Cheek v. United States – Oral Argument – October 03, 1990

Media for Cheek v. United States

Audio Transcription for Opinion Announcement – January 08, 1991 in Cheek v. United States

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William R. Coulson:

Unlike most criminal statutes they are malum prohibitum rather than malum in se.

That’s another unfairness of this doctrine.

So he has no knowledge of the duty imposed by the code then, right?

So do we import these same standards into the antitrust laws, which are also complex… the case laws if not statutory?

–But, certainly that point is not raised in your petition for certiorari, the suggestion that the court of appeals for the Seventh Circuit has unfairly applied its law to tax protesters.

Edwin S. Kneedler:

–I suppose one could look at it that way, but I think… but he certainly has a duty of what the law says, the law being the statute and the regulations that the Commissioner is authorized… or the Secretary is authorized to promulgate.

William R. Coulson:

I’m not suggesting that the doctrine that we suggest remain the law of the land be applied to anything other than criminal tax statutes.

Yes, sir, it is.

Edwin S. Kneedler:

That… that’s the classic place that people look for what the law is when they are trying to comport their behavior to the requirements of the law.

But why should criminal tax statutes be singled out for this treatment?

William R. Coulson:

It is.

Edwin S. Kneedler:

They look to the law, the statute, and the regulations issued by the agency.

William R. Coulson:

This Court has singled them out for that treatment and other courts have, recognizing that in the tax area it is easy, relatively easy for a well-minded individual to violate the law, because the law is complex.

We even put it in the nature of a First Amendment gloss on the issue in our cert. petition.

So all he has to know is the regulation.

William R. Coulson:

Mistake of law has particular vitality in this… under these… in this context and under the criminal tax statutes.

A doctrine which is–

He has to know the existence of the regulation, and that… that’s your answer to Justice O’Connor of how the mentally retarded person is to be–

William R. Coulson:

And I say that not only because this Court has said that, the circuits have said that.

I… I shouldn’t have to read back to you the two questions presented in your petition for certiorari.

Edwin S. Kneedler:

I don’t think he has to know the… I don’t think he has to know the… he doesn’t have to know the text of the statute.

Well, what if the taxpayer understood that the law says you’ll file a tax return, but genuinely believed the… the tax law was unconstitutional?

To me the idea that the Seventh Circuit has deliberately treated tax protesters differently than other tax defendants to whom it is equally applicable is not fairly subsumed in those questions.

Edwin S. Kneedler:

I think he has to know the legal duty.

Would that be a defense to willfulness?

The first is

Edwin S. Kneedler:

If we can show that, if we… which is the phrase from Pomponio,–

William R. Coulson:

No, but it’s… personal belief that a known statute is unconstitutional smacks of knowledge with existing law, but disagreement with it.

“Is the Seventh Circuit’s unique approach, under which petitioner was convicted and jailed because a panel announced that his sincerely held beliefs were unreasonable and therefore impermissible, consistent with the statutes under which petitioner was convicted.”

–Well, you’re saying again he has to know the legal duty.

William R. Coulson:

And I am not suggesting that any individuals–

“2.”

What is legal duty?

Well, someone in good faith believes it.

“If so, is the Seventh Circuit’s approach consistent with the First, Fifth, and Sixth Amendments?”

Edwin S. Kneedler:

–Legal duty traces from the statute.

It is not objectively reasonable to believe that, but that is the belief.

Those are complaints about the way the Seventh Circuit decide… decided your client’s case.

Edwin S. Kneedler:

If the statute says, as this one does, you shall file a tax return if you have income above a certain amount, and you know of that legal requirement, then you have to… then you have to file it.

Now is that a defense to willfulness?

They don’t to me import any suggestion that the Seventh Circuit is not even handed in deciding similarly situated cases.

Edwin S. Kneedler:

And if the IRS has given content to that statutory requirement in regulations, and you disagree with that interpretation of the statute by IRS, and if your disagreement is objectively reasonable then you haven’t committed a willful offense.

William R. Coulson:

–It depends on the nature of the defense.

–No, I think it is fairly subsumed in our issues, because the Buckner-Cheek doctrine expressly, expressly… the Seventh Circuit said we are… have to deal with annoying tax protesters.

Edwin S. Kneedler:

But I think it’s important for… when a person is claiming a mistake of law defense, that defense has to be grounded in the statute that he is challenging.

William R. Coulson:

If the person believes as a personal belief that known… law known to them is unconstitutional, I submit that that would not be a defense, because what the person is really saying is I know what the law is, for constitutional reasons I have made my own determination that it is invalid.

That is their term, annoying tax protesters.

Edwin S. Kneedler:

He has to be able to say, using traditional legal tools, no, income doesn’t include wages.

William R. Coulson:

I am not suggesting that that is a defense.

Thorns in the side of the Federal judiciary, the Seventh Circuit calls these annoying tax protesters.

Edwin S. Kneedler:

He has to… it has to be grounded in the act that he is claiming to have been mistaken about.

William R. Coulson:

However, if the person was told by a lawyer or by an accountant erroneously that the statute is unconstitutional, and it’s my professional advice to you that you don’t have to follow it, then you have got a little different situation.

Well, I would expect a Federal judiciary has developed a thick enough hide to be able to tolerate these annoying thorns.

Edwin S. Kneedler:

Nothing in this case remotely approached that.

William R. Coulson:

This is not that case–

All we’re asking this Court to do is to have John Cheek treated like any other tax-evasion defendant in the Seventh Circuit, like any other tax-evasion defendant anywhere else in the country.

Edwin S. Kneedler:

In fact, when you look at the definition of gross income under the Internal Revenue Code it refers to income from whatever source derived, specifically including in the first itemization compensation for services.

How do you instruct the jury so that they can convict in the one case and acquit in the other?

William R. Coulson:

And that is if he can establish his bona fides to a jury, if he can show the jury that he was… had a sincere and good-faith misunderstanding of his duties under the tax law, he has negated willfulness and he is entitled to be acquitted.

Edwin S. Kneedler:

It strikes me as a–

William R. Coulson:

–You instruct the jury that disagreement with known law is not a defense.

And to be sure, the Government is going to collect its taxes.

Mr. Kneedler, do you also go along with the Seventh Circuit that there is a laundry list of per se nonobjectively reasonable items?

William R. Coulson:

You instruct the jury that–

They are going to collect civil penalties, and so forth.

Edwin S. Kneedler:

–We… we do agree that the arguments that have been, that–

A known law?

William R. Coulson:

But they should not be able to convict him of a criminal offense unless they show he acted willfully.

Which should never have to go to the jury.

Known to whom?

William R. Coulson:

And under this Court’s rulings he did not act wilfully if he had a good-faith misunderstanding of his duty.

Edwin S. Kneedler:

–That… that’s correct.

Known to the defendant?

William R. Coulson:

And we’re… all we are asking is tha he permitted to have a jury make that judgment.

Edwin S. Kneedler:

Now again, most of those are constitutional arguments, which Mr. Cheek concedes are not a valid defense.

William R. Coulson:

–Known to the defendant.

And there is nothing more fundamental, I think, in our criminal justice system than the notion that the issue of criminal intent is one for the jury.

