39 F.4th 318
6th Cir.2022Background
- Gregory VanDemark owned Used Car Supermarket (C-corp) and related S-corporations; dealership primarily used lease-to-buy contracts requiring large down payments.
- Beginning in 2013, VanDemark instructed an employee to stash customer down-payment cash in a safe rather than deposit it; bank cash deposits dropped sharply in 2013–2014.
- The stashed cash funded personal expenses (notably mortgage payments on his mansion), and because deposits were omitted from QuickBooks, the tax preparer did not report that cash on corporate or personal returns.
- Lease contracts allowed refunds in theory, but evidence showed refunds were extremely rare and contract terms left refund determinations to the dealer, so the business effectively retained the deposits.
- IRS learned of suspicious banking inquiries, conducted an undercover call in which VanDemark made incriminating statements, executed search warrants, and recovered ledger evidence; he was indicted on six counts (four counts under 26 U.S.C. § 7206(2) for assisting false returns, one structuring count, one false-statement count).
- After a jury conviction on all counts, the district court denied Rule 29 and Rule 33 motions; the Sixth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument (Government) | Defendant's Argument (VanDemark) | Held |
|---|---|---|---|
| Whether the dealership's down payments were taxable income to the corporation (Counts 1–2) | Deposits were effectively retained and thus taxable when received; VanDemark aided preparation of false corporate returns omitting those receipts. | Under Indianapolis Power, deposits refundable under contract and thus not taxable until dealer had a guaranteed right to keep them. | Rejected defendant. Contract terms and practice gave dealer control; refunds were rare and contract ambiguities let dealer deny refunds; deposits were taxable and omissions supported convictions. |
| Whether a § 7206(2) conviction requires that a false return actually be filed (Count 3) | Aiding or assisting in preparation of a false return is punishable even if the return is not received by the IRS. | Conviction requires filing; there is no record the 2013 personal return was received by the IRS, so acquittal required. | Rejected defendant. Statutory text covers "preparation" separate from "presentation"; courts have held filing is not an element and preparation alone suffices. |
| Whether a new trial was warranted on all counts based on challenge to taxability (Rule 33) | Convictions stand on the evidence independently; overturning Counts 1–2 would not be appropriate. | If down payments were not taxable, all convictions (including structuring and false-statement) are undermined and a new trial is required. | Rejected defendant. The court found no clear error in taxability rulings; denial of new trial was not an abuse of discretion. |
Key Cases Cited
- Commissioner v. Indianapolis Power & Light Co., 493 U.S. 203 (1990) (deposit not taxable on receipt where taxpayer lacks guarantee to keep it)
- Jackson v. Virginia, 443 U.S. 307 (1979) (standard for reviewing sufficiency of the evidence)
- Delek US Holdings, Inc. v. United States, 32 F.4th 495 (6th Cir. 2022) (statutory-text principles demand effect be given to each word)
- United States v. Dahlstrom, 713 F.2d 1423 (9th Cir. 1983) (holding that filing is an element of § 7206(2), cited by defendant but nonbinding here)
- United States v. McLain, 646 F.3d 599 (8th Cir. 2011) (liability under § 7206(2) can attach even if a false return is never filed)
- United States v. Monteiro, 871 F.2d 204 (1st Cir. 1989) (discussing presentation/filing in cases involving intermediaries)