## Facts

- Manley Sullivan earned substantial income from illegal liquor sales during Prohibition.
- The federal government alleged Sullivan had net income of about $10,000 in 1921 and was required to file a return under the Revenue Act of 1921.
- Sullivan did not file any income tax return for 1921.
- He was convicted in federal district court for willfully refusing to file a return.
- The court of appeals reversed, reasoning that filing a sworn return would violate the Fifth Amendment privilege against self-incrimination for a person whose income was illegal.
- The Supreme Court granted certiorari to review whether illegal income is taxable and whether the Fifth Amendment excused total nonfiling.

## Issues

1. Whether income derived from illegal liquor trafficking constitutes taxable “gross income” under the Revenue Act of 1921.
2. Whether the Fifth Amendment privilege against self-incrimination permits a taxpayer with illegal income to refuse entirely to file an income tax return.
3. Whether, and how, a taxpayer must assert the Fifth Amendment privilege when responding to a return’s disclosure requirements.

## Decision

- The Supreme Court unanimously reversed the court of appeals.
- The Court held that gains from illegal liquor trafficking are subject to federal income tax.
- The Court held that the Fifth Amendment does not bar prosecution for willful refusal to file any return.
- The Court ruled that any Fifth Amendment privilege must be asserted as to particular disclosures on the return, not by total noncompliance.
- Because Sullivan filed no return and asserted no specific privilege, his conviction for willful failure to file was sustained.

## Legal Principles

- Federal income tax statutes covering income “from any source whatever” apply to illegal as well as legal income.
- The Fifth Amendment privilege against self-incrimination does not create a general exemption from filing a required tax return.
- A taxpayer must file a return and may claim the Fifth Amendment only as to specific items that would be self-incriminating; the privilege is not a blanket defense to nonfiling.
- Failure to file any return, rather than filing and asserting privilege where appropriate, permits prosecution for willful refusal to file.

## Conclusion

The Court held that illegal earnings are taxable and that the Fifth Amendment does not justify refusing to file an income tax return; any self-incrimination concern must be raised specifically within the return rather than by total nonfiling.


United States v. Sullivan, 274 U.S. 259 (1927)