Edwin S. Kneedler:

And the argument that wages aren’t income, again, I think that, given the virtually universal compliance by taxpayers in this country with the requirement to file tax returns on the understanding that wages are income, that is not an objectively reasonable belief in the matter of–

William R. Coulson:

All of… our position obviously is that all of this deals with the defendant’s personal view, the defendant’s personal state of mind, the defendant’s personal knowledge.

It’s not one for the Seventh Circuit, it is not one that ignores in all situations the genesis of a defendant’s claimed misunderstanding.

But Mr. Kneedler, the question whether a particular claim is objectionably reasonable or not then becomes a question of law if the court can specify a list.

And a known law is a… is a statute that is on the books?

William R. Coulson:

Cheek went to seminars.

It and should not be submitted to the jury, should it?

William R. Coulson:

No.

He had lawyers tell him this stuff.

Edwin S. Kneedler:

–Well, our… our principal submission is that it is a question of law, like the question of materiality in a false statement case.

William R. Coulson:

If the Government can prove that the defendant knew what the law is and chose–

He did not act with criminal intent, and he never got the opportunity because of Buckner-Cheek to have a jury pass on it.

Would it not have been correct then for the district court to in effect instruct the jury to reject this defense, because it was based on objectionably… items on the laundry list.

He knew that the statute was on the books?

William R. Coulson:

That’s really all we are asking.

He says those are not a defense; just tell the jury that.

William R. Coulson:

–No, he knew of his duties under the tax laws a la Murdock.

And I think that the Government’s position would represent a radical departure from subtle law going back though Murdock, going back through Bishop, the cases we cite in our brief.

Edwin S. Kneedler:

Yes, absolutely.

William R. Coulson:

That is a little broader than just knowing there is a statute on the books.

But I think to disrupt, to unsettle the law on such a fundamental element as the need for a jury to pass on criminal intent simply because of the occasional John Cheeks of the world is… is unfair and it is unwise on the part of the Government.

Edwin S. Kneedler:

And the jury… the judge did in this case.

He knows… he knows his duty under the statute, and he knows that it’s the [inaudible] of the Government to prosecute if he violates that duty.

William R. Coulson:

The Government does not need to win this case.

Say you had a closer case, maybe not wage or not income, would the… should the judge decide and tell the jury whether a particular claim is objectionably reasonable or not, or let the jury decide this semi-legal question?

Is that sufficient?

William R. Coulson:

They don’t need it to enforce the tax laws.

Edwin S. Kneedler:

Well, I think one approach would be for the judge to say it’s objectively reasonable, and then not even instruct the jury on the question.

William R. Coulson:

No, because it would depend on the particular misunderstanding that is in issue.

They don’t need it in the other circuits.

Edwin S. Kneedler:

And I think if you look at Murdock, that is exactly the procedural approach the Court–

William R. Coulson:

A defendant may believe that… that bribes that he receives is not income.

And this Court should not, on this kind of a showing by the Government, depart from 57 years of settled law under the criminal justice system.

The Court decided it there.

William R. Coulson:

He may believe that, as in this case, wages he receives are not income.

I would like to reserve the remaining time for rebuttal.

Edwin S. Kneedler:

–The Court decided it.

And suppose that he also knows that the position of the IRS and of the Justice Department is to the contrary?

Very well, Mr. Coulson.

Edwin S. Kneedler:

What the Court said is because the law was uncertain at the time that he declined to furnish the information, it was improper for the judge to in effect instruct the jury that Murdock’s belief was so unreasonable and ill founded… the words the court used… to amount to willfulness.

What result?

Mr. Kneedler.

Edwin S. Kneedler:

But the clear implication, the other side of what the court was saying, is if the… if that question had been settled, as it subsequently was by this Court, if that question had been settled by this Court at the time that Murdock acted, then the district court should not have submitted that to the jury at all.

William R. Coulson:

The result is that a jury decides whether his–

Edwin S. Kneedler:

Thank you, Mr. Chief Justice, and may it please the Court:

Well, maybe the solution to this problem is never to instruct the jury on an… to make an objectively reasonable determination, but have the judge decide whether or not the defense is sufficient or not, assuming that–

On what standing?

Edwin S. Kneedler:

The obvious purpose of the criminal tax statutes, as this Court recognized in the Spies case, is to induce the prompt fulfillment of every duty under the tax laws.

I think that would be… that would be one appropriate approach.

William R. Coulson:

–his understanding is pretextual or is sincere, based on all of this information.

Edwin S. Kneedler:

At the same time the Court has understood Congress not to want to punish what it termed innocent errors made despite the exercise of reasonable care in trying to comply with the complex tax code, those provisions that are complex.

And as I say, that has a lot of support in Murdock.

He really… he honestly… it’s an honest belief?

Edwin S. Kneedler:

And this Court has construed that criminal tax statute in a line of cases that seek to give effect to both of those purposes, in particular as the Court stated in Bishop, and I quote,

That is I think what the Court contemplated.

Sincerity of belief, that’s the test?

Edwin S. Kneedler:

“It has construed the term willfully in a way that implements the intent of Congress to construct penalties that separate the purposeful tax violator on the one hand from the well-meaning but easily confused mass of taxpayers on the other.”

–Mr. Kneedler, the problem with that and the problem with having a laundry list, as the Seventh Circuit does, is that the statute, it seems to me, and using the term willfully clearly… clearly requires an individuated determination.

William R. Coulson:

The test is sincerity of belief as to his understanding of his duties under the tax laws, and that is taken from Murdock.

Edwin S. Kneedler:

In this case petitioner Cheek is far removed from the category of innocent but well meaning class of categories, those seeking to comply with the sometimes complex provisions of the Internal Revenue Code.

If someone visits the Supreme Court and a Supreme Court justice tells him I assure you, my boy, wages are not income, is… is his reasonableness in believing that wages are not income no different from the reasonableness of someone who just… just hears it from somebody on the street?

Suppose… the Seventh Circuit has ruled that he has to file and that the Seventh Circuit has ruled contrary to his beliefs.

Edwin S. Kneedler:

He didn’t commit innocent errors in… in connection with such complex provisions.

The individualized determination, Justice Scalia, comes in the knowing requirement.

William R. Coulson:

A ruling that he has to file may or may not be relevant to his own belief given his tax situation.

Edwin S. Kneedler:

Despite his awareness of the basic requirements of the code, he declined, refused to comply with the most basic and universally applicable provisions of the code.

Once again I would like to stress we have to show intentional violation of a known legal duty, and the person–

xxx the Seventh Circuit has ruled that his belief was held in error.

Edwin S. Kneedler:

He declined to file tax returns, and he declined to–

I don’t understand your known legal duty.

William R. Coulson:

That would be a fact which the Government would elicit.

Well, the Seventh Circuit though said it didn’t make any difference whether his actions were innocent if they were not objectively reasonable.

The more you explain it, the less I understand it.

William R. Coulson:

The jury would determine, based on that fact as well as other facts that the defendant may present, whether or not his good faith… his misunderstanding is in good faith or is pretextual, just as the jury does in any other–

So to argue here that they weren’t even innocent, I don’t think is very acceptable.

I do understand, however, that you’re… that you are trying to decide reasonableness on an across-the-board basis.

He thinks in good faith that the Seventh Circuit is wrong.

