Joseph P. Lucia v. United States of America

struсtion, though imperfect, does even error. reversible constitute de- each

We affirm conviction

fendant. Plaintiff-Appellant,

Joseph LUCIA, P. al., et

UNITED America STATES Defendants-Appellees.

No. 30342. Appeals, States Court of Fifth Circuit.

Aug. 23, 1971. Tex., Austin, Wright, Alan Charles Reasoner, Heard, Harry M.

John G. Wood, Marinis, Jr., F. P. Donald Thomas Connally, Vinson, Elkins, & Hous- Searls ton, Tex., Hester, Heath, Davis DeanW. MeCalla, plaintiff- Austin, Tex., for & Coleman, Judge, concurred appellant. Roney, specially opinion; and filed Cir- Dowd, Meyer Rothwacks, M. John Judge, opinion. filed cuit dissented and Burke, Joseph Howard, John P. M. Atty. Gen., Walters, Johnnie M. Asst. Div., Jackson, Attys., Tax U. S. Lee A. C., Washington, Dept, Justice, Sea- D. Hugh gal Wheatley, Atty., P. V. U. S. you may then, course, there, doubt, you may not find heroin find both of out guilty.” guilty. you find them them But if cannot beyond reasonable those elements true Antonio, Atty., Shovlin, 26, Asst. S. San Title U.S.C. 6862.1 The assessment U. Tex., defendants-appellees. $3,913,761.74 for was for for taxes owing and interest claimed to and be due COLEMAN, Before and SIMPSON 26, Title under Section Judges. RONEY, Circuit 1(a)2 440 . The district court dis injunctive complaint missed Lucia’s for relief. We reverse and remand for fur SIMPSON, .Judge: proceedings. ther Lucia, Joseph having successfully P. Litigation 1. The Criminal privilege invoked his Fifth Amendment self-incrimination, Lucia was applied indicted in the as Southern 18, September 1964, District of Texas on 1968, Marchetti v. United 889, pro- on 697, various counts for violations 88 S.Ct. 19 L.Ed.2d and statutory States, 1968, visions of the federal scheme Grosso v. United taxing illegal wagers. plead- first He to nulli- fy guilty ed not to all counts of the his indict- convictions for of the violations ment, rearraignment January laws, at a but on federal excise tax now changed guilty plea he privilege his as seeks of that as to extension so to Count of the indictment. proceeding bar the tax collector remaining court jeopardy dismissed the pursuant with a counts. assessment jeopardy, 26, U.S.C., lection of such tax is in notice 1. Title Section as reads payment and demand for immediatе follows: by Secretary (a) tax such be made Immediate assessment. —If delegate and, upon Secretary delegate or his or re- failure or his believes pay tax, (other any fusal by such collection thereof the collection of tax than in- levy regard tax, tax, gift shall tax) be lawful without come and under estate 10-day period provided any provision in this to the revenue internal jeopardized by delay, section. laws will be he shall, whether or time other- 4401(a) 2. Title reads as Section by prescribed making wise law for . follows: expired, paying turn and immediately such tax has Wagers. imposed (a) shall —There (together such assess tax wagers, on as in section defined interest, amounts, with all additional _an equal percent excise tax of the to 10 by provided and additions to the tax amount thereof. law). tax, tax, Such additions to the thereupon shall interest become charged: 3. Count immediately payable, due and im- day on or about the of De- That 31st mediate notice and demand shall cember, 1963, in Division the Houston by Secretary delegate made or his Texas, of the Southern District of JOS- payment for the thereof. “JOE”, LUCIA, P. EPH also known as (b) levy.' provision Immediate —For defendant, who called the hereinafter during permitting levy immediate case the month of November jeopardy, 6331(a). see section accepting wagers was in the business of 26, U.S.C., 6331(a) Title Section by 4421(1) (A), as defined reads as follows: Code, during Title United States (a) Authority Secretary dele- or wagers in said month such person any gate. any pay liable to —If upon wag- $11,080.00, neglects pay or tax same refuses to owing ers there was due to the days demand, within after notice States of America the defend- United Secretary it shall or be lawful pro- $1,108.00, excise tax of ant аn delegate (and his to collect such tax United vided such further sum as shall be sufficient knowingly Code, wilfully did levy expenses levy) by to cover the of the attempt all of the to evade and defeat property rights property all to exempt for the said excise on said property (except as is un- such by failing make and file said month 6334) per- belonging der section to such Return) (Tax Wagering Form 730 provided son or on lien which there is a failing law, chapter payment in this for the Reve- Director Internal the District * ** Secretary If proper other officer nue or delegate finding makes a col- said excise States of America United charging conspir- day Lucia and others At- the United States Later that ing willfully pay the torney to fail to federal ex- criminal information4 filed a tax, by failing keep file as re- fail to make and records defendants would quired by Directоr of Internal with the District (Tax Wagering concealing attempt- by Re- Form 730 and Revenue turn) States Code by required ing which said return was the existence of said to conceal required concealing monthly business, by wagering and was and law to filed identity information attempting to true and correct the of contain conceal to wagering wagers regarding persons placed defendants’ busi- the the with the defendant, who ; destroying causing by to and ness part conspiracy wagering destroyed of the It was further a and memoranda attempt wagers slips relating accepting to defendants would to the of disguise concealing by defendant, by extent conceal and the nature and and and wagering his, attempting of the said business and the said de- to conceal identity engaging identity through those were of of who the use fendant’s operation 7201, (Violation said business. the conduct and of Section false names. conspiracy part 26, Code). further of said As a Title United States falsified, keep and defendants would make quoted 4. The criminal information is in its incomplete records, of inaccurate and some entirety : wager- code, regarding their which were ing day 1st “That on or about from time time activities and that to 1959, March, of to on or about the 31st destroy, to be the defendants would destroyed cause 1964, day January, and within the five of attempt destroy such and to years past Houston last Division they records, had, concerning said1 as Texas, of the Southern District of JOS- wagering business, which all of was LUCIA, “Joe”, known EPH P. also attempt to conceal from Internal SICOLA, also known as CHARLES “Charlie”, the true and Revenue Service accurate CRAPITTO, F. ANTHONY wagers placed and amount of taxable with “Doc”, ROBERT also known as ROG- by defendants; accepted the said GEN, also known as “Colonel” and part conspiracy As a further said “Milky”, WOODS, HUGHIE JOHN engage in the defendants would aforesaid CUTRUPIA, “Johnny”, also known as receiving accepting wagers business of and SALIBO, PHILIP defendants, called and hereinafter special having paid oc- without first cupational persons and with other imposed by 4411, Section unlawfully, unknown, names are did whose knowingly Code, and without Title United States . wilfully conspire, combine, conspicuously and obtaining, possessing and agree together and with confederate and displaying pursuant 6806, Title to Section to Title each other 26, violate Section Code, stamp United States wilfully Code, is, defendants; United States quired by purchased pay wagers the excise fail tax on further, engaged in the defendants owing was due and the United States wagering and continued aforesaid business by the defendant regis- of America said JOS- engage in said business without LUCIA, EPH P. for each month from tering In- Director with the District 1959, through including March, by Jan- required ternal Section Revenue being imposed uary, 1964, Code; said taxes States Title Title United States pursuant purpose for the to and That Code. carrying said into execution the unlawful part conspiracy It a of said combination, was conspiracy, confederation during period alleg- objects time heretofore agreement effectuate ed, the defendant JOSEPH P. LUCIA thereof, following and other overt acts accepting wagers was in the business District committed in Southern were sporting events, part a and as jurisdiction on operation within the Texas and business, of said said defendant this Court: employed from time P. JOSEPH LUCIA ACTS OVERT defendants herein nam- to time other January 6, 1964, during ; about 1. On or the said ed defendants Houston, Texas, engage P. alleged, defendant JOSEPH heretofore would time approxi- accepting receiving received LUCIA the business of wagers mately $14,000.00 cur- 4421(1) in United States as defined rency Code, upon (A), of a account as settlement Title defendants’ P. maintained the defendant JOSEPH law to business. LUCIA tax, November On or about the United a 10% meeting Texas, Houston, a part conspiracy, there was said but as of said gambling imposed probation. paid cise tax on two fines were in violation of Lucia served six month sentence. defendant U.S.C., Section 371. The January On again guilty. plead The court sentenced Court decided Marchetti and Grosso. As- Lucia to consecutive terms of six months serting giv- that these decisions should be charge years conspiracy on the and five effect, en Lucia filed mo- retroactive charge. imposed a on the evasion It also tion, error in the nature a writ of $10,000.00 fine on each The court count. nоbis, and set aside coram vacate year suspended execution five sen- judgments district and sentences. respect put it on tence and Lucia with and Marchetti court ruled that Pharmacy, Caroline, Airway between the A-C in Development Company. the false fictitious name LUCIA, AN- P. defendants JOSEPH ‍‌​‌​‌‌​​​​‌​​‌​​​​​‌​​‌​​​‌​​‌‌‌​​​‌​‌‌​​‌‌​​​‌​‍1963, 5, PHILIP F. and

