CHEEK v. UNITED STATES
Legal provision: Internal Revenue Code
ORAL ARGUMENT OF WILLIAM R. COULSON ON BEHALF OF THE PETITIONER
Chief Justice Rehnquist: We'll hear argument next in No. 89-658, John L. Cheek v. United States.
Mr. Coulson: Mr. Chief Justice, and may it please the Court:
This is a criminal tax case.
Just before sentencing the petitioner, John L. Cheek, the district court said to him,
"I do not want to sentence you for beliefs that I believe were honestly held, although I believe foolishly held."
That is the district court speaking, and that is what this case is fundamentally all about.
Petitioner John Cheek's defense, albeit a pro se defense, was a classic mistake of law based in part on advice he got from counsel.
He contended that at all times of the alleged offenses he had a bona fide misunderstanding of his duties under the tax laws.
This is a recognized defense.
It was articulated by this Court in Murdock in 1933, some 57 years ago.
However, not more than 3 weeks before petitioner's trial commenced before the Seventh Circuit... before the district court in Chicago, the Seventh Circuit in October of 1987 in the United States v. Buckner decided that in so-called tax-protester cases it wasn't enough that the tax defendant's misunderstanding or belief, as the Seventh Circuit calls it, be sincerely held or bona fide per Murdock, but also the defendant's understanding or belief of the tax laws had to be found by the jury to be objectively reasonable, whatever that means.
Moreover, as to certain enumerated understandings, or beliefs, or misunderstandings of the tax laws, it wasn't enough even for a defendant to convince a jury that he sincerely possessed the misunderstanding and that the misunderstanding was objectively reasonable.
But as to those listed beliefs the Seventh Circuit held that they were forever objectively unreasonable as a matter of law.
Mr. Kneedler: Mr. Coulson, you don't have to go to law school to learn that traditionally mistake of law is... is no defense.
Why is there, why should it be a defense here, because of the word willfully in the statute?
Mr. Coulson: Because this Court and other courts have recognized that in the criminal tax statutes, the mistake of law defense has particular vitality.
Mr. Kneedler: Why should that be?
Mr. Coulson: Because the tax codes are complex in numerous respects.
Unlike most criminal statutes they are malum prohibitum rather than malum in se.
Mr. Kneedler: So do we import these same standards into the antitrust laws, which are also complex... the case laws if not statutory?
Mr. Coulson: I'm not suggesting that the doctrine that we suggest remain the law of the land be applied to anything other than criminal tax statutes.
Mr. Kneedler: But why should criminal tax statutes be singled out for this treatment?
Mr. Coulson: This Court has singled them out for that treatment and other courts have, recognizing that in the tax area it is easy, relatively easy for a well-minded individual to violate the law, because the law is complex.
Mistake of law has particular vitality in this... under these... in this context and under the criminal tax statutes.
And I say that not only because this Court has said that, the circuits have said that.
Mr. Kneedler: Well, what if the taxpayer understood that the law says you'll file a tax return, but genuinely believed the... the tax law was unconstitutional?
Would that be a defense to willfulness?
Mr. Coulson: No, but it's... personal belief that a known statute is unconstitutional smacks of knowledge with existing law, but disagreement with it.
And I am not suggesting that any individuals--
Mr. Kneedler: Well, someone in good faith believes it.
It is not objectively reasonable to believe that, but that is the belief.
Now is that a defense to willfulness?
Mr. Coulson: --It depends on the nature of the defense.
If the person believes as a personal belief that known... law known to them is unconstitutional, I submit that that would not be a defense, because what the person is really saying is I know what the law is, for constitutional reasons I have made my own determination that it is invalid.
I am not suggesting that that is a defense.
However, if the person was told by a lawyer or by an accountant erroneously that the statute is unconstitutional, and it's my professional advice to you that you don't have to follow it, then you have got a little different situation.
This is not that case--
Mr. Kneedler: How do you instruct the jury so that they can convict in the one case and acquit in the other?
Mr. Coulson: --You instruct the jury that disagreement with known law is not a defense.
You instruct the jury that--
Mr. Kneedler: A known law?
Known to whom?
Known to the defendant?
Mr. Coulson: --Known to the defendant.
All of... our position obviously is that all of this deals with the defendant's personal view, the defendant's personal state of mind, the defendant's personal knowledge.
Mr. Kneedler: And a known law is a... is a statute that is on the books?
Mr. Coulson: No.
If the Government can prove that the defendant knew what the law is and chose--
Mr. Kneedler: He knew that the statute was on the books?
Mr. Coulson: --No, he knew of his duties under the tax laws a la Murdock.
That is a little broader than just knowing there is a statute on the books.
Mr. Kneedler: He knows... he knows his duty under the statute, and he knows that it's the [inaudible] of the Government to prosecute if he violates that duty.
Is that sufficient?
Mr. Coulson: No, because it would depend on the particular misunderstanding that is in issue.
A defendant may believe that... that bribes that he receives is not income.
He may believe that, as in this case, wages he receives are not income.
Mr. Kneedler: And suppose that he also knows that the position of the IRS and of the Justice Department is to the contrary?
Mr. Coulson: The result is that a jury decides whether his--
Mr. Kneedler: On what standing?
Mr. Coulson: --his understanding is pretextual or is sincere, based on all of this information.
Mr. Kneedler: He really... he honestly... it's an honest belief?
Sincerity of belief, that's the test?
Mr. Coulson: The test is sincerity of belief as to his understanding of his duties under the tax laws, and that is taken from Murdock.
Mr. Kneedler: Suppose... the Seventh Circuit has ruled that he has to file and that the Seventh Circuit has ruled contrary to his beliefs.
Mr. Coulson: A ruling that he has to file may or may not be relevant to his own belief given his tax situation.
Mr. Kneedler: xxx the Seventh Circuit has ruled that his belief was held in error.
Mr. Coulson: That would be a fact which the Government would elicit.
The jury would determine, based on that fact as well as other facts that the defendant may present, whether or not his good faith... his misunderstanding is in good faith or is pretextual, just as the jury does in any other--
Mr. Kneedler: He thinks in good faith that the Seventh Circuit is wrong.
What does the jury have to do then?
Mr. Coulson: --No.
If he testifies and the Government is able to elicit on cross-examination that he is aware of the Seventh Circuit case, and he is aware the Seventh Circuit thinks he is wrong, I rather suspect the jury would convict him in this situation.
Mr. Kneedler: Well, should the jury convict him based on... this is what I want to know.
What is the standard?
Mr. Coulson: The standard is whether he has a good-faith misunderstanding of his particular duties under the tax laws.
That is the standard this Court set out in Murdock.
Mr. Kneedler: Well, I am stipulating to you that he has an honest, sincere belief that the Seventh Circuit is 180 degrees wrong.
Mr. Coulson: I would submit that that would establish, at least if I were on the jury, as disagreement with what he knows to be the law.
Mr. Kneedler: The question isn't what--
--Justice Marshall has had a question he wants to ask.