Edwin S. Kneedler:

–No, but the point I am making, sir… Chief Justice, is the fact that the most basic obligations in the tax code that are at issue here, the duty to file a return and the duty to acknowledge that wages are taxable income, a belief that a person doesn’t have to comply with those provisions is not objectively reasonable.

It’s reasonable for everybody, it is unreasonable for everybody in the world to believe X.

What does the jury have to do then?

Edwin S. Kneedler:

The Seventh Circuit was addressing a category of… of assertions in this case–

And I am not sure that’s true, and I think the statute does require an individuated determination.

William R. Coulson:

–No.

But you made the statement that he was not innocent, which to me means that he did not sincerely believe this.

Edwin S. Kneedler:

–Our second position in the case is that there may be cases in which it would be proper to submit to the jury, but these beliefs in this case are unreasonable… unreasonable as a matter of law or unavailable as a matter of law.

William R. Coulson:

If he testifies and the Government is able to elicit on cross-examination that he is aware of the Seventh Circuit case, and he is aware the Seventh Circuit thinks he is wrong, I rather suspect the jury would convict him in this situation.

And of course the jury was never given an opportunity–

You certainly didn’t object to the business of unreasonable belief going to the jury in this case.

Well, should the jury convict him based on… this is what I want to know.

Edwin S. Kneedler:

–I was using the word innocent in a… in a different way, of somebody who is–

That… that’s correct, so the Court doesn’t have to decide that.

What is the standard?

–Who is unreasonable is not innocent.

Edwin S. Kneedler:

It doesn’t have to decide that question here.

William R. Coulson:

The standard is whether he has a good-faith misunderstanding of his particular duties under the tax laws.

Edwin S. Kneedler:

–Pardon me, I’m sorry.

But you would have said that the issue didn’t need to go to the jury at all, is that it?

William R. Coulson:

That is the standard this Court set out in Murdock.

Somebody who is unreasonable is not innocent.

Edwin S. Kneedler:

I think… I think Murdock would support that approach, but because–

Well, I am stipulating to you that he has an honest, sincere belief that the Seventh Circuit is 180 degrees wrong.

Our jails will be full, Mr. Kneedler.

The judge in effect took it away from the jury, didn’t he?

William R. Coulson:

I would submit that that would establish, at least if I were on the jury, as disagreement with what he knows to be the law.

Edwin S. Kneedler:

No.

–Took several of the beliefs away from the jury.

The question isn’t what–

Edwin S. Kneedler:

What is required in this case, it’s our position that, generally as the Court said in Bishop and Pomponio, that the Government must prove an intentional violation of a known legal duty, which is the gloss that the Court has put on the word willfully under the tax statutes.

Took away… took away the argument that the belief that the tax code is unconstitutional–

–Justice Marshall has had a question he wants to ask.

Edwin S. Kneedler:

A known legal duty requires awareness of the duty.

Only after the jury asked some questions.

Would you make the same defense to a civil action?

Edwin S. Kneedler:

Here there’s no question that Mr. Cheek was aware of his duty under the tax laws to file a return.

–Pardon me?

William R. Coulson:

No.

But the gloss… the gloss we put on it in Murdock is that quote, “an evil motive”… and evil motive…

Only when the jury asked some questions.

William R. Coulson:

Civil standards are different.

“is a constituent element of the crime.”

Only when the jury understood the thing.

And that’s what I would like for you to explain, other than that civil and criminal are different.

Edwin S. Kneedler:

Well, subsequently though, Justice Scalia, in Pomponio the Court described what it meant by the phrase evil motive in prior cases.

Right.

William R. Coulson:

I guess the most obvious example is his rule 11, or sanctions.

Edwin S. Kneedler:

What it meant… what it said was we meant by that nothing more than intentional violation of a known legal duty.

I think the Chief Justice has put his finger on it.

William R. Coulson:

You could take a legal position that is sanctionable under rule 11, even if you believe it to be true, if it’s a frivolous position.

Edwin S. Kneedler:

And that was the precise question presented on Pomponio.

I think that there was a tension between the court’s principal instructions and the court’s attempt to explain Mr. Chief’s theory of the defense, even though his theory was not… was not a valid one.

William R. Coulson:

Whereas to put somebody in jail, to convict somebody of a criminal offense, it seems to me the Government needs to show that it was a willful act.

Edwin S. Kneedler:

So–

Well, that is because this jury insisted on getting a clear explanation of what a known legal duty is.

You mean in a tax defense… a tax case?

Well, here he says he was somehow fooled into believing that his conduct was lawful.

[Laughter]

William R. Coulson:

In a tax case.

Edwin S. Kneedler:

–Well, I think–

And that’s what we’re trying to do.

William R. Coulson:

I am confining all of my remarks here to tax cases because, as this Court has pointed out, the willfulness element is somewhat unique in tax cases.

And I guess we have to take the case on that assumption.

Edwin S. Kneedler:

Well, again, I think the court gave a clear answer, and we think that this Court should give a clear answer.

I just want to follow up on Justice Kennedy’s question, because I don’t think you have answered.

Edwin S. Kneedler:

–I think for purposes of analyzing the legal question, perhaps that is true.

And that is that at least the particular beliefs that Mr. Cheek was offering here are not objectively reasonable as a matter of law, either on the theory that this is always a question for the judge, which was properly exercised here, in effect, or that at least in this case these beliefs were unreasonable as a matter of law.

You have given us a prediction what the jury would do.

Edwin S. Kneedler:

I would like to say, though, that the tax seminars and what not that he says he attended were in 1980.

I would like to go back again though to stress that this Court has taken upon… has had to take upon itself the construction of the term willfully in a way that furthers the policies of the tax statutes.

Say you are a trial judge and you are convinced that when this man gets on the stand and says I think not only the Seventh Circuit is wrong, but the United States Supreme Court is wrong, and that the Constitution does not require me to pay these taxes.

Edwin S. Kneedler:

From then on his submissions to the IRS and his legal arguments about the Sixteenth Amendment and other legal objections to the tax system appear… for all that appears to be self-generated and–

And we think that a requirement that a jury acquit a defendant as long as it believes… as long as he convinces them that he subjectively believed in his cause, even if that cause has no support in the Internal Revenue Code, that that would promote disrespect for the law, not, just among the particular category of people who are sometimes categorized as tax protesters, but the rest of us who are taxpayers.

That’s my sincere and honest belief, just like my belief in God is sincere and honest.

Well, but that’s… that’s for the jury.

Well, I guess there’s a whole range of civil penalties.

Does he win or does he lose?

We are talking about the instruction.

We’re dealing here with a criminal statute, not the civil recovery provisions and the civil penalties and so forth.

William R. Coulson:

In that case the judge, as he would in evaluating any defense–

Edwin S. Kneedler:

–I understand, I understand.

Right, there are civil penalties, but here we had somebody… and this case really… really shows what, the mischief of the contrary rule.

He believes him.

Is the problem here with the term known legal duty?

Edwin S. Kneedler:

Somebody who has had four cases thrown out of court, making these arguments that they are frivolous.

That’s what I am saying, the judge believes him.

Is that where we’re having difficulty?

Edwin S. Kneedler:

Somebody who has been written by the Internal Revenue Code… written to by the Internal… IRS, telling him that he has to file tax returns.

Then what does the judge do?

Edwin S. Kneedler:

Well, it’s… it’s… it’s one place in the case that I think it’s useful, productive to focus upon.