THONY CRAPITTO at or about November 10. On Houston, Pharmacy, Caroline, SALIBO. the A-C 920 February 22, 1963, Texas, attempted the or about 3. On de- the defendants stroy slips for their caused to be rented defendants and which were bet line sheets wagers accepting wagering in their business of busi- use records of the defendants’ premises Anderson located at 5417 the ness. County, Texas, 1962, Road, 21, Harris under 11. On or about June Airway De- fictitious name of made a false and JOSEPH P. LUCIA defendant Company. velopment false, and statement fictitious fraudulent agents Service Internal Revenue 1963, at 4. On or about March denied in that said JOSEPH P. LUCIA Texas, Houston, CHARLES defendant accepting wagers. being in the business of fictitious used false and SICOLA 10, 1963, September about 12. orOn paying the M. N. name of Ahrmans SICOLA, pick- the defendant CHARLES premises And- at on located rent up wagering paraphernalia World ed Newsstand, Road, County, which Harris Texas erson Houston, Texas. operation premises were used September or about 13. On wagers. accepting business defendants’ CUTRUPIA, paid defendant, JOHN day Novem- or about the On 5th 5. Houston, Texas, Newsstand, World ber, the use the defendants obtained up prev- wagering paraphernalia picked Gloger premises at 11849 of the Road, located iously by SICOLA. CHARLES County, Texas, their Harris August 23, about 14. On or accepting wagers. business of in their use LUCIA, defendant, received P. JOSEPH November, 1962, the about 6. On or approximately $2,000.00 accepted and rotary tele- obtained two line defendants currency of a ns settlement United States phone Bell from service Southwestern witli defend- account maintained Gloger Company Telephone at 11849 wagering business. ants’ County, by using Road, Texas Harris July 25, about 15. On Soren- fictituous name of Jean false and defendant, LUCIA, received P. JOSEPH telephone son, listed was which service accepted approximately $2,000.00 in and Gloger fictitious name of the false and currency settlement States United Soliciting Service. de- with account maintained de- On or about November wagering business. fendants burned ROBERT ROGGEN fendant August 4, or about 16. On attempted slips Rich- bet at 1017 burn LUCIA, defendant, received JOSEPH P. Avenue, Houston, mond Texas. approximately $2,000.00 accepted 21, 1963, or about November 8. On currency aof as settlement United States wagering CHARLES SICOLA defendants with defend- account maintained destroyed WOODS burned HUGHIE wagering business. ants’ Road, slips Harris Anderson bet March, from on оr That about County, Texas. May, 1961, including on or about County, Texas. Joseph Lucia, defendant, Hous P. Texas, ton, January endorsement cashed without or about 9. On paid rotary bank, had been cheeks which tele- at a obtained line three defendants phone wagering ac on P. LUCIA Bell JOSEPH from service Southwestern previously by persons Company had Telephone who counts placed Anderson at 5417 defendants, Texas, by using County, Road, Harris payable made to “Cash”. Ahr- were M. N. checks name of and fictitious false (Ariolation telephone mans, listed service was Code). wagers in under which area were ac- had statutes Houston not voided merely convicted, cepted six-day per on a but week had been using computed $28,780.00 provided a defense to them. Such de Agent slips fense, court, seized bet the Revenue the district could reasoned gross wagers accepted $2,- addition, computed retroactively. applied not be guilty 244,840.00 being applicable Lucia’s held that to bets district court during defenses, including accepted pleas a 13-weekfootball sea- had waived all privilege gross represents sum This defense based son. 40% wagers during year. appeal, On an entire self-incrimination. figure Agent projected con this set aside the Revenue Court reversed and gross giving wagers accepted victions, into annual Marchetti eliminating day By $5,612,100.00. Lu one v. retroactive effect. United States week, cia, per Agent then determined 920. This court F.2d Cir. days panel decision that that bets were annually. en adhered banc gross wagers applied annual Marchetti and Grosso should retroactively $5,612,100.00 into a motion. United was converted Using Lucia, daily $17,930.00. 1970, 423 F.2d 697. States v. Cir. Agent government’s gross wager figure, daily petition for writ days number of then certiorari determined denied. Lucia, 1971, S.Ct. month that would ac- 402 91 each U.S. gross wagers cepted computed and on 29 L.Ed.2d 111. resulting monthly in a a tax lia- Wagering II. Excise Tax Assess- The totaling bility $2,653,640.00 pe- for the ment through 1, 1959, riod March November 21, 1963.” July Internal Revenue On the a Service assessed excise Complaint Injunctive Lucia’s III. for liability $2,653,640.00, the of Relief together $1,260,121.74, with interest of Lucia, 4, 1970, on Lucia for the March June filed this suit 1959, through The 1963. States District for November United Court Texas, seeking upon projection a to assessment was based District of Western betting proceed- period’s of ting bet- from “handle” from restrain the United ing States possession levy- slips taken from the of