Would you make the same defense to a civil action?
Mr. Coulson: No.
Civil standards are different.
Mr. Kneedler: And that's what I would like for you to explain, other than that civil and criminal are different.
Mr. Coulson: I guess the most obvious example is his rule 11, or sanctions.
You could take a legal position that is sanctionable under rule 11, even if you believe it to be true, if it's a frivolous position.
Whereas to put somebody in jail, to convict somebody of a criminal offense, it seems to me the Government needs to show that it was a willful act.
Mr. Kneedler: You mean in a tax defense... a tax case?
Mr. Coulson: In a tax case.
I am confining all of my remarks here to tax cases because, as this Court has pointed out, the willfulness element is somewhat unique in tax cases.
Mr. Kneedler: I just want to follow up on Justice Kennedy's question, because I don't think you have answered.
You have given us a prediction what the jury would do.
Say you are a trial judge and you are convinced that when this man gets on the stand and says I think not only the Seventh Circuit is wrong, but the United States Supreme Court is wrong, and that the Constitution does not require me to pay these taxes.
That's my sincere and honest belief, just like my belief in God is sincere and honest.
Does he win or does he lose?
Mr. Coulson: In that case the judge, as he would in evaluating any defense--
Mr. Kneedler: He believes him.
That's what I am saying, the judge believes him.
Then what does the judge do?
Mr. Coulson: --The judge rules that that is not a good-faith misunderstanding of one's duties to file.
It is rather a knowledge of existing law and a belief that it is wrong, and that defense does not go to the jury.
Mr. Kneedler: In other words, belief that the statute is unconstitutional is a belief that it's wrong?
Mr. Coulson: --Yes.
Mr. Kneedler: That's not what Murdock... Murdock was a constitutional case, you know.
You can even stop short of the unconstitutional point.
All... you're... you're stopping short... you want to stop short of saying that a belief that is unconstitutional is a good... like some of the other justices, I don't see the basis for drawing that line.
But you don't... you don't stop short of saying that belief that the Supreme Court has misinterpreted the statute is... is not a good-faith defense.
Suppose he doesn't think that the Constitution entitles him to say that wages are not income, but that simply the Supreme Court got it wrong when it said that under the Internal Revenue Code wages are not income and said, you know, gee, the Supreme Court said that, but they misinterpreted the statute.
Mr. Coulson: I am trying to draw a distinction between knowing what the law is and disagreeing with it, which is not a good-faith misunderstanding of your duty to file.
Mr. Kneedler: Well, which is this?
Is this a good-faith misunderstanding or not?
Mr. Coulson: It sounds like it is not.
I must point out--
Mr. Kneedler: Why is it not?
He thinks the Supreme Court was wrong.
He thinks the Supreme Court misread the statute.
He sits down and looks at the statute and says, gee, I think they got it wrong again.
Mr. Coulson: --That is disagreement with the law.
Mr. Kneedler: That is disagreement with the law?
Mr. Coulson: Right.
Mr. Kneedler: I am surprised at your position.
It seems... it seems to me that you would be arguing that it's a sincere, good-faith belief that is not willful.
That is what I thought your position was below.
Mr. Coulson: Well, it is.
That is my position.
Mr. Kneedler: But only... in other words, everything goes to the Supreme Court?
Mr. Coulson: Not at all.
Not at all.
This case did not involve Mr. Cheek's contentions that the statutes were unconstitutional, and that's why I am dealing with these hypotheticals the way I am.
He had a good-faith misunderstanding of his duties under the tax statutes in a number of various ways based on all the indoctrination he got.
Mr. Kneedler: Do you concede that those beliefs were not objectively reasonable beliefs?
Mr. Coulson: I do not concede that.
Mr. Kneedler: Did you preserve that issue for review here then, or do we have to take it on the assumption that they were not objectively reasonable beliefs?
Mr. Coulson: --We don't know what objectively reasonable means.
Mr. Kneedler: Well, is that our assumption for deciding the case, and did you preserve that issue otherwise?
Mr. Coulson: --Our position is that there should be no such test as whether the contents of a belief are objectively reasonable or not.
I don't know if I am answering your question.
Mr. Kneedler: Part of your claim is, if you preserved it, that it's objectively reasonable to think that wages are not income?
Mr. Coulson: It would be objectively unreasonable to a lawyer or to a judge.
It might well be, and I contend here it was objectively reasonable to somebody like Mr. Cheek, who was a lay person and who was confused and who was hit with this tax-protester literature and these lectures and these statements from attorneys.
Our point is isn't it an individualized determination of each defendant?
Mr. Kneedler: Well, then, but then what use is the term objectively reasonable, if it is an individualized determination and if it would be... objectively unreasonable for most people, but not objectively unreasonable for your client?
Mr. Coulson: That illustrates the impossibility of dealing with what... the term the Seventh Circuit has defined.
Objectively reasonable, what does it mean?
What is it?
It would differ from case to case.
It would differ from jury to jury.
It would differ from judge to judge.
I'm arguing there should be no such standard as objectively reasonable.
It ought to be a question of whether the jury finds that the defendant sincerely believes... has a sincere misunderstanding of his duties under the tax law.
Mr. Kneedler: Well, what, what standard were you applying when you answered these questions about if the Supreme Court has held that wages are income and he... you say that he couldn't possibly have... have a defense in that respect.
Mr. Coulson: No.
If he knows... if the Government proves he knows that the Supreme Court has held that.
Mr. Kneedler: All right, he knows it, but he says they got it wrong.
They got it wrong, and I sincerely believe that they misread the statute.
Mr. Coulson: I am not suggesting that disagreement with known law can be excused.
Mr. Kneedler: Well, what standard are you applying in saying that?
Mr. Coulson: No.
Mr. Kneedler: Well, what... what is it?
Mr. Coulson: I am... the standard I am applying is the one set out in Murdock.
Did the defendant have a good-faith misunderstanding of his duties under the tax laws?
If the defendant... that does not include disagreement with the law.
It means it's confusion or misunderstanding with his duties under the law that is a defense.
And I am suggesting that that has to be a determination--
Mr. Kneedler: He... he mistakenly thought the Supreme Court had it wrong.
He just made a mistake.
Why isn't that a defense?
Mr. Coulson: --Because... I'm not suggesting that every citizen has the prerogative to decide for himself if he is going to obey what this Court or any other court says.
Mr. Kneedler: Or suppose that the Treasury regulations say wages are income and are taxable, and he says well, I know that, and regulation is supposed to be the law, but the Commissioner just had it wrong.
They... those regulations are just inconsistent with the statute, or with the Constitution.
Mr. Coulson: The first example would present for the jury a fact question.
The jury would decide, is he sincerely confused about the law, and if so how?
How did he come to that confusion, that misunderstanding?
Or is he pretextual, does he know darn well what the law is?
Mr. Kneedler: Counselor, that is just not helpful for this argument.