Somebody who filed tax returns for 10 years, and he is entitled to go to the jury and say I believed I didn’t have to.

William R. Coulson:

–The judge rules that that is not a good-faith misunderstanding of one’s duties to file.

Edwin S. Kneedler:

Known… the term knowledge as used in this Court’s decision in Bailey and as the model penal code describes the word knowledge, it uses that in terms of awareness, cognition.

That’s not the way our tax system operates.

William R. Coulson:

It is rather a knowledge of existing law and a belief that it is wrong, and that defense does not go to the jury.

Edwin S. Kneedler:

Is the actor aware of the attendant circumstances, where the attendant circumstances that have to be shown are the state of the law, where, in this case the Internal Revenue Code requirements, awareness of what the Internal Revenue Code requires is an element of the offense.

Citizens in this country understand their legal duties under the tax code.

William R. Coulson:

And that–

Edwin S. Kneedler:

But once he is aware of what the law requires, but disagrees with, as I think it’s only fair to say Mr. Cheek does in this case, disagrees with the code either because he thinks it is unconstitutional or because the IRS’ construction of it is wrong, or–

And at least focusing on the particular objections to the tax code here, we think it is proper for the Court to say that this defense is unavailable.

In other words, belief that the statute is unconstitutional is a belief that it’s wrong?

I didn’t understand that, Mr. Kneedler.

Edwin S. Kneedler:

A contrary rule would come into tension with Reynolds and Oregon Department of Employment Securities.

William R. Coulson:

–Yes.

I understand he disagreed with whether the code… his position was that the code did not require it, despite what the courts had said, despite what the regulations said.

I seems to me, if you say you have to prove that he knew what his legal duty was, and yet you can say he has a sincere belief that there is no such duty, how can he possibly know it?

That’s not what Murdock… Murdock was a constitutional case, you know.

He didn’t think the code required that.

I think you probably really now say, well, he really knew it, even if he has a belief that he doesn’t have a duty.

You can even stop short of the unconstitutional point.

I thought that was what the facts of this case are.

Edwin S. Kneedler:

There is a difference between knowledge and belief.

All… you’re… you’re stopping short… you want to stop short of saying that a belief that is unconstitutional is a good… like some of the other justices, I don’t see the basis for drawing that line.

Edwin S. Kneedler:

–Well, most of his arguments in this case are constitutionally based, that the Sixteenth Amendment was not properly ratified, or that… that this tax is a direct tax that has to be apportioned among the states, which is just simply wrong under Pollock–

It’s highlighted… it’s highlighted by the example of where this Court has ruled on the precise question.

But you don’t… you don’t stop short of saying that belief that the Supreme Court has misinterpreted the statute is… is not a good-faith defense.

He’s abandoning that, as I understood the argument.

Edwin S. Kneedler:

He certainly knows what the law is as interpreted by this Court.

Suppose he doesn’t think that the Constitution entitles him to say that wages are not income, but that simply the Supreme Court got it wrong when it said that under the Internal Revenue Code wages are not income and said, you know, gee, the Supreme Court said that, but they misinterpreted the statute.

Illogically, perhaps, but the assertion is not being made that if he thinks the statute is unconstitutional he has a defense.

Edwin S. Kneedler:

He simply doesn’t believe it.

William R. Coulson:

I am trying to draw a distinction between knowing what the law is and disagreeing with it, which is not a good-faith misunderstanding of your duty to file.

Edwin S. Kneedler:

–I understood him to be abandoning that as well, although I would like to point out that… that even the courts that have adopted the purely subject standard for claims to a belief that income… that a certain duty under the code is not required, it’s purely subjective.

Well, belief in the way… in that sense is not a belief coming from trying to comply with the law.

Well, which is this?

Edwin S. Kneedler:

Those courts have all said that a belief that the statute is unconstitutional is not a defense.

It’s a belief… it’s a subjective abstract belief about what the law ought to be.

Is this a good-faith misunderstanding or not?

Edwin S. Kneedler:

And there is a statutory basis for that, because both 7201 and 7203 refer to evading titles imposed by this title, or failing to perform a duty required by this title, which suggests all you look to is the title… is the statute, rather than whether the Constitution might trump the statute.

And that defense, we submit, under the tax code is not available.

William R. Coulson:

It sounds like it is not.

Mr. Kneedler, the Murdock case though, the defense was based on a Constitution… belief that the Constitution did not require him to incriminate himself.

You… you define law to be not just what this Court has said, but also whatever is set forth in the regulation.

William R. Coulson:

I must point out–

Edwin S. Kneedler:

Right, but it was not… it was not a claim that the statute was unconstitutional.

Well, law–

Why is it not?

Edwin S. Kneedler:

What he was claiming was a constitutional privilege from having to furnish the information.

If he reads that he knows what the law is, you tell us.

He thinks the Supreme Court was wrong.

Edwin S. Kneedler:

It was not a claim that Congress did not have the authority to enact such a statute in the first place.

–No, law in the first instance is what Congress says it is.

He thinks the Supreme Court misread the statute.

Why should that make a difference?

Edwin S. Kneedler:

We are not suggesting that this Court has to have ruled before somebody has to comply with the tax code.

He sits down and looks at the statute and says, gee, I think they got it wrong again.

Edwin S. Kneedler:

Well, I think it’s… first of all, I think when… when that involves someone who was summoned to furnish information to the IRS, I think it’s fair to attribute to Congress an intent to comply with the Fifth Amendment when a person is requested for information.

It is what… the law that Congress enacted.

William R. Coulson:

–That is disagreement with the law.

Edwin S. Kneedler:

And so whether a person has a duty… a duty to comply in those circumstances, I think there isn’t a clash between the Fifth Amendment and the statute.

Thank you, Mr. Kneedler.

That is disagreement with the law?

Edwin S. Kneedler:

The way you are claiming that the statute itself is unconstitutional in the sense that Congress didn’t even have authority to enact it in the first place, I think that’s… I think that’s quite a different sort of claim.

Mr. Coulson, do you have rebuttal?

William R. Coulson:

Right.

Even if it were a closely debated and open question on which scholars disagreed as to the constitutional issue?

You have 3 minutes.

I am surprised at your position.

Edwin S. Kneedler:

Yes, because I think we would be reduced to chaos if… if individual citizens could take it upon themselves to make, as one court of appeals put in response to this very argument, to make individualized determinations of constitutionality.

William R. Coulson:

Your Honor, the Government is taking the position that no one who possesses the belief that wages are not income can ever be not guilty.

It seems… it seems to me that you would be arguing that it’s a sincere, good-faith belief that is not willful.

Edwin S. Kneedler:

There is a presumption of constitutionality.

William R. Coulson:

They are taking the position that it doesn’t matter whether a lawyer tells you that, as happened in John Cheek’s case, or an accountant tells you that.

That is what I thought your position was below.

Congress could avoid being reduced to chaos by removing the willfully requirement.

William R. Coulson:

It wouldn’t matter, because the Government says the content of that belief is on this forbidden list.

Well, it is.

Edwin S. Kneedler:

It… it could, but I think there is no reason to think that Congress intended to encourage disobedience of the statutes it enacted by claims that those statutes are… are unconstitutional.

