WASHINGTON -- A divided Supreme Court ruled yesterday that a taxpayer who believes sincerely that a federal tax was not due cannot be convicted as a criminal for failing to pay it, even if that belief was plainly wrong or irrational.
A taxpayer's ignorance of the law, if a jury believes it was genuine, deprives federal prosecutors of a chance to prove that a tax was evaded "willfully," the court declared by a 6-2 vote. Evidence of willfulness is a necessary part of a criminal tax-evasion charge.
The court's decision dealt solely with the use of such a charge and the right of taxpayers to rely upon a claim of ignorance to persuade a jury not to convict them of a crime.
Nothing in the ruling frees any taxpayer, however ignorant of the tax laws, from paying taxes that the Internal Revenue Service insists are due, or from facing civil penalties for failing to pay taxes due. Even if a taxpayer makes an honest mistake, out of ignorance, taxes due still must be paid -- unless the taxpayer sues for a refund and wins.
The ruling was a defeat for the IRS because the court rejected its view of the criminal law, but the decision set no precedent that would allow taxpayers to try to get excused from paying taxes, as a general rule, because of ignorance.
For federal prosecutors pursuing criminal tax cases, the ruling does not mean they must forgo a charge against a taxpayer whose claim of ignorance they don't believe. In court, however, they would have to try to convince the jury that the taxpayer was faking the ignorance. The court said prosecutors may try to show that the taxpayer actually did know what the law required.
No data were available last night to show how many federal criminal cases might be affected by the decision, or how many taxpayers try to defend themselves by pleading ignorance.
The IRS, backed by the Justice Department, had argued in the case that ignorance should not be allowed as a defense in a criminal tax case unless the taxpayer could show to the jury that the belief that no tax was due was a "reasonable" conclusion that any taxpayer might draw. The court said the sincerity of an individual taxpayer's belief that no tax was due was all that counted in a criminal case. Two justices dissented from that part of the decision.
The court noted that, for nearly 60 years, Congress has tried to soften the impact on taxpayers of the old rule that ignorance is no excuse for breaking the law.
Congress has done that, the court said, because the tax law is so complex that the average citizen may not understand it fully. Thus, Congress has made it a crime to evade taxes only if that is done "willfully."
Yesterday's ruling was a major decision clarifying what "willful" means.
In a separate part of the new decision, which produced only one dissenting vote, the court said that a taxpayer could not try to fend off a criminal tax-evasion charge by claiming that the tax laws are unconstitutional.
A taxpayer who insists that a particular tax provision is invalid, the court said, is not ignorant of the tax law but probably knows it full well and is simply trying to avoid taxes by getting them struck down. That kind of taxpayer could be found to have "willfully" evaded taxes, and thus committed a crime, the court made clear.
The ruling came in the case of Cheek vs. U.S. (No. 89-658), involving a Chicago taxpayer who insisted he did not think that the tax laws applied to him or that his wages were taxable income. He now will get a chance to prove that at a new criminal trial.
In a second significant decision yesterday, the court ruled unanimously that prison inmates who testify in federal court in someone else's trial are entitled -- like every other witness -- to be paid the $30-a-day witness fee.
Even if inmates do not lose any wages or salary when they go to court as witnesses, the law makes no exception for their right to jury fees in federal trials, the court said
* John L. Cheek, an American Airlines pilot from Chicago who has been fighting the Internal Revenue Service over his taxes for the past 11 years, won his first significant victory yesterday -- in the Supreme Court.
The court wiped out his conviction of criminal tax evasion, and with it a prison sentence of one year and a day, plus a payment of $3,576.66 for the costs of prosecuting him. Mr. Cheek was given a chance to prove, at a new trial, that he was sincere in his belief that the federal tax laws did not apply to him and that his wages were not taxable income.
A jury had convicted him of intentionally evading taxes over a seven-year span. The judge had told the jurors that they could reject Mr. Cheek's claim that he did not know what the tax laws required if they did not consider his claim "reasonable." All he needs to prove, the Supreme Court said, is that his beliefs were sincere.
* Another man winning a big victory in court yesterday was a prison inmate in Colorado, Richard E. Demarest, who now stands to get $300 in fees as a court witness -- more than seven times what he now makes every month as a clerk in prison.
Demarest was summoned to appear in federal court as a witness in another man's federal trial in Denver. When he finished his duty on the stand, he asked to be paid the usual $30-a-day witness fee for each day on the stand and each day he was awaiting that appearance. He was turned down.
Yesterday, the Supreme Court said he is due the fees, as any other witness would be.
'Washington Bureau of The Sun