What we're trying to establish, and I think it's a difficult case, is what instruction the judge should give to the jury.
What is the standard for guilt.
And if you say, oh, that's for the jury, that doesn't help us.
We're asking what the instruction should be.
And it seems to me that based on your case, you have to say that if he sincerely believes that the Supreme Court got it wrong, that is a defense.
I think that's the theory of your case.
And if you say, well, the Supreme Court, then I would ask you about the Seventh Circuit, or I would ask you about a Supreme Court decision which is 5 to 4 and a justice leave the bench, and so forth and so on.
We need to know what standard the judge uses when he instructs, or she instructs the jury.
Mr. Coulson: The judge says to the jury it is a defense to willfulness if the defendant at the time of the alleged offenses had a good-faith misunderstanding of his duties under the tax laws.
It is not a defense if the defendant had... knew of his duties under the tax law, but had a personal or subjective disagreement with them.
That's essentially... part of those instructions were given in this case.
Mr. Kneedler: Mr. Coulson, can I just ask one question?
Is this issue, whether the mistake of law issue, are you contending that it's a failure of proof of part of an element of the Government's affirmative case, or that this is an affirmative defense with respect to what you have the burden of showing that he had an honest misunderstanding?
Mr. Coulson: Obviously the Government has the burden in the first instance of its proving willfulness.
It is in the nature of an affirmative defense, a mistake of law, based on in this case advice of counsel and various other things.
Mr. Kneedler: Your client was an American Airlines pilot, wasn't he?
Mr. Coulson: Yes.
Mr. Kneedler: xxx the Government proved willfulness?
Mr. Coulson: I do not agree that the Government proved willfulness.
Mr. Kneedler: Well, you mean that... why did you need a defense then, other than to say there's a failure of proof?
Mr. Coulson: Well, that was raised at trial when the Government rested.
Of course the motion was overruled under the Seventh Circuit standards, and Mr. Cheek put on a defense.
And his defense was that he had a good-faith misunderstanding of his duties under the tax laws, based on a number of factors.
Based on his cult-like indoctrination he got.
Mr. Kneedler: But again he did not have to put on that defense unless the Government had put in evidence that he knowingly violated a... violated a known duty to obey the law, right?
Mr. Coulson: Right.
Mr. Kneedler: In other words, they had proved--
Mr. Coulson: And they had introduced some evidence.
Mr. Kneedler: --At least prima facie they had proved willfulness.
Mr. Coulson: Right.
And I am not suggesting that Mr. Cheek or any other defendant is necessarily going to prevail in his mistake of law defense.
Obviously I am saying he's entitled to present it to a jury.
It's a fact question for the jury whether he possessed a mistake of law.
It is not, as the Seventh Circuit has held, a legal question, a question in which they are going to launch this preemptive strike.
Mr. Kneedler: But the conclusion of your argument is that he has therefore established an affirmative defense known as mistake of law.
It is not that ergo there is a failure to prove willfulness.
Mr. Coulson: Well, I think that's right.
I think it... and it comes down to a jury question.
The Government has its evidence, they have enough evidence of willfulness to get past a directed verdict.
Mr. Cheek puts on his evidence as mistake of law.
From all these facts and all this mix the jury has to decide, as they do in every case in this country every day, whether he is a sham or whether he is sincerely confused.
Mr. Kneedler: But they are not deciding whether there's willfulness.
They are deciding the separate issue, whether there is an affirmative defense of legal mistake, as I understand you.
Mr. Coulson: The affirmative defense negates willfulness, so the two are related.
Mr. Kneedler: Did he take any position about the withholding tax?
Mr. Coulson: I... not... not per se, Your Honor.
He... he filed withholding statements to have his... to have his wages withheld... the withholding stopped, I am sorry.
Mr. Kneedler: Well, he agreed that withholding was okay.
Mr. Coulson: No, he fought withholding.
He filed a civil suit against withholding.
He filed W-4's claiming he was exempt.
The usual indoctrination that somebody who goes to these meetings of these tax protesters gets.
Mr. Kneedler: Did you submit an instruction to the jury on mistake of law as an affirmative defense?
Mr. Coulson: In this, no.
In this case Mr. Cheek was pro se at the trial level, and essentially Judge Plunkett construct... put all the instructions together for him.
Mr. Kneedler: Well then did Mr. Cheek submit an instruction on mistake of law?
Mr. Coulson: Yes, there was an instruction.
He did and he didn't.
He orally discussed it with Judge Plunkett, and Judge Plunkett drafted it for him because he was pro se.
He didn't have a lawyer at the trial.
Mr. Kneedler: And what was the substance of the instruction?
Mr. Coulson: The substance of the instruction was... was Buckner, which Judge Plunkett felt compelled to give, that a good-faith misunderstanding has to be sincere and objectively reasonable.
The jury was confused.
The jury couldn't agree.
The jury sent out notes what does this mean?
We think he is sincere, what does this mean?
The judge reinstructed him, and then the judge instructed him that, per Buckner, wages of not income is a prohibited belief.
It cannot form the basis for a good-faith defense.
But that was not tendered until after the jury was out, after the jury had had some questions.
And I think it illustrates the difficulty that Judge Plunkett and other district judges have had trying to apply this Buckner-Cheek doctrine.
There are a lot of other problems with Buckner-Cheek.
It was decided in October of '87, it was applied retroactively to Cheek's trial, even though the offenses that Cheek had allegedly committed took place in 1981 to the spring of 1987, before Buckner.
This Buckner-Cheek doctrine, you look at the Buckner and Cheek and the Dunkel case, in the Seventh Circuit it is applied only to tax protesters.
It is not applied to more traditional tax-evasion defendants in the Seventh Circuit.
It has not been applied in any other circuit in this country.
Mr. Kneedler: I don't understand.
How can you avoid applying it to other, you know... how can you avoid applying it across the board to all taxpayers who fail to do it?
Mr. Coulson: I agree completely, and that is a problem with the way the Seventh Circuit has done it.
They have singled out tax protesters.
They have come up with a unique definition of willfulness in the criminal tax statutes and they have applied it only to the people they consider to be tax protesters.
That is unfair.
That is improper.
That is one of our complaints about the Buckner-Cheek doctrine.
Mr. Kneedler: I don't understand what you mean.
You don't mean that they... that they apply their rule only to tax protesters.
You mean that their rule only identifies tax protesters.
Is that what you mean?
Mr. Coulson: The rule is expressly designed to deal with tax protesters, and in fact it has been applied only in tax-protester cases.
And I cite in our brief some Seventh Circuit traditional tax-evasion cases in which the Seventh Circuit applies the subjective standard.
They don't require... a person defends in the Seventh Circuit and says I didn't know that bribes were income or I didn't know that this payment to me, the return of capital, was income.
Issues like that.
The Seventh Circuit does not require that the defendant establish that those ideas are objectively reasonable.
It is only in tax protesters.
Mr. Kneedler: Do you think--
Mr. Coulson: That's another unfairness of this doctrine.