with assessment from ing upon property The his he was arrested 1962.5 in accordance with when by computational process employed in this created lien the assessment. alleged projection complaint set in an affidavit that the assessment was out by foundation; filed this case the District Director was without factual Austin, Revenue, by Texas: the assessment was barred Internal limitations; levy statute of that the on agent day’s had one bet “The available property his result in would his bank- slips during the 1962 football ruptcy; that he financial was without upon His calculations based season. assessment; resources betting slips produced a total those $28,780.00 legal adequate was an without he accepted for that in bets day. proposition upon relief. avenue for Based Secretary return, 26, U.S.C., Applying Title or fraudulent false (b) delegate make such return reads as follows: or his shall by knowledge (b) own Execution return Secre- from his through tary.— obtain as he can information Authority Secretary testimony (1) or execute otherwise. Any any person return to make Status return. —If fails returns. — * * * Secretary by any in- made subscribed return so prima delegate regulation facie made his shall revenue law or ternal or legal pur- good prescribed for all sufficient at the time there- thereunder otherwise, makes, willfully poses. for, or ing levy pending appeal. his Lucia filed the United States June On July 27, complaint appeal lack for moved dismiss notice citing Ti- subject-matter jurisdiction, Arguments Appellate The Parties’ IY. 7421(a).6 By or- U.S.C., tle argues this Lucia first Court 23,1970, the court der June district dated government employed the method proceed no ordered the United States compute alleged wagering jeopardy as- of its further on the basis liability arbitrary, capricious, time as Lucia sessment until such sup and without factual foundation. discovery complete with opportunity an proposition places heavy port he respect June On the tax assessment. de reliance Circuit’s Second’s citing 24, 1970, again States, in Pizzarello v. United cision 7421(a), filed denied, 1969, 408 F.2d 579 cert. complaint amended dismiss the motion to 24 L.Ed.2d 450. later, days jurisdiction. lack of Two for argues appellee method and 26, 1970, for ex- Lucia’s motion June process computation entirely were granted. pedited discovery was pointing proper, to this Court’s decisions Following grant of motion States, Cir., in Pinder v. United expedited discovery, skirmish- several 330 F.2d and Mersel v. United place parties re- es took spect between Cir., 1969, 420 F.2d 517. depose officials to Lucia’s efforts point The second raised Lucia on the Internal Service Revenue appeal is that the assessment is bar- stay judicially-ordered obtain efforts year red limita- three levy pending final assessment 26, U.S.C., tions embodied in Title Sec- injunctive disposition re- of his suit z7 tion 6501 6, 1970, July court district lief. On joins by citing 26, U.S.C., Section granted gоvernment’s mo- amended (3) ,8 (c) permanently tolls complaint lack of tion to dismiss statute of “in the limitations case of fail- request jurisdiction, and denied Lucia’s ure to file a return”. Lucia’s answer to injunction pending appeal to this for argument proposition this is the that un- doing the In- it noted that so Court. ruling der the Grosso he was under no ternal Revenue indicated Service duty to file tax returns excise appeal. levy pending no there would be may deprived not be his defense pretty judge the case “was The stated expiration of the limitation vanilla, variety, garden plain much having for failed to file. differs. Our view of refund case to me”. By July 20, argues Thirdly, 1970, the dis- that the district an order dated complaint granted govern- improperly court trict court dismissed prejudice complaint interim recited the ment’s motion dismiss the regard- arrangement parties giving without first leave between 7421(a) 26, U.S.G., prescribed) : was filed or after the date 6. Title Section provided any Except or, stamp, (a) payable in as sec- if the tax is at Tax. — (c), 6213(a), 6212(a) time after such tax due and be- tions became expiration years (1), 7426(a) (b) no for suit fore of 3 after the any part restraining purpose or assessment date on of such tax was any paid, proceeding maintained and no in court tax shall be without collection of any by any person, for whether assessment the collection of in sncli court person begun expiration person shall be after not such period. assessed. such whom tax was such (3) 26, Ü.S.C., 6501(c) 26, U.S.C., 6501(a) is as 8. Title : is as follows: follows (a) Except No the case of failure as other- return.- —In General rule. — may return, assessed, section, provided be the amount to file a the tax in this wise proceeding any imposed bo for the collec- shall or a in court this title may begun years tion after the return of such tax without assessed within 3 assessment, (whether time. or not return was filed such 918 information, be en- collection should prove the complaint or to amend his jurisdiction joined, equity if otherwise allegations contained truth of page op. exists.” cit. at response is that appellee’s