I suppose the Government… wanted to add… provided you know the Government is going to disagree with you and enforce its laws and prosecute you.

William R. Coulson:

That is my position.

Or the courts could change their interpretation of willfulness.

William R. Coulson:

John Cheek had lawyers tell him that under the Internal Revenue Code wages were not income.

But only… in other words, everything goes to the Supreme Court?

The courts are the ones that put this spin on willfulness in the tax cases.

William R. Coulson:

Did he know his legal duty?

William R. Coulson:

Not at all.

Edwin S. Kneedler:

Well, this Court… this Court in particular in Murdock and in subsequent cases.

William R. Coulson:

Don’t we want to encourage people to seek advice from lawyers and accountants on the tax laws?

This case did not involve Mr. Cheek’s contentions that the statutes were unconstitutional, and that’s why I am dealing with these hypotheticals the way I am.

Edwin S. Kneedler:

And in Murdock the Court says the, said that the word willfully has to be construed in light of its context in the tax code and the purposes of the tax code.

Not from those lawyers.

William R. Coulson:

He had a good-faith misunderstanding of his duties under the tax statutes in a number of various ways based on all the indoctrination he got.

Well, and you… and you say that there is a special rule about willfulness in tax cases.

Well, I guess he had taken the issue to court in civil litigation and been told, hadn’t he?

Do you concede that those beliefs were not objectively reasonable beliefs?

You accept that.

William R. Coulson:

The Government, I think, exaggerates the significance of that evidence.

I do not concede that.

Edwin S. Kneedler:

Yes, but… but–

William R. Coulson:

In any event, it is my position that that is a question for the jury.

I believe–

And all it… and that he must… he’s entitled to have a mistake of law.

William R. Coulson:

The jury is entitled to all of this information on what Cheek did and didn’t do, and what he was told, and what he really understood and what he claimed he understood.

Did you preserve that issue for review here then, or do we have to take it on the assumption that they were not objectively reasonable beliefs?

Edwin S. Kneedler:

–Yes, we do acknowledge the existence of a certain implied defense of mistake of law.

William R. Coulson:

That is an individualized jury determination which the Government seeks to take from the jury in this case and in all other cases, because Cheek’s particular belief or misunderstanding is on this forbidden list.

–We don’t know what objectively reasonable means.

So he must know what his legal duty is.

William R. Coulson:

That makes no sense.

I don’t–

Edwin S. Kneedler:

We… it must be shown that he was aware of his legal duty, a known legal duty in that sense.

William R. Coulson:

If the Government is as confident, as Mr. Kneedler seems to be here, that Cheek is clearly guilty, he is clearly a sham, then why don’t, why are they afraid to let a jury decide under the Murdock instruction?

Well, is that our assumption for deciding the case, and did you preserve that issue otherwise?

Aware of his legal duty.

William R. Coulson:

Why do they need the helping hand of Buckner-Cheek, which says the jury has to find that it’s objectively reasonable.

William R. Coulson:

–Our position is that there should be no such test as whether the contents of a belief are objectively reasonable or not.

And if says I am not aware of it, and the jury believes him, he’s off.

William R. Coulson:

And under Buckner-Cheek that is a jury determination unless it is on the forbidden list.

I don’t know if I am answering your question.

Edwin S. Kneedler:

Right.

William R. Coulson:

It makes no sense in jurisprudence.

Part of your claim is, if you preserved it, that it’s objectively reasonable to think that wages are not income?

Edwin S. Kneedler:

That is correct.

William R. Coulson:

I am not abandoning this… I don’t like the word abandon.

It would be objectively unreasonable to a lawyer or to a judge.

Edwin S. Kneedler:

But I think–

William R. Coulson:

I don’t feel that I am abandoning the argument on its unconstitutionality.

It might well be, and I contend here it was objectively reasonable to somebody like Mr. Cheek, who was a lay person and who was confused and who was hit with this tax-protester literature and these lectures and these statements from attorneys.

Is he aware of the legal duty if he disagrees with the Government’s interpretation of the legal duty?

William R. Coulson:

I don’t think it is an issue in Mr. Cheek’s case.

Our point is isn’t it an individualized determination of each defendant?

Edwin S. Kneedler:

–Yes, I think that he is.

William R. Coulson:

He had all these crazy beliefs, wages are not income, the income tax is voluntary.

Well, then, but then what use is the term objectively reasonable, if it is an individualized determination and if it would be… objectively unreasonable for most people, but not objectively unreasonable for your client?

Edwin S. Kneedler:

He’s aware in the sense that is relevant for purposes of the criminal law.

William R. Coulson:

To be sure, wrong beliefs.

That illustrates the impossibility of dealing with what… the term the Seventh Circuit has defined.

Edwin S. Kneedler:

The criminal law is–

William R. Coulson:

I am not here to defend those beliefs on the merits, but those are statutory beliefs.

Objectively reasonable, what does it mean?

So all he has to know is that the IRS takes a position different than he does?

William R. Coulson:

And he was told that that was the state of the law by attorneys at seminars, and he obviously is not a sophisticated man.

What is it?

Edwin S. Kneedler:

–For purposes of triggering the awareness of the requirements of the law, yes.

William R. Coulson:

And note, this Court and the Government cannot say that a person in Mr. Cheek’s position as a matter of law could not have been mistaken.

William R. Coulson:

It would differ from case to case.

Edwin S. Kneedler:

Now that is where the defense of objective… objectively reasonable belief in the validity of his legal position kicks in.

William R. Coulson:

Yet that’s the position the Government is urging.

It would differ from jury to jury.

Edwin S. Kneedler:

Of course, if the court… if the court agrees with his position on the merits that wages aren’t income, then you don’t need the willfulness standard.

William R. Coulson:

All we are asking is that Mr. Cheek be permitted to present that to a jury.

It would differ from judge to judge.

Edwin S. Kneedler:

He simply hasn’t committed a violation of the act.

William R. Coulson:

If the jury thinks he is a phoney they will convict him.

I’m arguing there should be no such standard as objectively reasonable.

Edwin S. Kneedler:

But… but… so we are assuming that his view of the law is incorrect.

William R. Coulson:

If they think he is sincere they should acquit him.

It ought to be a question of whether the jury finds that the defendant sincerely believes… has a sincere misunderstanding of his duties under the tax law.

He hasn’t preserved that question, has he, whether wages are income?

William R. Coulson:

And the Government can get its penalties and fines–

Well, what, what standard were you applying when you answered these questions about if the Supreme Court has held that wages are income and he… you say that he couldn’t possibly have… have a defense in that respect.

Edwin S. Kneedler:

No.

Which they are likely to think.

William R. Coulson:

No.

We don’t have to wrestle with that one, do we?

I mean, they’re more likely to think he is a phony if it’s an unreasonable belief.

William R. Coulson:

If he knows… if the Government proves he knows that the Supreme Court has held that.

Edwin S. Kneedler:

No, although, Justice Scalia, we would be delighted with a statement by this Court that would put to rest once and for all the proposition that wages are not income.

I mean, you say, oh, come on, nobody–

All right, he knows it, but he says they got it wrong.

Edwin S. Kneedler:

It may seem amusing here, but it is… it is a problem with an assertion like this being made in cases in this day and age.

William R. Coulson:

–Right.

They got it wrong, and I sincerely believe that they misread the statute.