Mr. Kneedler: --But, certainly that point is not raised in your petition for certiorari, the suggestion that the court of appeals for the Seventh Circuit has unfairly applied its law to tax protesters.
Mr. Coulson: Yes, sir, it is.
We even put it in the nature of a First Amendment gloss on the issue in our cert. petition.
A doctrine which is--
Mr. Kneedler: I... I shouldn't have to read back to you the two questions presented in your petition for certiorari.
To me the idea that the Seventh Circuit has deliberately treated tax protesters differently than other tax defendants to whom it is equally applicable is not fairly subsumed in those questions.
The first is
"Is the Seventh Circuit's unique approach, under which petitioner was convicted and jailed because a panel announced that his sincerely held beliefs were unreasonable and therefore impermissible, consistent with the statutes under which petitioner was convicted."
"If so, is the Seventh Circuit's approach consistent with the First, Fifth, and Sixth Amendments?"
Those are complaints about the way the Seventh Circuit decide... decided your client's case.
They don't to me import any suggestion that the Seventh Circuit is not even handed in deciding similarly situated cases.
Mr. Coulson: --No, I think it is fairly subsumed in our issues, because the Buckner-Cheek doctrine expressly, expressly... the Seventh Circuit said we are... have to deal with annoying tax protesters.
That is their term, annoying tax protesters.
Thorns in the side of the Federal judiciary, the Seventh Circuit calls these annoying tax protesters.
Well, I would expect a Federal judiciary has developed a thick enough hide to be able to tolerate these annoying thorns.
All we're asking this Court to do is to have John Cheek treated like any other tax-evasion defendant in the Seventh Circuit, like any other tax-evasion defendant anywhere else in the country.
And that is if he can establish his bona fides to a jury, if he can show the jury that he was... had a sincere and good-faith misunderstanding of his duties under the tax law, he has negated willfulness and he is entitled to be acquitted.
And to be sure, the Government is going to collect its taxes.
They are going to collect civil penalties, and so forth.
But they should not be able to convict him of a criminal offense unless they show he acted willfully.
And under this Court's rulings he did not act wilfully if he had a good-faith misunderstanding of his duty.
And we're... all we are asking is tha he permitted to have a jury make that judgment.
And there is nothing more fundamental, I think, in our criminal justice system than the notion that the issue of criminal intent is one for the jury.
It's not one for the Seventh Circuit, it is not one that ignores in all situations the genesis of a defendant's claimed misunderstanding.
Cheek went to seminars.
He had lawyers tell him this stuff.
He did not act with criminal intent, and he never got the opportunity because of Buckner-Cheek to have a jury pass on it.
That's really all we are asking.
And I think that the Government's position would represent a radical departure from subtle law going back though Murdock, going back through Bishop, the cases we cite in our brief.
But I think to disrupt, to unsettle the law on such a fundamental element as the need for a jury to pass on criminal intent simply because of the occasional John Cheeks of the world is... is unfair and it is unwise on the part of the Government.
The Government does not need to win this case.
They don't need it to enforce the tax laws.
They don't need it in the other circuits.
And this Court should not, on this kind of a showing by the Government, depart from 57 years of settled law under the criminal justice system.
I would like to reserve the remaining time for rebuttal.
Mr. Kneedler: Very well, Mr. Coulson.
ORAL ARGUMENT OF EDWIN S. KNEEDLER ON BEHALF OF THE RESPONDENT
Mr. Kneedler: Thank you, Mr. Chief Justice, and may it please the Court:
The obvious purpose of the criminal tax statutes, as this Court recognized in the Spies case, is to induce the prompt fulfillment of every duty under the tax laws.
At the same time the Court has understood Congress not to want to punish what it termed innocent errors made despite the exercise of reasonable care in trying to comply with the complex tax code, those provisions that are complex.
And this Court has construed that criminal tax statute in a line of cases that seek to give effect to both of those purposes, in particular as the Court stated in Bishop, and I quote,
"It has construed the term willfully in a way that implements the intent of Congress to construct penalties that separate the purposeful tax violator on the one hand from the well-meaning but easily confused mass of taxpayers on the other."
In this case petitioner Cheek is far removed from the category of innocent but well meaning class of categories, those seeking to comply with the sometimes complex provisions of the Internal Revenue Code.
He didn't commit innocent errors in... in connection with such complex provisions.
Despite his awareness of the basic requirements of the code, he declined, refused to comply with the most basic and universally applicable provisions of the code.
He declined to file tax returns, and he declined to--
Mr. Kneedler: Well, the Seventh Circuit though said it didn't make any difference whether his actions were innocent if they were not objectively reasonable.
So to argue here that they weren't even innocent, I don't think is very acceptable.
Mr. Kneedler: --No, but the point I am making, sir... Chief Justice, is the fact that the most basic obligations in the tax code that are at issue here, the duty to file a return and the duty to acknowledge that wages are taxable income, a belief that a person doesn't have to comply with those provisions is not objectively reasonable.
The Seventh Circuit was addressing a category of... of assertions in this case--
Mr. Kneedler: But you made the statement that he was not innocent, which to me means that he did not sincerely believe this.
And of course the jury was never given an opportunity--
Mr. Kneedler: --I was using the word innocent in a... in a different way, of somebody who is--
Mr. Kneedler: --Who is unreasonable is not innocent.
Mr. Kneedler: --Pardon me, I'm sorry.
Mr. Kneedler: Somebody who is unreasonable is not innocent.
Our jails will be full, Mr. Kneedler.
Mr. Kneedler: No.
What is required in this case, it's our position that, generally as the Court said in Bishop and Pomponio, that the Government must prove an intentional violation of a known legal duty, which is the gloss that the Court has put on the word willfully under the tax statutes.
A known legal duty requires awareness of the duty.
Here there's no question that Mr. Cheek was aware of his duty under the tax laws to file a return.
Mr. Kneedler: But the gloss... the gloss we put on it in Murdock is that quote, "an evil motive"... and evil motive...
"is a constituent element of the crime."
Mr. Kneedler: Well, subsequently though, Justice Scalia, in Pomponio the Court described what it meant by the phrase evil motive in prior cases.
What it meant... what it said was we meant by that nothing more than intentional violation of a known legal duty.
And that was the precise question presented on Pomponio.
Mr. Kneedler: Well, here he says he was somehow fooled into believing that his conduct was lawful.
Mr. Kneedler: --Well, I think--
Mr. Kneedler: And I guess we have to take the case on that assumption.
Mr. Kneedler: --I think for purposes of analyzing the legal question, perhaps that is true.
I would like to say, though, that the tax seminars and what not that he says he attended were in 1980.
From then on his submissions to the IRS and his legal arguments about the Sixteenth Amendment and other legal objections to the tax system appear... for all that appears to be self-generated and--
Mr. Kneedler: Well, but that's... that's for the jury.
We are talking about the instruction.
Mr. Kneedler: --I understand, I understand.