complaint. The district “Taxpayer inform the did aspect of the assessment so as proposed to amend court how he discussed Circuit was troubled Second facts, and nullify record the effect opinion as follows: Court’s time.” at this offer makes engaged in the of ac- business “One court, the Unit- did district As it in the required by cepting wagers 26 U.S.C. strenuously argues daily ed States keep records and 4423 4403 §§ 26, U.S.C., 7421 gross Court and to of the produce received injunctive prohibits (a) this suit may frequently them ‘as Lucia, as he lief from a tax assessment. еnforcement of needful to the impact must to avoid the of Section (tax).’ produced no records Pizzarello bring (a), attempts his obliged case within to es- Government exception in Enochs Williams set forth his and extent of timate the volume Packing Co., Navigation doing, noted, & it used business. In so (1962), L.Ed.2d 292 average S.Ct. three-day calculate it is where stated: wagers thought to have received been five-year pe- appellant over a “Nevertheless, it is that under clear if riod. could no circumstances the Government ultimately prevail, purpose the central proof record “But there is no in the * * * inapplicable Act is operated as a us that Pizzarello before enjoin- attempted collection that, gambler years or even for five equity jurisdiction ex- ed if otherwise operate, three-day if he did aver- so ists.” U.S. ‍‌​‌​‌‌​​​​‌​​‌​​​​​‌​​‌​​​‌​​‌‌‌​​​‌​‌‌​​‌‌​​​‌​‍at age 1962, repre- 12th-14th, April added). 296) (Emphasis L.Ed.2d average daily sented his business urges The United several addition- injunctive 1,575 days. could the other No court grant relief al bars properly such inferences without make argument. statutory addition its (op. cit. at some foundation of fact.” These contentions are discussed infra. 583). page Validity V. Assessment acknowledged the dif- Second Circuit Treasury Depart- ficulties faced Following prosecution an unsuccessful calculating ment illegal wagering activity and an un- liability not does of an individual who tax keep proceeding, successful the civil forfeiture required records, the but neverthe- jeop- Internal a Revenue Service issued rejected assessment: less the against ardy assessment Emilio Pizzarel- $282,440.70. lo in the as- amount of The recognize “Moreover, we the dif- while betting slips sessment was on based Agents by Treasury ficulties faced days taxpayer three seized from the of need in situations the to estimate April, purported the 1965. It to cover wagers nature, on three received April period April between days hardly said can consecutive 14, 1965. district court Piz- The denied wagers representative received of ,for injunc- preliminary zarello’s motion assuming five-year period, a even over equita- tion and dismissed the action for long wagers as Pizzarello States, relief. v. ble Pizzarello United Notwith- as Government contends. the 1968). (S.D.N.Y., F.Supp. standing assertion the Government’s Appeals, of Pizzarello Court v. of an that there substantial evidence States, 579, re- 2 Cir. 408 F.2d operation gambling here, extensive versed, holding that: activity gambling his trial of evidence slight- only period a limited to a of District made was “Because the Director page totally ly (op. assessment, excessive over two weeks.” cit. excessive 584) inadequate entirely on because based August distinguish jected through here would Decem- o,f following grounds: (1) ber the date the raid. We held Pizzarello on the charged by in- had that failed to meet his indictment and the Lucia was proof of that violations burden assessment was tax the formation with improper. covering excise Pinder and Mersel are the for which the made, distinguished capable being princi- Pizzarel- while of on tax assessment was charged ple criminal viola- from the at bar. with case lo had been covering only period; week a two tions U.S.C., Under Title (2) guilty plea the a of Lucia entered 6020(b) against (2), the assessment Lu and the information indictment prima cia was facie as correct against plea admission used merely by taxpayer, amount. The at judgments though interest even tacking govern by the methods used aside; have been set cоnviction ment to estimate the tax government, evidenced liability, has failed shoulder bur Agent, posses- port is in of the Revenue proof establishing den the invalid tending estab- sion of evidence some ity assessment. lish Lucia is well-known bookmak- at least VT. Statute Limitations who that business er has been twenty years. argument Before deal we with Lucia’s respect limitations, to the statute of binding prece- We decline because inquiry put it will if our in focus we re- adopt the rationale dent in this Circuit to view two recent Court deci- in Pizza/rello. Second governing relationship sions between unnecessary under- find it Hence we privilege Fifth Amendment analysis side detailed take side wager- self-incrimination and federal comparison In factual two cases. ing Grosso, supra, excise tax scheme: States, Pinder 5 Cir. v. United and United v. United States Coin government’s assess- F.2d tax Currency, 1971, taking computed total ment 1041, 28 L.Ed.2d 434. day pro- the raid and on the Anthony jecting previous amount for the M. Grosso was on back convicted weeks, by assessing pay sixty-two the tax counts of fifteen willful failure up- imposed wagering by percent ten amount. We the excise tax on assessment, validity 26, U.S.C., not- Title four counts held destroyed special taxpayers ing of willful failure to oc- imposed by cupational underlying failed and had records presumption U.S.C., of correctness and one count of overcome conspiracy assessments.9 to defraud which attaches evading taxes, payment of in vio- 5 Cir. both Mersel United assessing government, ex- lation of