Edwin S. Kneedler:

IRS informs me that 116 million tax returns were filed last year with W-2’s attached to them, meaning that those were tax forms filed by wage earners.

William R. Coulson:

It’s a factor the jury can consider, in addition to all the other factors, the genesis and so forth.

William R. Coulson:

I am not suggesting that disagreement with known law can be excused.

Edwin S. Kneedler:

People know in this country that wages are income, and the idea that a defense like this should be presented to the jury, I think I would do nothing but promote disrespect for the tax laws, when what the court should be doing in construing willfully is promoting the duty to comply with the tax laws.

William R. Coulson:

A defendant like Cheek–

Well, what standard are you applying in saying that?

Mr. Kneedler, can I take your… I understand your argument why… a constitutional concern.

William H. Rehnquist:

Thank you, Mr. Coulson.

Objectively reasonable?

We understand what the statute requires.

William H. Rehnquist:

The case is submitted.

William R. Coulson:

No.

Supposing a taxpayer honestly advised by counsel believes that a regulation does not comply with the Internal Revenue Code, but he knows very well what the regulation requires.

Well, what… what is it?

Criminal or not?

William R. Coulson:

I am… the standard I am applying is the one set out in Murdock.

Edwin S. Kneedler:

I think your point… your question raises two points.

William R. Coulson:

Did the defendant have a good-faith misunderstanding of his duties under the tax laws?

Edwin S. Kneedler:

One is advised by counsel.

William R. Coulson:

If the defendant… that does not include disagreement with the law.

Edwin S. Kneedler:

There is… there–

William R. Coulson:

It means it’s confusion or misunderstanding with his duties under the law that is a defense.

It’s a sincere belief.

William R. Coulson:

And I am suggesting that that has to be a determination–

Edwin S. Kneedler:

–Here I should put out… point out petitioner did not–

He… he mistakenly thought the Supreme Court had it wrong.

Well, let’s leave out–

He just made a mistake.

Edwin S. Kneedler:

–he’s not claiming he was advised… it’s not the classic advice of counsel defense, is the only point that I am making.

Why isn’t that a defense?

–All right, okay.

William R. Coulson:

–Because… I’m not suggesting that every citizen has the prerogative to decide for himself if he is going to obey what this Court or any other court says.

I just mean a sincere belief that a regulation is not authorized by the statute.

Or suppose that the Treasury regulations say wages are income and are taxable, and he says well, I know that, and regulation is supposed to be the law, but the Commissioner just had it wrong.

Edwin S. Kneedler:

Right.

They… those regulations are just inconsistent with the statute, or with the Constitution.

Edwin S. Kneedler:

As long as that is a reasonable belief, a plausible belief, and I think there should be considerable latitude for a court to recognize arguments such as that.

William R. Coulson:

The first example would present for the jury a fact question.

Edwin S. Kneedler:

But on the other hand if this–

William R. Coulson:

The jury would decide, is he sincerely confused about the law, and if so how?

It is a defense if it’s a plausible belief?

William R. Coulson:

How did he come to that confusion, that misunderstanding?

Edwin S. Kneedler:

–If… if he has… he is aware of the regulation, we… we therefore have shown the knowledge–

William R. Coulson:

Or is he pretextual, does he know darn well what the law is?

Why is that different from a plausible belief that a statute is unconstitutional?

Counselor, that is just not helpful for this argument.

Edwin S. Kneedler:

–Because the statute is written terms… in terms of, for example, in terms of filing returns.

What we’re trying to establish, and I think it’s a difficult case, is what instruction the judge should give to the jury.

Edwin S. Kneedler:

It refers to returns that are required by this statute, or regulations under it, in fact.

What is the standard for guilt.

Edwin S. Kneedler:

So the regulations reflect IRS’ interpretation of the statute.

And if you say, oh, that’s for the jury, that doesn’t help us.

But Mr. Kneedler, is it plausible on a subjective basis or plausible on an objective basis?

We’re asking what the instruction should be.

I mean, that is the question.

And it seems to me that based on your case, you have to say that if he sincerely believes that the Supreme Court got it wrong, that is a defense.

You say plausible–

I think that’s the theory of your case.

Edwin S. Kneedler:

It has to be plausible on an objective basis.

And if you say, well, the Supreme Court, then I would ask you about the Seventh Circuit, or I would ask you about a Supreme Court decision which is 5 to 4 and a justice leave the bench, and so forth and so on.

Edwin S. Kneedler:

I mean, there is a threshold–

We need to know what standard the judge uses when he instructs, or she instructs the jury.

–Well, suppose… suppose there’s… suppose there’s a baggage worker or a janitor, not a pilot, but he is working for American Airlines.

William R. Coulson:

The judge says to the jury it is a defense to willfulness if the defendant at the time of the alleged offenses had a good-faith misunderstanding of his duties under the tax laws.

And some one of his coworkers announced, remember now that wages aren’t income, this is a new theory.

William R. Coulson:

It is not a defense if the defendant had… knew of his duties under the tax law, but had a personal or subjective disagreement with them.

And he really believes that.

William R. Coulson:

That’s essentially… part of those instructions were given in this case.

And he is just as wrong as he can be, but he believes it.

Mr. Coulson, can I just ask one question?

Edwin S. Kneedler:

–Well, there may all… I mean, there is always the possibility that he will show… that he would be able to show a lack of knowledge.

Is this issue, whether the mistake of law issue, are you contending that it’s a failure of proof of part of an element of the Government’s affirmative case, or that this is an affirmative defense with respect to what you have the burden of showing that he had an honest misunderstanding?

What is the instruction, Mr. Kneedler?

William R. Coulson:

Obviously the Government has the burden in the first instance of its proving willfulness.

Edwin S. Kneedler:

The instruction is that we have to show that there was a violation of a known legal duty.

William R. Coulson:

It is in the nature of an affirmative defense, a mistake of law, based on in this case advice of counsel and various other things.

Edwin S. Kneedler:

He had to know that the Internal Revenue Code required him to file a tax return, and that wages are income under the Internal Revenue Code as construed.

Your client was an American Airlines pilot, wasn’t he?

He knows that it’s in the code, but he has been told that the code section’s invalid.

William R. Coulson:

Yes.

And he really believes it and he is really dumb.

xxx the Government proved willfulness?

Edwin S. Kneedler:

Then, no matter who it is, this is a ruling… this is a determination that that is not an acceptable basis for declining to comply with the tax code.

William R. Coulson:

I do not agree that the Government proved willfulness.

Edwin S. Kneedler:

Because the rule we’re proposing is not that… doesn’t turn on somebody’s ability to do legal research on the question.

Well, you mean that… why did you need a defense then, other than to say there’s a failure of proof?

Edwin S. Kneedler:

It is simply that as a matter of judgment… and what is a reasonable legal argument is quintessentially a legal determination, that that’s simply… that’s simply frivolous.

William R. Coulson:

Well, that was raised at trial when the Government rested.

Edwin S. Kneedler:

And in fact Mr. Cheek’s lawyer was, or Mr. Cheek was assessed penalties in his civil case for making that precise argument in the courts.

William R. Coulson:

Of course the motion was overruled under the Seventh Circuit standards, and Mr. Cheek put on a defense.

You agree that he has to know more than what the regulations, the tax code regulations say?