Mr. Kneedler: Is the problem here with the term known legal duty?
Is that where we're having difficulty?
Mr. Kneedler: Well, it's... it's... it's one place in the case that I think it's useful, productive to focus upon.
Known... the term knowledge as used in this Court's decision in Bailey and as the model penal code describes the word knowledge, it uses that in terms of awareness, cognition.
Is the actor aware of the attendant circumstances, where the attendant circumstances that have to be shown are the state of the law, where, in this case the Internal Revenue Code requirements, awareness of what the Internal Revenue Code requires is an element of the offense.
But once he is aware of what the law requires, but disagrees with, as I think it's only fair to say Mr. Cheek does in this case, disagrees with the code either because he thinks it is unconstitutional or because the IRS' construction of it is wrong, or--
Mr. Kneedler: I didn't understand that, Mr. Kneedler.
I understand he disagreed with whether the code... his position was that the code did not require it, despite what the courts had said, despite what the regulations said.
He didn't think the code required that.
I thought that was what the facts of this case are.
Mr. Kneedler: --Well, most of his arguments in this case are constitutionally based, that the Sixteenth Amendment was not properly ratified, or that... that this tax is a direct tax that has to be apportioned among the states, which is just simply wrong under Pollock--
Mr. Kneedler: He's abandoning that, as I understood the argument.
Illogically, perhaps, but the assertion is not being made that if he thinks the statute is unconstitutional he has a defense.
Mr. Kneedler: --I understood him to be abandoning that as well, although I would like to point out that... that even the courts that have adopted the purely subject standard for claims to a belief that income... that a certain duty under the code is not required, it's purely subjective.
Those courts have all said that a belief that the statute is unconstitutional is not a defense.
And there is a statutory basis for that, because both 7201 and 7203 refer to evading titles imposed by this title, or failing to perform a duty required by this title, which suggests all you look to is the title... is the statute, rather than whether the Constitution might trump the statute.
Mr. Kneedler: Mr. Kneedler, the Murdock case though, the defense was based on a Constitution... belief that the Constitution did not require him to incriminate himself.
Mr. Kneedler: Right, but it was not... it was not a claim that the statute was unconstitutional.
What he was claiming was a constitutional privilege from having to furnish the information.
It was not a claim that Congress did not have the authority to enact such a statute in the first place.
Mr. Kneedler: Why should that make a difference?
Mr. Kneedler: Well, I think it's... first of all, I think when... when that involves someone who was summoned to furnish information to the IRS, I think it's fair to attribute to Congress an intent to comply with the Fifth Amendment when a person is requested for information.
And so whether a person has a duty... a duty to comply in those circumstances, I think there isn't a clash between the Fifth Amendment and the statute.
The way you are claiming that the statute itself is unconstitutional in the sense that Congress didn't even have authority to enact it in the first place, I think that's... I think that's quite a different sort of claim.
Mr. Kneedler: Even if it were a closely debated and open question on which scholars disagreed as to the constitutional issue?
Mr. Kneedler: Yes, because I think we would be reduced to chaos if... if individual citizens could take it upon themselves to make, as one court of appeals put in response to this very argument, to make individualized determinations of constitutionality.
There is a presumption of constitutionality.
Mr. Kneedler: Congress could avoid being reduced to chaos by removing the willfully requirement.
Mr. Kneedler: It... it could, but I think there is no reason to think that Congress intended to encourage disobedience of the statutes it enacted by claims that those statutes are... are unconstitutional.
Mr. Kneedler: Or the courts could change their interpretation of willfulness.
The courts are the ones that put this spin on willfulness in the tax cases.
Mr. Kneedler: Well, this Court... this Court in particular in Murdock and in subsequent cases.
And in Murdock the Court says the, said that the word willfully has to be construed in light of its context in the tax code and the purposes of the tax code.
Mr. Kneedler: Well, and you... and you say that there is a special rule about willfulness in tax cases.
You accept that.
Mr. Kneedler: Yes, but... but--
Mr. Kneedler: And all it... and that he must... he's entitled to have a mistake of law.
Mr. Kneedler: --Yes, we do acknowledge the existence of a certain implied defense of mistake of law.
Mr. Kneedler: So he must know what his legal duty is.
Mr. Kneedler: We... it must be shown that he was aware of his legal duty, a known legal duty in that sense.
Mr. Kneedler: Aware of his legal duty.
And if says I am not aware of it, and the jury believes him, he's off.
Mr. Kneedler: Right.
That is correct.
But I think--
Mr. Kneedler: Is he aware of the legal duty if he disagrees with the Government's interpretation of the legal duty?
Mr. Kneedler: --Yes, I think that he is.
He's aware in the sense that is relevant for purposes of the criminal law.
The criminal law is--
Mr. Kneedler: So all he has to know is that the IRS takes a position different than he does?
Mr. Kneedler: --For purposes of triggering the awareness of the requirements of the law, yes.
Now that is where the defense of objective... objectively reasonable belief in the validity of his legal position kicks in.
Of course, if the court... if the court agrees with his position on the merits that wages aren't income, then you don't need the willfulness standard.
He simply hasn't committed a violation of the act.
But... but... so we are assuming that his view of the law is incorrect.
Mr. Kneedler: He hasn't preserved that question, has he, whether wages are income?
Mr. Kneedler: No.
Mr. Kneedler: We don't have to wrestle with that one, do we?
Mr. Kneedler: No, although, Justice Scalia, we would be delighted with a statement by this Court that would put to rest once and for all the proposition that wages are not income.
It may seem amusing here, but it is... it is a problem with an assertion like this being made in cases in this day and age.
IRS informs me that 116 million tax returns were filed last year with W-2's attached to them, meaning that those were tax forms filed by wage earners.
People know in this country that wages are income, and the idea that a defense like this should be presented to the jury, I think I would do nothing but promote disrespect for the tax laws, when what the court should be doing in construing willfully is promoting the duty to comply with the tax laws.
Mr. Kneedler: Mr. Kneedler, can I take your... I understand your argument why... a constitutional concern.
We understand what the statute requires.
Supposing a taxpayer honestly advised by counsel believes that a regulation does not comply with the Internal Revenue Code, but he knows very well what the regulation requires.
Criminal or not?
Mr. Kneedler: I think your point... your question raises two points.
One is advised by counsel.
There is... there--
Mr. Kneedler: It's a sincere belief.
Mr. Kneedler: --Here I should put out... point out petitioner did not--
Mr. Kneedler: Well, let's leave out--
Mr. Kneedler: --he's not claiming he was advised... it's not the classic advice of counsel defense, is the only point that I am making.
Mr. Kneedler: --All right, okay.
I just mean a sincere belief that a regulation is not authorized by the statute.
Mr. Kneedler: Right.
As long as that is a reasonable belief, a plausible belief, and I think there should be considerable latitude for a court to recognize arguments such as that.
But on the other hand if this--
Mr. Kneedler: It is a defense if it's a plausible belief?