Section 371. F.2d wagers, to dismiss the tax on estimated moved before trial cise charged conspiracy and $22,036.68, month- counts which fail- of tax due at based asserting August, tax, reporting to excise that ly periods ure from obliged appar- December, payment him in- would have to 1962. The estimate betting himself, ently in on the claimed violation of the based criminate was during guar- privilege a raid and on self-incrimination records seized Agent, pro- Treasury placed He Fifth Amendment. bets anteed U.S.C., 26, U.S.O., 9. Title Section 4403: reads as person for tax under this Each liable follows: keep daily 7605(b), subchapter Notwithstanding shall record section gross any person showing of all liable books of account of liable, chapter may in he so addition tax under be examined pursuant required inspected frequently all other records as be 6001(a). chap- section needful to the enforcement of ter. following support of and Grosso in the in Marchetti this contention reiterated acquittal after manner: motions for unsuccessful The Court new trial. and for a verdict argument principal “The Government’s affirm- Apрeals the Third Circuit upon exceedingly narrow con- turns (1966). convictions, 358 F.2d ed the our in Marchetti struction of decisions granted certiorari Supreme Court cases, In those took we Grosso. reversed. Grosso pains make it clear that the Court L.Ed. 390 U.S. S.Ct. way in no doubted Government’s 2d 906. power assess collect taxes on gambling It unlawful activities. was through Supreme Court, speaking Congress adopted only had the method Harlan, observed Mr. Justice collecting the tax that raised the Pennsylvania, where Commonwealth question. Fifth Amendment The stat- wagers, allegedly im- had taken gamblers submit ute commanded that posed upon penalties those who criminal registration special statements and gambling engaged in activities. unlawful returns contained information payment He further noted that of the well incriminate which could them wagering federal excise tax would not many the risk cirсumstances. Because Internal Revenue substantial, of self-incrimination was accompanied re- unless Service priv- a Fifth we held that Amendment page quired return. 390 U.S. ilege as a defense to a could raised Finally, pointed out the Court S.Ct. 709. prosecution charging criminal failure had the Internal Revenue Service required to file the it forms. Since was provided en- for some time state law only this method of tax collection which forcement authorities with information subject objection, to constitutional was wagering re- excise tax obtained we indicated that Government page Idem at Under turns. these mained free to collect taxes due under circumstances, ruled Court that Gros- long it so did not at- very indeed have run a sub- so would tempt punish for his under stantial risk of self-incrimination failure to file the documents.” Pennsylvania’s anti-gambling if he laws (401 complied prоvisions with the 437.) L.Ed.2d at wagering federal tax statutes. In United v. United States Coin Supreme We believe Currency, Court, supra, rulings Court’s Grosso and United again through speaking Har- Mr. Justice Currency10 require States Coin and lan, held that the doctrines announced duty conclusion that was under given Marchetti and Grosso were re file federal excise tax proceed- retroactive effect in a during forfeiture turns as for which the ing pursuant instituted to Title sessment has been For Lucia to made. ruling, Section 7302. might so filed such returns well have have holdings anti-gam- Court prosecution elaborated its led to under companion White, announcing judgment case to Coins and Cur- of the rency, Mackey States, 1971, Court, v. United concluded that Marchetti and Gros- applied so were not in that situation to be distinguishable. Mackey retroactively, was con- since no the re- threat during liability factfinding process victed of income tax evasion and in- the course of his trial volved in the use of the monthly wagering Mackey’s used tax which forms tax forms at trial income for petitioner filed, required by Mackey, had evasion. Unlike Lucia faces the statute, gross imposition liability show to that amount of of founded reported, expenses, he less business excise tax statutes. The federal gambling profits reported exceeded the difference we think is critical. obvious and his income tax returns. Mr. Justice Texas, immunity bling he was laws of Vernon’s Penal Code cute a waiver of when investigating Annotated, grand jury Arti- of called before a of State Texas bribery petitioners 646, seq., corruption. under et and to conviction The cles supplied Men had been laws means of evidence Sanitation those Uniformed City hold that York San- Lucia Because we their New himself. dismissed they duty Department positions no to file the re- when Lucia was under itation provide turns, not be information to inves- it follows Lucia to refused deprived tigating agencies of of the statute of could been which have defense against prosecutions to file un- limitations for failure returns in criminal used U.S.C., 26, 6501(e) (3). Supreme cases, der Title Section In four all them. public contrary holding placement would constitute of A Court denounced the lawyers positions “punishment” of the for employees of punish- of they file a return and such the choice failure to faced with were where rulings they proscribed of could giving ment under information on losing posi- Coin and Cur- prison Grosso and United States of their be sent rency. professional licenses. tions or 6501(c) (3), U.S.C., 26, Supreme decisions of the Court Several deprive here, literally applied would if support respect to our conclusion with defense of statute limitations defense of the limitations, in an effort to avoid because, Garrity