Summary
rejecting argument that an indictment alleging violations of § 7202 was deficient because it failed to quote § 7202 and allege defendant was a person "required to collect, account for, and pay over any tax"
Summary of this case from United States v. RussellOpinion
Criminal No. SA-03-CR-0469-XR
December 16, 2003
ORDER
On this date, the Court considered Defendant's Motion to Dismiss Indictment (docket no. 16). For the reasons stated below, the Court DENIES the motion.
Indictment
On October 13, 2003, a seven count indictment was filed against Mary Esther Ramirez. The Indictment charged that she was the President, treasurer and 50% shareholder of TRI-RAM, Inc., which conducted business under the name of Security General Insurance. The five page Indictment alleged that during various specific time periods, Defendant deducted and collected from the total taxable wages of the employees of TRI-RAM, Inc., federal income taxes, Federal Insurance Contributions Act (FICA) taxes, and Medicare taxes in various specific sums, and she willfully failed to truthfully account for and pay over to the Internal Revenue Service said federal income taxes, FICA taxes and Medicare taxes due and owing to the United States of America in violation of 26 U.S.C. § 7202. In total, the Indictment alleges that Defendant failed to account for and pay over $69,984.45 to the Internal Revenue Service from the period October 1997 through April 1999.
Section 7202 states:
Any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution.
Defendant's Motion to Dismiss
Defendant argues that the Indictment is deficient, and therefore fails to state an offense, because there is no allegation that the Defendant was a person "required to collect, account for, and pay over any tax." In the alternative, Defendant argues that even if she was a person "required to collect, account for, and pay over any tax," the statute is unconstitutionally vague in that neither section 7202, nor any other statute, imposes upon a corporate officer or shareholder an unequivocal duty to collect, account for, and pay over any tax, with the specificity required for a criminal statute.
Analysis
"An indictment is sufficient if it contains the elements of the charged offense, fairly informs the defendant of the charges against him, and ensures that there is no risk of future prosecutions for the same offense." U.S. v. Sims Bros. Const. Inc., 277 F.3d 734, 741 (5th Cir. 2001); U.S. v. Perry, 638 F.2d 862, 870-71 (5th Cir. 1981) (upholding the sufficiency of a "bare-bones" indictment). The basic purpose of an Indictment is to fairly inform the defendant of the charge against him so that he may prepare his defense. U.S. v. Fitzgerald, 89 F.3d 218, 222(5th Cir.), cert. denied, 519 U.S. 987 (1996). Here, the Indictment charged that Defendant was the President and Treasurer of TRI-RAM, Inc. d/b/a Security General Insurance. The Indictment charges that Defendant deducted and collected various sums from TRI-RAM, Inc.'s employees' total taxable wages for federal income taxes, FICA taxes, and Medicare taxes. Finally, the Indictment charges that she willfully failed to truthfully account for and pay over to the Internal Revenue Service said federal income taxes, PICA taxes and Medicare taxes due and owing to the United States of America in violation of 26 U.S.C. § 7202. The requisite elements of the offense were alleged in the Indictment. See U.S. v. Wilson, 884 F.2d 174, 179 (5th Cir. 1989)("The test of the validity of an indictment is "not whether the indictment could have been framed in a more satisfactory manner, but whether it conforms to minimal constitutional standards."). The mere fact that the Indictment failed to include a statement that Defendant was a person "required . . . to collect, account for, and pay over any tax imposed" does not cause the Indictment to become deficient. See Id., 884 F.2d at 179 ("the law does not compel a ritual of words, and a recitation of the exact scienter (`knowing') is not required where the pleading `fairly imports' knowledge."). Accordingly, the Court finds that the Indictment fairly informs Defendant as to the charges against her so that she may adequately prepare her defense.
With regard to Defendant's argument that section 7202 is unconstitutionally vague in that it does not unequivocally impose a duty upon a corporate officer or shareholder to collect, account for and pay over taxes, a related argument was made and rejected by the Third Circuit Court of Appeals in U.S. v. Thayer, 201 F.3d 214 (3d Cir. 1999), cert. denied, 530 U.S. 1244 (2000). In Thayer, Defendant Thayer was convicted on twenty counts of criminal liability for willful failure to pay over federal withholding and FICA taxes in violation of 26 U.S.C. § 7202 and 18 U.S.C. § 2; willful filing of false claims against the government, in violation of 18 U.S.C. § 2, 152; and willful concealment of bankruptcy-estate assets, in violation of 18 U.S.C. § 2, 152. Thayer and his wife were sole owners of two corporations. He was the President. He also owned eighty percent of the corporations (his wife owned the remaining 20 percent). On appeal from his conviction, Thayer claimed that § 7202 was inapplicable because he was not a person required to pay over withheld taxes and because he truthfully accounted for the unpaid taxes. Thayer argued that only employers such as his two corporations were required to withhold employees' taxes. Thayer argued he was merely an officer and part-owner of the two corporations, and not an "employer" as defined by the Internal Revenue Code. Relying upon the United States Supreme Court's decision in Slodov v. U.S., 436 U.S. 238(1978), the Third Circuit found that persons civilly liable under § 6672(a) for failure to collect and pay over taxes could also be held criminally liable under § 7202. Rejecting Thayer's narrow definition of "person", the Third Circuit also found that "person" for purposes of § 7202 was the same as the definition stated in § 7343. Accordingly, the Third Circuit found that Thayer, as the president and majority owner of the two corporations in question was properly charged and convicted as a "person" under § 7202.
"Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over."
The term "person" as used in this chapter includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs.
The standard for finding a statute void for vagueness is whether the statute (1) fails to define the offense with sufficient definitiveness that ordinary people can understand what conduct is prohibited, and (2) fails to establish minimum guidelines to govern law enforcement so as to invite arbitrary and discriminatory law enforcement. Kramer v. Price, 712 F.2d 174 (5th Cir. 1983), vacated on other grounds, 723 F.2d 1164 (5th Cir. 1984). Section 7202 imposes a penalty upon any person who willfully fails to collect or truthfully account for and pay over taxes. The term "person," as used in the relevant chapter, includes a corporate officer who "is under a duty to perform the act in respect of which the violation occurs." An ordinary person is able to understand the conduct prohibited by the statutes. Further, the statutes require proof that the defendant knew of the collection, accounting and turn over requirements and acted with specific intent to circumvent the requirements ("who willfully fails'). Section 7202 is not void for vagueness.
It is therefore ORDERED that Defendant's Motion to Quash Indictment is DENIED.