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939 F.2d 499
UNITED STATES of America, Plaintiff-Appellee,
Lorin G. SLOAN, Defendant-Appellant.
United States Court of Appeals,
Argued June 14, 1991.
Decided Aug. 9, 1991.
Rehearing and Rehearing En Banc
Denied Sept. 10, 1991.
Andrew B. Baker, Jr. (argued), Asst. U.S. Atty., Dyer, Ind., for plaintiff-appellee.
Lorin G. Sloan (argued), pro se.
Before POSNER, MANION and KANNE, Circuit Judges.
KANNE, Circuit Judge.
Like moths to a flame, some people find themselves irresistibly drawn to
the tax protestor movement's illusory claim that there is no legal requirement
to pay federal income tax. And, like the moths, these people sometimes
burned. Lorin G. Sloan believed these claims and because he acted upon
them now faces four months in a federal prison; there can be little doubt that
he has been burned.
Mr. Sloan describes himself as a "blue collar working man" employed
by the Fisher Body Division of General Motors at its plant in Marion, Indiana.
After studying anti-tax literature he received at meetings of the Sons of Liberty
and Patriots for Liberty, two organizations of like-minded tax protestors,
Mr. Sloan became adamant in his belief that he was not obligated to pay federal
income taxes. Consistent with this new-found conviction, Mr. Sloan did not
pay any federal income taxes on his wages for the years 1981, 1982 and 1983
(a total tax due of approximately $8,000.00) and took the affirmative step
of filing false W-4 forms to ensure that his "exemption" from the
income tax continued. Because he put this theory into practice, in due course
Mr. Sloan was charged with, tried on, and convicted by a jury of three counts
of tax evasion, 26 U.S.C. s 7201. The district judge sentenced him to four
months imprisonment on one count to be followed by four months of work release.
Sentences of two and three years imposed on the other two counts were suspended.
In addition, Mr. Sloan was placed on follow-up probation of five years, required
to pay his tax deficiency and repay the costs of prosecution, and fined $200,000
(which was later suspended). The execution of Mr. Sloan's sentence was stayed
pending the outcome of this appeal.
Mr. Sloan ostensibly pursues this matter on his own behalf--or perhaps more
correctly without trained legal counsel. In any event, he appeared before us
personally to argue his appeal. The primary position taken by Mr. Sloan is
that he has been unable to learn from any authoritative source--the tax code,
the Internal Revenue Service, or the federal courts--the exact statutory provision
which imposes upon him a legal duty to file a federal tax return. This position
is, no doubt, formulated to show that he did not willfully violate a "known
legal duty." Moreover, in demonstrating to him the existence of this duty,
Mr. Sloan insists that our analysis of his obligation to pay the federal income
tax be consistent with certain fundamental principles or "standards" which
he says he has learned through his studies. Unfortunately, for Mr. Sloan, his "standards" are
inapplicable because they have previously been rejected by the federal courts.
One such fundamental and immutable principle, he maintains, is that the revenue
laws of the United States do not impose a tax on income. But we have squarely
rejected this tax protestor argument before, holding that the Internal Revenue
Code imposes a tax on all income, Coleman v. Commissioner, 791 F.2d 68, 70
(7th Cir.1986); Lovell v. United States, 755 F.2d 517, 519 (7th Cir.1984),
and that wages are income, United States v. Koliboski, 732 F.2d 1328, 1329 & n.
1 (7th Cir.1984).
As another cornerstone of his position, Mr. Sloan cites Chevron U.S.A., Inc.
v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct.
2778, 2781, 81 L.Ed.2d 694 (1984), for the proposition that the tax code provisions
establishing an income tax are an unlawful agency interpretation of a statute
because the Congress clearly did not intend to impose a tax on income. His
argument, of course, is based on the false premise described above. Congress
lawfully enacted the Internal Revenue Code and the Internal Revenue Code lawfully
imposes a tax on income. See, e.g., Coleman, 791 F.2d at 70; United States
v. Studley, 783 F.2d 934, 940 (9th Cir.1986); Wheeler v. United States, 744
F.2d 292, 293 (2d Cir.1984); Koliboski, 732 F.2d at 1329. Thus, the prosecution
of persons for tax evasion under federal criminal law presents no issue of
deference to an agency's interpretation of federal statutes. Also basic to
Mr. Sloan's "freedom from income tax theory" is his contention that
he is not a citizen of the United States, but rather, that he is a freeborn,
natural individual, a citizen of the State of Indiana, and a "master"--not "servant"--of
his government. As a result, he claims that he is not subject to the jurisdiction
of the laws of the United States. This strange argument has been previously
rejected as well. "All individuals, natural or unnatural, must pay federal
income tax on their wages," regardless of whether they requested, obtained
or exercised any privilege from the federal government. Lovell, 755 F.2d at
519; cf. Studley, 783 F.2d at 937 (Studley's argument that "she is not
a 'taxpayer' because she is an absolute, freeborn and natural individual ...
is frivolous. An individual is a 'person' under the Internal Revenue Code.").