Jersey, In v. New instance. il- for Texas law under prosecution 616, L.Ed. 385 U.S. 87 S.Ct. activities, he did legal gambling 562, police convicted in 2d officers were submit jus- conspiracy to state court of obstruct Govern- to the United States returns trials, During course of their tice. as constitu- such choice view ment. We prosecution permitted to intro- teach- impermissible tionally under inculpatory statements which the duce Spevack, ings Garrity, Gardner investigators made to after officers had supra. Lucia Men, Sanitation Uniformed give being their refusal advised defense interpose the thus entitled dismissals. would lead to their statements as- in this limitations the statute Supreme Court reversed the convic- proceeding. sessment tions on the that the statements coerced in violation of the officers’ bеen Injunctive Propriety VII. Relief rights Fourteenth and Fifth under arguing that Title Amendments to the Constitution. addition injunc companion Spevack Klein, 7421(a) case of U.S.C., bars assessment, against 17 L.Ed.2d a tax relief tive attorney urges held that an could not be Lucia’s com solely claimed his disbarred because he the existence plaint to establish fails following against privilege in re- jurisdiction self-incrimination equitable for testimony complaint fusing provide (1) fails records and reasons: alleged investigation pro- into his or that he allege he owes portion Similar outcomes ready fessional misconduct. stands owe; (2) v. Brod- Lu noted in cases of Gardner are he does assessment law, erick, remedy adequate 392 U.S. 88 S.Ct. has an cia pur way trial, by L.Ed.2d and Uniformed Sanita- suit jury of a refund Association, Inc. v. Commis- tion Men’s suant Sanitation, sioner (a); (3) prospect that collection taxpayer’s In Gard- eco might ruin the tax ner, Court reversed a suffi in itself is not condition nomic New refusal to reinstate ground equitable state courts’ relief cient liabilities; City police had been York officer who of tax enforcement discharged, pursuant the con to Section abandoned has never lifting the City cept as a basis Charter, of fraud to exe- his refusal upon limitations; to (5) not relied the run- assessments be statute of presented three-year dispose the issue here. ning of of statute of the normal injunctive is not a basis limitations relief, citing posi- the United States takes While Curd, v. 5 Cir. it that has never abandoned tion on brief Heidelberg v. 257 F.2d rely right a means fraud as its to F.2d 988. Martin, 5 Cir. preventing limitations the statute of U.S.C., expiring, argument opposing is that: 6501(a) remedy (1) adequate (1) an he does not have no factual (2), discern 6501(c) we can be- a refund action law in at only now stands which cаse as it prove in the issue he would have to cause running stat- preclude of the government’s was would that tax assessment of Both our cases of also ute of limitations. incorrect but the correct amount supra, Heidelberg, sit- thereby rendering involved tax, him vulnerable Curd fraud, as prosecution attempt the existence to uations where should he to state matter, dispute. wagering On prove lia- a important basis, was in his true excise tax factual do not bility; (2) prospect those decisions of economicruin resulting apply to Lucia’s case. from the collection of the grant proper is a basis for the assessed govern- find in do merit Nor we injunctive relief; (3) is is- there no injunctive relief contention that ment’s regarding applicability sue fact an Lucia has should denied because case; to the statute of limitations remedy adequate suit for а refund. injunction may an issue to re- course, Ordinarily have we would strain of taxes where it nec- collection argu- agree an with such but choice right. essary protect a constitutional refund suit in ease such a But ment. below, For the set reasons forth we light meaningless in ritual would be a agree with Lucia’s contentions. running respect to the with our decision In addi- statute of limitations. of the important It is to bear in mind that the meaning- being tion less, Lucia, the refund suit Marchetti, in Court’s decisions prosecuting a refund United, Grosso, and Coin and Cur- prose- suit, subject possible would rency entirely introduced an new consti- in- providing law cution under Texas dimension to tutional the administration him.11 could incriminate formation which wagering the federal excise tax suggests itself to us as No reason judicial earlier scheme. The concerning decisions appellant requiring the one for valid undergo wager- the enforcement of the him in order to enable such risk ing primarily upon excise tax focused right to the defense to vindicate the method used to such matters com- of limitations. pute the tax assessment and the existence ruling fraud in returns filed with court erred that the district payments. injunctive dismissing this radical Because of Lucia’s suit for very of the environ- relief, alteration constitutional restrict- have in mind we ment, pre-Mar- exception scope we believe decisions referred ed dealing injunc- Enochs, chetti and our supra. But the result against wagering tive relief excise tax issue constitutional resolution of the Supreme Court, Helvering 11. The Cir. Bicknell v. Taylor, consequence, 55 S.Ct. As F.2d Lucia, the burden refund of 79 L.Ed.2d observed action paid, in an in all on the action for would taxes previously paid “specifi- considerable fund of taxes himself under find likelihood cally merely pressure, to show not the assess- burden in order to sustain his erroneous, proof, with evidence ment was but also the come forward helpful en Texas law to which he was entitled”. which could proceed 628- in criminal forcement authorities consistently ings 629. The Fifth has him. adhered that view in refund cases. See