William R. Coulson:

And his defense was that he had a good-faith misunderstanding of his duties under the tax laws, based on a number of factors.

Edwin S. Kneedler:

No.

William R. Coulson:

Based on his cult-like indoctrination he got.

Edwin S. Kneedler:

The affirmative case that we must show is that it was a known legal duty in the sense that he had to be aware that he was required by law–

But again he did not have to put on that defense unless the Government had put in evidence that he knowingly violated a… violated a known duty to obey the law, right?

All right, he… he knows it, but he can still get off.

William R. Coulson:

Right.

Edwin S. Kneedler:

–The affirmative defense then kicks in.

In other words, they had proved–

Edwin S. Kneedler:

It is available to him, not in… not in the hypothetical Justice Kennedy posited of the… the janitor believing that wages aren’t income.

William R. Coulson:

And they had introduced some evidence.

Edwin S. Kneedler:

We are saying that is not objectively reasonable across the board.

–At least prima facie they had proved willfulness.

Edwin S. Kneedler:

That is not individually–

William R. Coulson:

Right.

All right, the… suppose the regulation that he thinks is not consistent with the statute has been upheld as being consistent by the Supreme Court?

William R. Coulson:

And I am not suggesting that Mr. Cheek or any other defendant is necessarily going to prevail in his mistake of law defense.

Edwin S. Kneedler:

–Then in that situation I think it would… it would not be objectively reasonable to challenge the regulation.

William R. Coulson:

Obviously I am saying he’s entitled to present it to a jury.

Edwin S. Kneedler:

At some point taxpayers have to recognize that their disagreements with the IRS have become settled by this Court, or once again we would be encouraging disrespect not only for the Internal Revenue Code, but for… but for the judicial process.

William R. Coulson:

It’s a fact question for the jury whether he possessed a mistake of law.

Edwin S. Kneedler:

I would like to get back to a question Justice Scalia mentioned earlier, that Mr. Cheek has conceded that constitutional objections to the Internal Revenue Code are not… are not a sufficient basis for defense, but he had other objections.

William R. Coulson:

It is not, as the Seventh Circuit has held, a legal question, a question in which they are going to launch this preemptive strike.

Edwin S. Kneedler:

In fact his only other objection, as I understand it, was the claim that wages are not income.

But the conclusion of your argument is that he has therefore established an affirmative defense known as mistake of law.

Edwin S. Kneedler:

If you look at his testimony in this case, and as this argument has been presented in other cases, that is… that has also been presented as a constitutional argument, that wages involve an equal exchange of labor for compensation.

It is not that ergo there is a failure to prove willfulness.

Edwin S. Kneedler:

There is no gain or profit, therefore it can’t be taxed.

William R. Coulson:

Well, I think that’s right.

Edwin S. Kneedler:

It’s in effect a tax of his property, which is a direct tax which can’t be taxed under the Sixteenth Amendment.

William R. Coulson:

I think it… and it comes down to a jury question.

Edwin S. Kneedler:

So even that argument, as it has traditionally been interpreted, or traditionally… traditionally been presented and as it has been presented by Mr. Cheek in this case, is at bottom a constitutional objection and falls in that same category.

William R. Coulson:

The Government has its evidence, they have enough evidence of willfulness to get past a directed verdict.

Edwin S. Kneedler:

But there is another point I would like to make about that.

William R. Coulson:

Mr. Cheek puts on his evidence as mistake of law.

Edwin S. Kneedler:

Petitioner does not suggest that that argument is grounded in anything in the Internal Revenue Code.

William R. Coulson:

From all these facts and all this mix the jury has to decide, as they do in every case in this country every day, whether he is a sham or whether he is sincerely confused.

Edwin S. Kneedler:

The other aspects of his testimony in this case were based on his… on a set of beliefs that were not grounded in the Internal Revenue Code.

But they are not deciding whether there’s willfulness.

Edwin S. Kneedler:

He referred to his… to his wages as property over which he had inalienable rights, citing and furnishing the IRS the Declaration of Independence.

They are deciding the separate issue, whether there is an affirmative defense of legal mistake, as I understand you.

Edwin S. Kneedler:

He had economic theories about equal exchanges of his labor for income.

William R. Coulson:

The affirmative defense negates willfulness, so the two are related.

Edwin S. Kneedler:

Those may be theories, those may be abstract beliefs, but they are not the sort of beliefs, as this Court made perfectly clear in Reynolds and–

Did he take any position about the withholding tax?

So I take it you do accept the Seventh Circuit saying that there has to be more than knowledge of, say, the provision of a regulation?

William R. Coulson:

I… not… not per se, Your Honor.

Edwin S. Kneedler:

–That’s all we have to show.

William R. Coulson:

He… he filed withholding statements to have his… to have his wages withheld… the withholding stopped, I am sorry.

Edwin S. Kneedler:

The defendant then may come in–

Well, he agreed that withholding was okay.

I know.

William R. Coulson:

No, he fought withholding.

I know, but the Seventh Circuit would say that if it’s objectively reasonable to believe that the regulation is invalid, he gets off.

William R. Coulson:

He filed a civil suit against withholding.

Edwin S. Kneedler:

–Yes.

William R. Coulson:

He filed W-4’s claiming he was exempt.

You accept that?

William R. Coulson:

The usual indoctrination that somebody who goes to these meetings of these tax protesters gets.

Edwin S. Kneedler:

We accept… we accept the mistake of law defense to that extent.

Did you submit an instruction to the jury on mistake of law as an affirmative defense?

Edwin S. Kneedler:

But I think the Chief Justice made an important point very early in the argument, and that is that as a general matter in the criminal law, mistake of law is not even a defense at all.

William R. Coulson:

In this, no.

Edwin S. Kneedler:

So we are operating in a context in which we are all… there is already an exception to the general principle under the criminal law that mistake of law is not a defense.

William R. Coulson:

In this case Mr. Cheek was pro se at the trial level, and essentially Judge Plunkett construct… put all the instructions together for him.

But an exception that wasn’t invented by the Internal Revenue Service.

Well then did Mr. Cheek submit an instruction on mistake of law?

Edwin S. Kneedler:

It wasn’t invented… it wasn’t invented in so many words by Congress either.

William R. Coulson:

Yes, there was an instruction.

Edwin S. Kneedler:

It was… it came from this Court… from this Court’s–

William R. Coulson:

He did and he didn’t.

Invented by this Court in Murdock.

William R. Coulson:

He orally discussed it with Judge Plunkett, and Judge Plunkett drafted it for him because he was pro se.

Edwin S. Kneedler:

–Right, attempting to… but, by the same… but I think that that points out why this Court should hold that defense within reasonable limits.

William R. Coulson:

He didn’t have a lawyer at the trial.

Edwin S. Kneedler:

If… if–

And what was the substance of the instruction?

Well, it’s a defense that makes a whole lot of sense, Mr. Kneedler.

William R. Coulson:

The substance of the instruction was… was Buckner, which Judge Plunkett felt compelled to give, that a good-faith misunderstanding has to be sincere and objectively reasonable.

Let’s not deprecate it.

William R. Coulson:

The jury was confused.

I take it that the reason we treat the tax laws differently is that everybody probably makes some mistake or other with respect to the complexities of the tax laws now and then.

