Facts
- John L. Cheek, an airline pilot, filed federal income tax returns through 1979 but stopped filing beginning in 1980.
- Cheek increased withholding allowances on his Form W-4 (to roughly sixty), substantially reducing wage withholding.
- After exposure to “tax protester” materials and personal study, Cheek asserted he believed his wages were not “income,” he was not a “taxpayer” under the Internal Revenue Code, and federal tax laws were being unconstitutionally enforced.
- A federal grand jury charged Cheek with six counts of willfully failing to file returns (26 U.S.C. § 7203) and three counts of willfully attempting to evade income tax (26 U.S.C. § 7201).
- Cheek admitted the charged conduct but argued he lacked “willfulness” because he sincerely believed he had no legal duty to file or pay tax on wages and believed the tax system was unconstitutional as applied to him.
Issues
- Whether a defendant’s good-faith misunderstanding of the tax law or belief that he is not violating the law must be objectively reasonable to negate “willfulness” under 26 U.S.C. §§ 7201 and 7203.
- Whether a defendant’s belief that the federal income tax laws are unconstitutional may be considered by the jury as evidence negating willfulness.
Decision
- The Supreme Court reversed and remanded for a new trial with proper jury instructions.
- The Court held that a good-faith misunderstanding of tax law, or a good-faith belief one is not violating the law, negates willfulness even if the belief is objectively unreasonable.
- The Court held that beliefs that tax statutes are unconstitutional or otherwise invalid do not negate willfulness and should not be presented to the jury on that issue.
- The Court ruled the trial court erred by instructing that an “honest but unreasonable” belief cannot negate willfulness and by treating certain asserted beliefs as categorically “not objectively reasonable.”
- The Court approved the instruction that constitutional challenges to the tax laws are irrelevant to willfulness.
Legal Principles
- In federal criminal tax offenses, “willfulness” means the voluntary, intentional violation of a known legal duty.
- The government must prove the defendant knew the law imposed a duty and intentionally violated that duty.
- A defendant’s subjective good-faith misunderstanding of the Internal Revenue Code, or subjective good-faith belief that he is complying with it, can negate willfulness even if the belief is unreasonable.
- The unreasonableness or implausibility of a claimed belief may be considered as evidence bearing on whether the belief was honestly held, but it is not a categorical bar to the defense.
- A belief that the tax laws are unconstitutional or invalid reflects disagreement with the law’s legitimacy, not misunderstanding of legal duty, and is irrelevant to willfulness.
Conclusion
The Court required that juries in criminal tax cases be allowed to consider a defendant’s sincerely held misunderstanding of tax duties when assessing willfulness, while excluding arguments that the tax laws are unconstitutional or invalid as irrelevant to that mental-state element.