Mr. Kneedler: --If... if he has... he is aware of the regulation, we... we therefore have shown the knowledge--
Mr. Kneedler: Why is that different from a plausible belief that a statute is unconstitutional?
Mr. Kneedler: --Because the statute is written terms... in terms of, for example, in terms of filing returns.
It refers to returns that are required by this statute, or regulations under it, in fact.
So the regulations reflect IRS' interpretation of the statute.
Mr. Kneedler: But Mr. Kneedler, is it plausible on a subjective basis or plausible on an objective basis?
I mean, that is the question.
You say plausible--
Mr. Kneedler: It has to be plausible on an objective basis.
I mean, there is a threshold--
Mr. Kneedler: --Well, suppose... suppose there's... suppose there's a baggage worker or a janitor, not a pilot, but he is working for American Airlines.
And some one of his coworkers announced, remember now that wages aren't income, this is a new theory.
And he really believes that.
And he is just as wrong as he can be, but he believes it.
Mr. Kneedler: --Well, there may all... I mean, there is always the possibility that he will show... that he would be able to show a lack of knowledge.
Mr. Kneedler: What is the instruction, Mr. Kneedler?
Mr. Kneedler: The instruction is that we have to show that there was a violation of a known legal duty.
He had to know that the Internal Revenue Code required him to file a tax return, and that wages are income under the Internal Revenue Code as construed.
Mr. Kneedler: He knows that it's in the code, but he has been told that the code section's invalid.
And he really believes it and he is really dumb.
Mr. Kneedler: Then, no matter who it is, this is a ruling... this is a determination that that is not an acceptable basis for declining to comply with the tax code.
Because the rule we're proposing is not that... doesn't turn on somebody's ability to do legal research on the question.
It is simply that as a matter of judgment... and what is a reasonable legal argument is quintessentially a legal determination, that that's simply... that's simply frivolous.
And in fact Mr. Cheek's lawyer was, or Mr. Cheek was assessed penalties in his civil case for making that precise argument in the courts.
Mr. Kneedler: You agree that he has to know more than what the regulations, the tax code regulations say?
Mr. Kneedler: No.
The affirmative case that we must show is that it was a known legal duty in the sense that he had to be aware that he was required by law--
Mr. Kneedler: All right, he... he knows it, but he can still get off.
Mr. Kneedler: --The affirmative defense then kicks in.
It is available to him, not in... not in the hypothetical Justice Kennedy posited of the... the janitor believing that wages aren't income.
We are saying that is not objectively reasonable across the board.
That is not individually--
Mr. Kneedler: All right, the... suppose the regulation that he thinks is not consistent with the statute has been upheld as being consistent by the Supreme Court?
Mr. Kneedler: --Then in that situation I think it would... it would not be objectively reasonable to challenge the regulation.
At some point taxpayers have to recognize that their disagreements with the IRS have become settled by this Court, or once again we would be encouraging disrespect not only for the Internal Revenue Code, but for... but for the judicial process.
I would like to get back to a question Justice Scalia mentioned earlier, that Mr. Cheek has conceded that constitutional objections to the Internal Revenue Code are not... are not a sufficient basis for defense, but he had other objections.
In fact his only other objection, as I understand it, was the claim that wages are not income.
If you look at his testimony in this case, and as this argument has been presented in other cases, that is... that has also been presented as a constitutional argument, that wages involve an equal exchange of labor for compensation.
There is no gain or profit, therefore it can't be taxed.
It's in effect a tax of his property, which is a direct tax which can't be taxed under the Sixteenth Amendment.
So even that argument, as it has traditionally been interpreted, or traditionally... traditionally been presented and as it has been presented by Mr. Cheek in this case, is at bottom a constitutional objection and falls in that same category.
But there is another point I would like to make about that.
Petitioner does not suggest that that argument is grounded in anything in the Internal Revenue Code.
The other aspects of his testimony in this case were based on his... on a set of beliefs that were not grounded in the Internal Revenue Code.
He referred to his... to his wages as property over which he had inalienable rights, citing and furnishing the IRS the Declaration of Independence.
He had economic theories about equal exchanges of his labor for income.
Those may be theories, those may be abstract beliefs, but they are not the sort of beliefs, as this Court made perfectly clear in Reynolds and--
Mr. Kneedler: So I take it you do accept the Seventh Circuit saying that there has to be more than knowledge of, say, the provision of a regulation?
Mr. Kneedler: --That's all we have to show.
The defendant then may come in--
Mr. Kneedler: I know.
I know, but the Seventh Circuit would say that if it's objectively reasonable to believe that the regulation is invalid, he gets off.
Mr. Kneedler: --Yes.
Mr. Kneedler: You accept that?
Mr. Kneedler: We accept... we accept the mistake of law defense to that extent.
But I think the Chief Justice made an important point very early in the argument, and that is that as a general matter in the criminal law, mistake of law is not even a defense at all.
So we are operating in a context in which we are all... there is already an exception to the general principle under the criminal law that mistake of law is not a defense.
Mr. Kneedler: But an exception that wasn't invented by the Internal Revenue Service.
Mr. Kneedler: It wasn't invented... it wasn't invented in so many words by Congress either.
It was... it came from this Court... from this Court's--
Mr. Kneedler: Invented by this Court in Murdock.
Mr. Kneedler: --Right, attempting to... but, by the same... but I think that that points out why this Court should hold that defense within reasonable limits.
Mr. Kneedler: Well, it's a defense that makes a whole lot of sense, Mr. Kneedler.
Let's not deprecate it.
I take it that the reason we treat the tax laws differently is that everybody probably makes some mistake or other with respect to the complexities of the tax laws now and then.
And if the only defense against going to jail for those mistakes is... is throwing yourself on prosecutorial discretion, we are all in the hands of Federal prosecutors who can choose to pursue us or not to pursue us as suits their convenience.
Mr. Kneedler: --Right, and I did not mean... I am sorry if I was suggesting I was denigrating.
All I was saying is that it needs the objective reasonableness limitation--
Mr. Kneedler: Yes, but you would still be treating tax cases specially if you said you have to show that he knew what the law was.
Mr. Kneedler: --Right.
But that is... that is an interpretation this Court put on the word willfully.
Mr. Kneedler: But you don't need to... you don't need to have the objectively reasonable business at all--
Mr. Kneedler: No.
Mr. Kneedler: --in order to treat the tax cases specially.
Mr. Kneedler: That is correct, but we do recognize that Murdock did... did recognize it in a little bit broader breadth for defense of mistake of law there.
It was quite... it was clear that there was no valid Fifth Amendment claim at the time that Murdock declined to furnish the information.
But... but because that was--
Mr. Kneedler: In any event, you accept the Seventh Circuit's objectively reasonable--
Mr. Kneedler: --We do, yes.
Mr. Kneedler: --and that the mistake of law defense is that broad.
Mr. Kneedler: That is right.