William R. Coulson:

The jury couldn’t agree.

And if the only defense against going to jail for those mistakes is… is throwing yourself on prosecutorial discretion, we are all in the hands of Federal prosecutors who can choose to pursue us or not to pursue us as suits their convenience.

William R. Coulson:

The jury sent out notes what does this mean?

Edwin S. Kneedler:

–Right, and I did not mean… I am sorry if I was suggesting I was denigrating.

William R. Coulson:

We think he is sincere, what does this mean?

Edwin S. Kneedler:

All I was saying is that it needs the objective reasonableness limitation–

William R. Coulson:

The judge reinstructed him, and then the judge instructed him that, per Buckner, wages of not income is a prohibited belief.

Yes, but you would still be treating tax cases specially if you said you have to show that he knew what the law was.

William R. Coulson:

It cannot form the basis for a good-faith defense.

Edwin S. Kneedler:

–Right.

William R. Coulson:

But that was not tendered until after the jury was out, after the jury had had some questions.

Edwin S. Kneedler:

But that is… that is an interpretation this Court put on the word willfully.

William R. Coulson:

And I think it illustrates the difficulty that Judge Plunkett and other district judges have had trying to apply this Buckner-Cheek doctrine.

But you don’t need to… you don’t need to have the objectively reasonable business at all–

William R. Coulson:

There are a lot of other problems with Buckner-Cheek.

Edwin S. Kneedler:

No.

William R. Coulson:

It was decided in October of ’87, it was applied retroactively to Cheek’s trial, even though the offenses that Cheek had allegedly committed took place in 1981 to the spring of 1987, before Buckner.

–in order to treat the tax cases specially.

William R. Coulson:

This Buckner-Cheek doctrine, you look at the Buckner and Cheek and the Dunkel case, in the Seventh Circuit it is applied only to tax protesters.

Edwin S. Kneedler:

That is correct, but we do recognize that Murdock did… did recognize it in a little bit broader breadth for defense of mistake of law there.

William R. Coulson:

It is not applied to more traditional tax-evasion defendants in the Seventh Circuit.

Edwin S. Kneedler:

It was quite… it was clear that there was no valid Fifth Amendment claim at the time that Murdock declined to furnish the information.

William R. Coulson:

It has not been applied in any other circuit in this country.

Edwin S. Kneedler:

But… but because that was–

I don’t understand.

In any event, you accept the Seventh Circuit’s objectively reasonable–

How can you avoid applying it to other, you know… how can you avoid applying it across the board to all taxpayers who fail to do it?

Edwin S. Kneedler:

–We do, yes.

William H. Rehnquist:

We’ll hear argument next in No. 89-658, John L. Cheek v. United States.

William R. Coulson:

I agree completely, and that is a problem with the way the Seventh Circuit has done it.

–and that the mistake of law defense is that broad.

William R. Coulson:

Mr. Chief Justice, and may it please the Court:

They have singled out tax protesters.

Edwin S. Kneedler:

That is right.

William R. Coulson:

This is a criminal tax case.

They have come up with a unique definition of willfulness in the criminal tax statutes and they have applied it only to the people they consider to be tax protesters.

Edwin S. Kneedler:

But we think that the limitation the Seventh Circuit has put on it in terms of the objectively reasonable limitation is a critical limitation, because it would–

William R. Coulson:

Just before sentencing the petitioner, John L. Cheek, the district court said to him,

That is unfair.

And how is the person who may be retarded or otherwise lacking in understanding to be protected here?

William R. Coulson:

“I do not want to sentence you for beliefs that I believe were honestly held, although I believe foolishly held.”

That is improper.

Edwin S. Kneedler:

–By… by the requirement of knowledge.

William R. Coulson:

That is the district court speaking, and that is what this case is fundamentally all about.

Absolutely.

Edwin S. Kneedler:

He has to, we have to show in order to sustain a conviction as part of our affirmative case that he was aware of the legal duty imposed by the code.

William R. Coulson:

Petitioner John Cheek’s defense, albeit a pro se defense, was a classic mistake of law based in part on advice he got from counsel.

That is one of our complaints about the Buckner-Cheek doctrine.

Edwin S. Kneedler:

And if he relies on a defense that… or an interpretation of the code, notwithstanding his knowledge, that is objectively reasonable, he, like anyone else, would benefit from that.

William R. Coulson:

He contended that at all times of the alleged offenses he had a bona fide misunderstanding of his duties under the tax laws.

I don’t understand what you mean.

Mr. Kneedler, you keep reciting that phrase and I have the same trouble that Justice Kennedy does with it, that he has to have knowledge of the legal duty imposed by the code.

William R. Coulson:

This is a recognized defense.

You don’t mean that they… that they apply their rule only to tax protesters.

But, I mean, that is circular.

William R. Coulson:

It was articulated by this Court in Murdock in 1933, some 57 years ago.

You mean that their rule only identifies tax protesters.

He is always contending that there is no legal duty under the… under the code.

William R. Coulson:

However, not more than 3 weeks before petitioner’s trial commenced before the Seventh Circuit… before the district court in Chicago, the Seventh Circuit in October of 1987 in the United States v. Buckner decided that in so-called tax-protester cases it wasn’t enough that the tax defendant’s misunderstanding or belief, as the Seventh Circuit calls it, be sincerely held or bona fide per Murdock, but also the defendant’s understanding or belief of the tax laws had to be found by the jury to be objectively reasonable, whatever that means.

Is that what you mean?

What do you mean by he has knowledge of the legal duty?

William R. Coulson:

Moreover, as to certain enumerated understandings, or beliefs, or misunderstandings of the tax laws, it wasn’t enough even for a defendant to convince a jury that he sincerely possessed the misunderstanding and that the misunderstanding was objectively reasonable.

The rule is expressly designed to deal with tax protesters, and in fact it has been applied only in tax-protester cases.

What precisely do you mean by it?

William R. Coulson:

But as to those listed beliefs the Seventh Circuit held that they were forever objectively unreasonable as a matter of law.

And I cite in our brief some Seventh Circuit traditional tax-evasion cases in which the Seventh Circuit applies the subjective standard.

He is always saying I think the code doesn’t impose a legal duty.

Mr. Coulson, you don’t have to go to law school to learn that traditionally mistake of law is… is no defense.

William R. Coulson:

They don’t require… a person defends in the Seventh Circuit and says I didn’t know that bribes were income or I didn’t know that this payment to me, the return of capital, was income.

Edwin S. Kneedler:

Well, in fact what he is saying in this case is what comes down to a natural law objection.

Why is there, why should it be a defense here, because of the word willfully in the statute?

William R. Coulson:

Issues like that.

Edwin S. Kneedler:

In my view of what wages are, they aren’t… there’s no gain or profit.

William R. Coulson:

Because this Court and other courts have recognized that in the criminal tax statutes, the mistake of law defense has particular vitality.

The Seventh Circuit does not require that the defendant establish that those ideas are objectively reasonable.

I’m not talking about this case.

Why should that be?

William R. Coulson:

It is only in tax protesters.

I’m talking about somebody who reads the regulation and says that regulation, I don’t think that’s an accurate interpretation of the code.

William R. Coulson:

Because the tax codes are complex in numerous respects.

Do you think–

Edwin S. Kneedler:

Well, if he has an argument–