923 by appeal raised necessary renders un- it announced in Enochs v. Williams Pack allege required ing Navigation Co., he be & 370 U.S. 82 S. way irreparable more in the harm than (1962): Ct. 8 L.Ed.2d 292 i.e. potential ruination financial of his it clear “[I]f that under no circum government proceed condition should the ultimately stances could the Government levy property. prevail, on his purpose the central of the Act 7421(a), [Section Internal Revenue Code Proceedings VIII. on Remand inapplicable”, 1954] 370 U.S. at recapitulate. We We here decide 82 S.Ct. government, running but fоr the upon It is this consideration that I con- limitations, the statute of would have at foregoing opinion cur in the of the Court. possibility prevailing least some in a taxpay- suit for refund instituted RONEY, Judge (dissenting): Circuit er. But we hold also that Lucia agree I cannot that the of lim- statute deprived not be the defense of itations has run the collection of statute of limitations failure file the taxes for which this assessment was wagering ‍‌​‌​‌‌​​​​‌​​‌​​​​​‌​​‌​​​‌​​‌‌‌​​​‌​‌‌​​‌‌​​​‌​‍federal excise tax running made. The of the statute is the returns with the Internal Revenue Serv- upon plaintiff which the is held to ice. have met the tests of Miller v. Standard above, government As noted has Margarine Co., Nut 284 52 U.S. S.Ct. appeal told us that it never in- 260, (1931), 76 422 L.Ed. as to when right rely tended to abandon its injunction can be entertained notwith- tolling fraud aas basis for the statute of standing 7421(a), pro- 26 U.S.C. § court, limitations. In the district purpose vides that “no suit for the of re- government relied, goоd reason, on straining the assessment or collection of wagering Lucia’s failure to file any any tax shall be maintained in court ground tax returns tolling as the for the person.” Enochs Williams v. Cf. of the limitations statute. Our decision Co., Packing Navigation & 370 U.S. ground invalidates that for constitutional (1962). 82 292 S.Ct. government reasons. But the should be An individual has no substantive or opportunity accorded the forward come right pe- fundamental to the shelter of a theory, in the district court with another Chase Securities riod of limitations. present, if one is toll the would Donaldson, Corp. v. 65 S.Ct. 325 U.S. government statute of If limitations. (1945). L.Ed. 1628 It has been 89 present constitutionally fails permis- constitutional law held as a matter of theory injunctive sible respect, go to matters statutes limitations sought by grant- relief Lucia is due to be remedy destruc- do not involve the byed the district court. rights. Campbell v. tion of fundamental Reversed and remanded for further Holt, 29 L.Ed. 6 S.Ct. proceedings consistent with the views ex- (1885); v. Nebo Oil pressed above. 1951). Co., (5th 190 F.2d 1003 Cir. COLEMAN, Judge (specially Congress power has the to create a concurring): right without time limitation which agree I with the view Lucia’s fail- must be Anderson v. Unit it exercised. Commission, Energy ure to file the tax returns ed States Atomic (7th 1963); would not toll the Holm limitations. 313 F.2d 313 Cir. statute of cf. run, Armbrecht, has, fact, berg If v. then 327 U.S. litigation (1946).1 power is controlled one of the rules 90 L.Ed. 743 1. The United States is not barred laches. Board Com’rs of Jackson Coun- ty defense of laches the enforcement of v. United 308 U.S. (1940) ; claims and cannot be barred L.Ed. United prosecuting Summerlin, tax claims because of Congress by the given assessment insofar tax is However, there Constitution, are concerned. Article laws States concluding seems to little for be Clause 1. Congress that if the self-assess- intended Congressional clear In absence of system failed, the ment statute limita- right intent, will not to collect taxes fact, apply. tions would nonetheless In by any presumed stat- to be barred be opposite intention seems to be clear. statutes ute Limitation of limitations. evade, fraud, willful intent to Cases against otherwise the collection of taxes specific to file a are failure return strictly unpaid must con- due sys- instances where self-assessment government. Pa- in favor of the strued instance, tem In each Con- fails. McLaughlin, 61 Co. cific Coast Steel v. gress provided that is no stat- has there Realty 1932); (9th Loewer F.2d Cir. 73 limitations defense. ute of (2nd Anderson, 31 F.2d 268 Cir. Co. v. States, 1929); United 315 McDonald v. carefully Court has noted (6th 1963). F.2d 796 Cir. govern- is no doubt that there effect, a of limitations runs power ment has to assess and collect against only of taxes be- collection gambling taxes on unlawful activities. government Congress through cause the supra. Currency, United States Coin has a consented to such defense. Absent previously It has held that a does government, no consent of there is merely regu- be valid because cease to it defense. discourages definitely lates, or de- even it ters the taxed or because Congress activities pe- has determined that the Congress on activities which touches might riod of limitations collection taxes regulate. begin not otherwise United does not to run a until return is Sanchez, 71 v. 340 S.Ct. States 108, U.S. In the case of a or fraudu- filed. lent false (1950). tax, 95 L.Ed. 47 return with the intent to evade any attempt a willful to defeat manner Any punishment taxpayer of a fail- tax, or the failure to file a return for comply self-assessment ure any reason, limit there no within time has fore- method tax collection been proceedings which collection must in- Marchetti, Grosso, supra, and closed pаttern 26 This U.S.C. 6501. § stituted. However, agree supra. I cannot by Congress was chosen with the obvious legally punish- collection taxes owed purpose making passage that the sure concept of ment within the these deci- of time will not bar collection of the Only interest were sions. sought taxes government tax until the has been made Lucia, was, aware that there or penalties, can civil Nor or criminal. might be, liability. keep- This is in Congress agree I failure of ing system, prem- with our tax which “is provide shelter of limitations largely theory ised on the of self-as- lawfully taxes, against the collection of Gilmore, sessment.” United 222 States v. accrued, “punish- as a can construed (5th 1955). F.2d 167 Cir. Ab- ment” failure file return. It is true that the recent eases Marc fundamental sent substantive hetti,2 v. Grosso3 and United States defense, right tax- to a limitations 4 Currency United have States Coin nothing payer deprived has been upset system of self- this fundamental constitutionally entitled. he was ; States, S.Ct. 84 L.Ed. 1283 Ols U.S. 3. v. United 390 88 C.I.R., (9th (1968). v. F.2d hausen 23 Cir. 19 L.Ed.2d 906 S.Ct. 1960), cert. den. 363 U.S. 80 S.Ct. 4. v. United Coin 4 L.Ed.2d reh. ‍‌​‌​‌‌​​​​‌​​‌​​​​​‌​​‌​​​‌​​‌‌‌​​​‌​‌‌​​‌‌​​​‌​‍den. 364 U.S. Currency, 1971, S.Ct. (1971). L.Ed.2d Marchetti (1968). 19 L.Ed.2d 889 argues remedy that he has no presumption validity law because the taxpayer’s