But we think that the limitation the Seventh Circuit has put on it in terms of the objectively reasonable limitation is a critical limitation, because it would--
Mr. Kneedler: And how is the person who may be retarded or otherwise lacking in understanding to be protected here?
Mr. Kneedler: --By... by the requirement of knowledge.
He has to, we have to show in order to sustain a conviction as part of our affirmative case that he was aware of the legal duty imposed by the code.
And if he relies on a defense that... or an interpretation of the code, notwithstanding his knowledge, that is objectively reasonable, he, like anyone else, would benefit from that.
Mr. Kneedler: Mr. Kneedler, you keep reciting that phrase and I have the same trouble that Justice Kennedy does with it, that he has to have knowledge of the legal duty imposed by the code.
But, I mean, that is circular.
He is always contending that there is no legal duty under the... under the code.
What do you mean by he has knowledge of the legal duty?
What precisely do you mean by it?
He is always saying I think the code doesn't impose a legal duty.
Mr. Kneedler: Well, in fact what he is saying in this case is what comes down to a natural law objection.
In my view of what wages are, they aren't... there's no gain or profit.
Mr. Kneedler: I'm not talking about this case.
I'm talking about somebody who reads the regulation and says that regulation, I don't think that's an accurate interpretation of the code.
Mr. Kneedler: Well, if he has an argument--
Mr. Kneedler: So he has no knowledge of the duty imposed by the code then, right?
Mr. Kneedler: --I suppose one could look at it that way, but I think... but he certainly has a duty of what the law says, the law being the statute and the regulations that the Commissioner is authorized... or the Secretary is authorized to promulgate.
That... that's the classic place that people look for what the law is when they are trying to comport their behavior to the requirements of the law.
They look to the law, the statute, and the regulations issued by the agency.
Mr. Kneedler: So all he has to know is the regulation.
He has to know the existence of the regulation, and that... that's your answer to Justice O'Connor of how the mentally retarded person is to be--
Mr. Kneedler: I don't think he has to know the... I don't think he has to know the... he doesn't have to know the text of the statute.
I think he has to know the legal duty.
If we can show that, if we... which is the phrase from Pomponio,--
Mr. Kneedler: --Well, you're saying again he has to know the legal duty.
What is legal duty?
Mr. Kneedler: --Legal duty traces from the statute.
If the statute says, as this one does, you shall file a tax return if you have income above a certain amount, and you know of that legal requirement, then you have to... then you have to file it.
And if the IRS has given content to that statutory requirement in regulations, and you disagree with that interpretation of the statute by IRS, and if your disagreement is objectively reasonable then you haven't committed a willful offense.
But I think it's important for... when a person is claiming a mistake of law defense, that defense has to be grounded in the statute that he is challenging.
He has to be able to say, using traditional legal tools, no, income doesn't include wages.
He has to... it has to be grounded in the act that he is claiming to have been mistaken about.
Nothing in this case remotely approached that.
In fact, when you look at the definition of gross income under the Internal Revenue Code it refers to income from whatever source derived, specifically including in the first itemization compensation for services.
It strikes me as a--
Mr. Kneedler: Mr. Kneedler, do you also go along with the Seventh Circuit that there is a laundry list of per se nonobjectively reasonable items?
Mr. Kneedler: --We... we do agree that the arguments that have been, that--
Mr. Kneedler: Which should never have to go to the jury.
Mr. Kneedler: --That... that's correct.
Now again, most of those are constitutional arguments, which Mr. Cheek concedes are not a valid defense.
And the argument that wages aren't income, again, I think that, given the virtually universal compliance by taxpayers in this country with the requirement to file tax returns on the understanding that wages are income, that is not an objectively reasonable belief in the matter of--
Mr. Kneedler: But Mr. Kneedler, the question whether a particular claim is objectionably reasonable or not then becomes a question of law if the court can specify a list.
It and should not be submitted to the jury, should it?
Mr. Kneedler: --Well, our... our principal submission is that it is a question of law, like the question of materiality in a false statement case.
Mr. Kneedler: Would it not have been correct then for the district court to in effect instruct the jury to reject this defense, because it was based on objectionably... items on the laundry list.
He says those are not a defense; just tell the jury that.
Mr. Kneedler: Yes, absolutely.
And the jury... the judge did in this case.
Mr. Kneedler: Say you had a closer case, maybe not wage or not income, would the... should the judge decide and tell the jury whether a particular claim is objectionably reasonable or not, or let the jury decide this semi-legal question?
Mr. Kneedler: Well, I think one approach would be for the judge to say it's objectively reasonable, and then not even instruct the jury on the question.
And I think if you look at Murdock, that is exactly the procedural approach the Court--
Mr. Kneedler: The Court decided it there.
Mr. Kneedler: --The Court decided it.
What the Court said is because the law was uncertain at the time that he declined to furnish the information, it was improper for the judge to in effect instruct the jury that Murdock's belief was so unreasonable and ill founded... the words the court used... to amount to willfulness.
But the clear implication, the other side of what the court was saying, is if the... if that question had been settled, as it subsequently was by this Court, if that question had been settled by this Court at the time that Murdock acted, then the district court should not have submitted that to the jury at all.
Mr. Kneedler: Well, maybe the solution to this problem is never to instruct the jury on an... to make an objectively reasonable determination, but have the judge decide whether or not the defense is sufficient or not, assuming that--
Mr. Kneedler: I think that would be... that would be one appropriate approach.
And as I say, that has a lot of support in Murdock.
That is I think what the Court contemplated.
Mr. Kneedler: --Mr. Kneedler, the problem with that and the problem with having a laundry list, as the Seventh Circuit does, is that the statute, it seems to me, and using the term willfully clearly... clearly requires an individuated determination.
If someone visits the Supreme Court and a Supreme Court justice tells him I assure you, my boy, wages are not income, is... is his reasonableness in believing that wages are not income no different from the reasonableness of someone who just... just hears it from somebody on the street?
Mr. Kneedler: The individualized determination, Justice Scalia, comes in the knowing requirement.
Once again I would like to stress we have to show intentional violation of a known legal duty, and the person--
Mr. Kneedler: I don't understand your known legal duty.
The more you explain it, the less I understand it.
I do understand, however, that you're... that you are trying to decide reasonableness on an across-the-board basis.
It's reasonable for everybody, it is unreasonable for everybody in the world to believe X.
And I am not sure that's true, and I think the statute does require an individuated determination.
Mr. Kneedler: --Our second position in the case is that there may be cases in which it would be proper to submit to the jury, but these beliefs in this case are unreasonable... unreasonable as a matter of law or unavailable as a matter of law.
Mr. Kneedler: You certainly didn't object to the business of unreasonable belief going to the jury in this case.
Mr. Kneedler: That... that's correct, so the Court doesn't have to decide that.
It doesn't have to decide that question here.
Mr. Kneedler: But you would have said that the issue didn't need to go to the jury at all, is that it?
