court held that tax
penalty of 81% for fraud, understatement, and negligence was not
punishment for double jeopardy purposes); United States v.
Brennick, 908 F. Supp. 1004 (D. Mass. 1995) (23% tax penalty for
failure to truthfully account for and pay federal income taxes was
not punishment for double jeopardy purposes). The penalties and
interest here are not so grossly disproportionate that they amount
to the additional criminal punishments which the Court found
violative of double jeopardy protection in Halper and Kurth Ranch.
As in Helvering, the penalties and interest here are remedial and
are reasonably related to compensating the government, in the form
of liquidated damages, for its tax collection and enforcement
activities.
The order of the circuit court of Du Page County denying
defendant's motion to dismiss the criminal prosecution is therefore
affirmed, and the cause is remanded for further proceedings.
Affirmed and remanded.
BOWMAN and THOMAS, JJ., concur.

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