of tax assessments and the place burden in a refund suit him in the position being effectively lit- unable igate the risk of without self-incrimina- Craven, Judge, dissented tion, against which Marchetti and Grosso opinion. and filed protect seek him. pre- It well some of the

sumptions and burdens this field of

civil tax collection will have to shift in principles

order to set accommodate However, forth in these recent it cases.

seems to me that these matters can be regular

fully worked out in the adminis- the courts

trative bodies and to which

Congress assigned matters, and that problems might be encountered give injunc- do not there us a basis 7421(a). jurisdiction in tive the face of §

I would affirm the dismissal of the

complaint. granting leave complaint within sound

amend a

discretion of the trial court. Absent plaintiff representation

some as to might grounds

additional be asserted relief, it as a would seem that deny- discretion

there was abuse of

ing the motion leave amend.

NATIONAL LABOR RELATIONS BOARD, Petitioner, INC., STAGES,

SMOKY MOUNTAIN Respondent.

No. 15121. Appeals, States Court

Fourth Circuit.

Argued April Sept. 10,

Decided Atty., (Ar- Jr., Nash,

Eli L. N. R. B. Counsel, Ordman, nold Gen. Dominick L. Manoli, ‍‌​‌​‌‌​​​​‌​​‌​​​​​‌​​‌​​​‌​​‌‌‌​​​‌​‌‌​​‌‌​​​‌​‍Counsel, Associate Gen. Marcel Mallet-Prevost, Counsel, Asst. Gen.

Case Details

Case Name: Joseph P. Lucia v. United States of America

Court Name: Court of Appeals for the Fifth Circuit

Date Published: Aug 23, 1971

Citation: 447 F.2d 912

Docket Number: 30342_1

Court Abbreviation: 5th Cir.