United States v. Barbara Coney, 689 F.3d 365

Government sued to reduce to judgment the Coneys’ 1996–2001 tax liabilities; district court granted summary judgment for Government for $2,687,408.59.
Coneys filed joint returns for the relevant years but did not fully pay the tax due; Curtis and Barbara reported substantial income from CLS, with funds used for non-deductible cash transactions and kickbacks.
CLS engaged in a high-volume cash operation; Curtis directed structuring of cash withdrawals to avoid currency transaction reporting; police and IRS investigations ensued.
Curtis and Barbara pleaded guilty to structuring and obstruction offenses; at trial they admitted directing runners and structuring transactions to evade reporting.
Barbara’s bankruptcy relief under Chapter 7 discharged pre-petition debts; Government sought to except the tax debts from discharge under 11 U.S.C. § 523(a)(1)(C); Curtis died, Barbara substituted as executrix.
District court held the Coneys’ 1996–2001 tax liabilities were excepted from discharge; Government then sought post-judgment relief, including interest, which was awarded.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether willfulness in § 523(a)(1)(C) includes acts to evade payment or collection	Coneys argued conduct must target tax assessment only	Coneys argued no conduct evading payment/collection	Yes; conduct includes evasion/defeat of payment or collection
Whether mental-state standard requires specific intent to defraud IRS	Coneys contended willfulness requires no specific fraud intent	Coneys argued need for intent to thwart assessment/collection	Willfulness requires voluntary, conscious, intentional acts, not specific fraud intent
Whether the district court correctly applied § 523(a)(1)(C) to Barbara and Curtis	Government maintained both willfully evaded or defeated taxes	Barbara argued insufficient to show willful evasion by her	Both Coneys willfully evaded or defeated payment/collection of taxes
Whether the district court properly awarded and calculated the money judgment and interest	Government argued it is entitled to judgment including interest under Code	Barbara challenged amount and method of interest calculation	Judgment amount and post-judgment interest properly calculated; no error

Bruner, 55 F.3d 195 (5th Cir. 1995) (dischargeability and civil willfulness standard in § 523(a)(1)(C))
Fretz, 244 F.3d 1323 (11th Cir. 2001) (conduct and mental-state requirements under § 523(a)(1)(C))
Birkenstock, 87 F.3d 947 (7th Cir. 1996) (willfulness defined as voluntary, conscious, intentional evasion)
Dalton, 77 F.3d 1297 (10th Cir. 1996) (expands willful evasion to cover concealment of assets)
Fegeley, 118 F.3d 979 (3d Cir. 1997) (willful intent not limited to fraud-specific intent)
Toti, 24 F.3d 806 (6th Cir. 1994) (definition of willful evasion aligned with civil tax standards)
Spies v. United States, 317 U.S. 492 (U.S. Supreme Court 1943) (interpretation of evasion/defeat language broad, includes payment)