Mr. Kneedler: I think... I think Murdock would support that approach, but because--
Mr. Kneedler: The judge in effect took it away from the jury, didn't he?
Mr. Kneedler: --Took several of the beliefs away from the jury.
Took away... took away the argument that the belief that the tax code is unconstitutional--
Mr. Kneedler: Only after the jury asked some questions.
Mr. Kneedler: --Pardon me?
Mr. Kneedler: Only when the jury asked some questions.
Only when the jury understood the thing.
Mr. Kneedler: Right.
I think the Chief Justice has put his finger on it.
I think that there was a tension between the court's principal instructions and the court's attempt to explain Mr. Chief's theory of the defense, even though his theory was not... was not a valid one.
Mr. Kneedler: Well, that is because this jury insisted on getting a clear explanation of what a known legal duty is.
And that's what we're trying to do.
Mr. Kneedler: Well, again, I think the court gave a clear answer, and we think that this Court should give a clear answer.
And that is that at least the particular beliefs that Mr. Cheek was offering here are not objectively reasonable as a matter of law, either on the theory that this is always a question for the judge, which was properly exercised here, in effect, or that at least in this case these beliefs were unreasonable as a matter of law.
I would like to go back again though to stress that this Court has taken upon... has had to take upon itself the construction of the term willfully in a way that furthers the policies of the tax statutes.
And we think that a requirement that a jury acquit a defendant as long as it believes... as long as he convinces them that he subjectively believed in his cause, even if that cause has no support in the Internal Revenue Code, that that would promote disrespect for the law, not, just among the particular category of people who are sometimes categorized as tax protesters, but the rest of us who are taxpayers.
Mr. Kneedler: Well, I guess there's a whole range of civil penalties.
We're dealing here with a criminal statute, not the civil recovery provisions and the civil penalties and so forth.
Mr. Kneedler: Right, there are civil penalties, but here we had somebody... and this case really... really shows what, the mischief of the contrary rule.
Somebody who has had four cases thrown out of court, making these arguments that they are frivolous.
Somebody who has been written by the Internal Revenue Code... written to by the Internal... IRS, telling him that he has to file tax returns.
Somebody who filed tax returns for 10 years, and he is entitled to go to the jury and say I believed I didn't have to.
That's not the way our tax system operates.
Citizens in this country understand their legal duties under the tax code.
And at least focusing on the particular objections to the tax code here, we think it is proper for the Court to say that this defense is unavailable.
A contrary rule would come into tension with Reynolds and Oregon Department of Employment Securities.
Mr. Kneedler: I seems to me, if you say you have to prove that he knew what his legal duty was, and yet you can say he has a sincere belief that there is no such duty, how can he possibly know it?
I think you probably really now say, well, he really knew it, even if he has a belief that he doesn't have a duty.
Mr. Kneedler: There is a difference between knowledge and belief.
It's highlighted... it's highlighted by the example of where this Court has ruled on the precise question.
He certainly knows what the law is as interpreted by this Court.
He simply doesn't believe it.
Well, belief in the way... in that sense is not a belief coming from trying to comply with the law.
It's a belief... it's a subjective abstract belief about what the law ought to be.
And that defense, we submit, under the tax code is not available.
Mr. Kneedler: You... you define law to be not just what this Court has said, but also whatever is set forth in the regulation.
Mr. Kneedler: Well, law--
Mr. Kneedler: If he reads that he knows what the law is, you tell us.
Mr. Kneedler: --No, law in the first instance is what Congress says it is.
We are not suggesting that this Court has to have ruled before somebody has to comply with the tax code.
It is what... the law that Congress enacted.
Mr. Kneedler: Thank you, Mr. Kneedler.
Mr. Coulson, do you have rebuttal?
You have 3 minutes.
REBUTTAL ARGUMENT OF WILLIAM R. COULSON ON BEHALF OF THE PETITIONER
Mr. Coulson: Your Honor, the Government is taking the position that no one who possesses the belief that wages are not income can ever be not guilty.
They are taking the position that it doesn't matter whether a lawyer tells you that, as happened in John Cheek's case, or an accountant tells you that.
It wouldn't matter, because the Government says the content of that belief is on this forbidden list.
Mr. Kneedler: I suppose the Government... wanted to add... provided you know the Government is going to disagree with you and enforce its laws and prosecute you.
Mr. Coulson: John Cheek had lawyers tell him that under the Internal Revenue Code wages were not income.
Did he know his legal duty?
Don't we want to encourage people to seek advice from lawyers and accountants on the tax laws?
Mr. Kneedler: Not from those lawyers.
Not from those lawyers.
Well, I guess he had taken the issue to court in civil litigation and been told, hadn't he?
Mr. Coulson: The Government, I think, exaggerates the significance of that evidence.
In any event, it is my position that that is a question for the jury.
The jury is entitled to all of this information on what Cheek did and didn't do, and what he was told, and what he really understood and what he claimed he understood.
That is an individualized jury determination which the Government seeks to take from the jury in this case and in all other cases, because Cheek's particular belief or misunderstanding is on this forbidden list.
That makes no sense.
If the Government is as confident, as Mr. Kneedler seems to be here, that Cheek is clearly guilty, he is clearly a sham, then why don't, why are they afraid to let a jury decide under the Murdock instruction?
Why do they need the helping hand of Buckner-Cheek, which says the jury has to find that it's objectively reasonable.
And under Buckner-Cheek that is a jury determination unless it is on the forbidden list.
It makes no sense in jurisprudence.
I am not abandoning this... I don't like the word abandon.
I don't feel that I am abandoning the argument on its unconstitutionality.
I don't think it is an issue in Mr. Cheek's case.
He had all these crazy beliefs, wages are not income, the income tax is voluntary.
To be sure, wrong beliefs.
I am not here to defend those beliefs on the merits, but those are statutory beliefs.
And he was told that that was the state of the law by attorneys at seminars, and he obviously is not a sophisticated man.
And note, this Court and the Government cannot say that a person in Mr. Cheek's position as a matter of law could not have been mistaken.
Yet that's the position the Government is urging.
All we are asking is that Mr. Cheek be permitted to present that to a jury.
If the jury thinks he is a phoney they will convict him.
If they think he is sincere they should acquit him.
And the Government can get its penalties and fines--
Mr. Kneedler: Which they are likely to think.
I mean, they're more likely to think he is a phony if it's an unreasonable belief.
I mean, you say, oh, come on, nobody--
Mr. Coulson: --Right.
It's a factor the jury can consider, in addition to all the other factors, the genesis and so forth.
A defendant like Cheek--
Chief Justice Rehnquist: Thank you, Mr. Coulson.
The case is submitted.
Argument of Justice White
Mr. Kneedler: The other case is Cheek against United States.
Here, we vacate the decision of the Court of Appeals for the Seventh Circuit and remand the case for further consideration.
Justice Scalia has filed an opinion concurring in the judgment.
Justice Blackmun, joined by Justice Marshall, dissents.
Justice Souter took no part in the consideration or decision of the case.