United States v. Donald Wanland, Jr.
2016 U.S. App. LEXIS 13661
| 9th Cir. | 2016Background
- Defendant Donald Wanland, a Sacramento civil attorney, received routine monthly partnership draws (75% share) from two partnerships, including funds held in a partnership bank account (“705 Account”), which he used for business and personal expenses.
- Wanland owed substantial federal taxes for 2000–2003, stopped filing returns, and failed to pay assessed taxes; by 2006 unpaid liabilities exceeded $900,000.
- Wanland submitted IRS Collection Information Statements (Form 433A) in 2003 and 2005 that omitted the 705 Account and understated his assets; the IRS subsequently served continuous levies on the partnerships under 26 U.S.C. § 6331(e).
- After levies, partnership checks and later checks drawn by Wanland from the 705 Account funded personal expenditures (including large payments to American Express); the government charged tax evasion (26 U.S.C. § 7201), concealment/removal with intent to defraud (26 U.S.C. § 7206(4)), and willful failure to file (26 U.S.C. § 7203).
- At trial the jury convicted Wanland on tax evasion, failure-to-file counts, and 24 of 26 levy counts; the district court sentenced him to 46 months’ imprisonment and 36 months’ supervised release.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether partnership draws qualify as “salary or wages” for § 6331(e) continuous-levy purposes | Government: the draws were predetermined, periodic remuneration for legal services and thus qualify | Wanland: draws are partnership distributions/self‑employment income, not employee salary or wages | Court: Affirmed jury verdict — draws were remuneration paid periodically and qualify as “salary or wages” under § 6331(e) (fact question for jury) |
| Sufficiency of evidence on levy counts / intent element | Government: evidence showed concealment, failure to disclose accounts, and actions to defeat levies | Wanland: lacked requisite intent because partnership draws were not wages and he relied on counsel | Held: Substantial evidence supported intent to evade collection; instructions included good-faith/advice-of-counsel defenses |
| Applicable statute of limitations for § 7206(4) levy counts | Government: six-year limitation under 26 U.S.C. § 6531(1) applies because fraud is an essential element | Wanland: three-year general limitation applies; IRM and text suggest § 7206(4) is three years | Held: Six-year statute applies to § 7206(4); § 6531(1) covers offenses where fraud is essential, including § 7206(4) |
| Whether bankruptcy discharge / res judicata bars prosecution | Wanland: bankruptcy discharge and failure of IRS to preserve nondischargeability estops prosecution | Government: bankruptcy role of IRS as creditor differs from sovereign criminal prosecution; no privity | Held: Res judicata does not bar the criminal prosecution; IRS in bankruptcy is not in privity with the United States in a criminal action (and discharge likely did not adjudicate non‑dischargeability issues) |
Key Cases Cited
- United States v. Jefferson-Pilot Life Ins. Co., 49 F.3d 1020 (4th Cir. 1995) (continuous-levy provision covers repeat, consistent remuneration like commissions)
- United States v. Moskowitz, Passman & Edelman, 603 F.3d 162 (2d Cir. 2010) (partnership draws can constitute “salary or wages” because they are compensation for services)
- United States v. Workinger, 90 F.3d 1409 (9th Cir. 1996) (§ 6531(1) six-year statute applies broadly to offenses where fraud is an essential element)
- United States v. Liquidators of European Federal Credit Bank, 630 F.3d 1139 (9th Cir. 2011) (res judicata barred criminal forfeiture after civil forfeiture because both arose from same transactional nucleus — noted as limited to forfeiture context)
- United States v. Hickey, 367 F.3d 888 (9th Cir. 2004) (government agencies are not automatically in privity for preclusion purposes)