Moreover, the tax code imposes a "direct nonapportioned [income] tax upon
United States citizens throughout the nation, not just in federal enclaves," such
as postal offices and Indian reservations. United States v. Collins, 920 F.2d
619, 629 (10th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 2022, 114
L.Ed.2d 108 (1991) (citing Brushaber v. Union Pacific R.R., 240 U.S. 1, 12-19,
36 S.Ct. 236, 239-42, 60 L.Ed. 493 (1916)). Mr. Sloan's proposition that he
is not subject to the jurisdiction of the laws of the United States is simply
wrong. The foregoing recitation of federal court rulings rejecting his taxation
principles really comes as no surprise to Mr. Sloan for he has shown himself
to be aware of existing case law in this area. In fact, in order to make plain
his position Mr. Sloan states categorically that "I DO NOT 'misunderstand
the law.' I am not raising a constitutional challenge to the taxing statutes.
This is a question of whether I can be charged with a crime for violating a
legal duty when no one will show me where that legal duty exists." See "Appellant
Sloan's Notice of Standard" at 10 (filed July 1, 1991).
We will treat Mr. Sloan's question as a challenge to the legal sufficiency
of the indictment which charged him with tax evasion. To meet the standards
imposed by the fifth and sixth amendments to the Constitution, an indictment
must " state[ ] all of the elements of the offense charged,  inform[
] him of the nature of the charges so that a defense can be prepared, and 
enable[ ] the defendant to evaluate any possible double jeopardy problems presented
by the charge." United States v. Glecier, 923 F.2d 496, 499 (7th Cir.1991)
(quoting United States v. Neapolitan, 791 F.2d 489, 500- 01 (7th Cir.), cert.
denied, 479 U.S. 939, 107 S.Ct. 421, 93 L.Ed.2d 371 (1986)); United States
v. Foster, 789 F.2d 457, 459 (7th Cir.), cert. denied, 479 U.S. 883, 107 S.Ct.
273, 93 L.Ed.2d 249 (1986). All the requirements were readily met in this case.
First, the three-count indictment stated all the essential elements required
to be proved by the government to convict the defendant of federal tax evasion.
Glecier, 923 F.2d at 499. "To establish a violation of s 7201, the government
must prove willfulness, the existence of a tax deficiency and an affirmative
act constituting an evasion or attempted evasion of [the] tax." United
States v. Copeland, 786 F.2d 768, 770 (7th Cir.1985) (citing Sansone v. United
States, 380 U.S. 343, 351, 85 S.Ct. 1004, 13 L.Ed.2d 882 (1965)); see also
United States v. Davenport, 824 F.2d 1511, 1516 (7th Cir.1987). Here, all three
counts of the indictment established the first required element by alleging
that Mr. Sloan "did willfully and knowingly attempt to evade and defeat
said income tax due and owing to the United States." The indictment's
first count further stated that he "owed approximately $4,142.30 to the
United States of America in income tax," providing him notice of the existence
of a tax deficiency. [FN1] Finally, the act of filing a false Form W-4 constitutes
an affirmative act of evasion or attempting to evade. See Copeland, 786 F.2d
at 770. And, once again, all three counts of the indictment indicated that
Mr. Sloan had committed this affirmative act.
FN1. The tax deficiencies differed for each of the three years. Count 2 indicated
that Sloan owed $3,618.00 to the United States government for 1982, while count
3 covering 1983 revealed that Sloan was obligated to pay $653.53 to the government.
Second, the indictment was sufficient to inform Mr. Sloan of the charges against
him. Glecier, 923 F.2d at 499. The indictment cited the statute he was accused
of violating (26 U.S.C. s 7201) and identified the specific tax (the income
tax) he was obligated to pay. It also provided other information--including
the tax year, his taxable income, the amount of tax due, his failure to file
an income tax return, his filing of a false Form W-4, and his failure to pay
the tax--pertinent to the charges against him. [FN2] Thus, the second requirement
was satisfied in the present case.
FN2. We also note that this information satisfies the requirements imposed
by the Federal Rules of Criminal Procedure. See FED.R.CRIM.P. 7(c)(1) ( "the
indictment or information shall be a plain, concise, and definite written statement
of the essential facts constituting the offense charged.... The indictment
or information shall state for each count the official or customary citation
of the statute, regulation or other provision of law which the defendant is
alleged therein to have violated.").
Third, the indictment sufficiently designated the tax, the tax year, and the
specific false W-4 forms (those Sloan filed with his employer, Fisher Body
Division of General Motors) to eliminate any possibility of objection on the
grounds of double jeopardy. Mr. Sloan's indictment was therefore legally sufficient
in all respects to support his convictions for tax evasion for the years 1981,
1982 and 1983.
We also note that the Supreme Court's recent decision in United States v.
Cheek, --- U.S. ----, 111 S.Ct. 604, 112 L.Ed.2d 617 (1991), does not help
Mr. Sloan. The jury in this case was given what was later determined in Cheek
to be an erroneous "objectively reasonable good faith misunderstanding
of the law" instruction. However, Mr. Sloan did not object to that instruction
at trial and therefore the issue was not preserved for appeal--unless the giving
of the instruction constituted plain error. United States v. Witvoet, 767 F.2d
338, 340 (7th Cir.1985). Plain error, as our cases teach, is error of such "great
magnitude that it probably changed the outcome of the trial." United States
v. Kerley, 838 F.2d 932, 937 (7th Cir.1988) (citation omitted). But it is rare
for an improper instruction to "justify reversal of a criminal conviction
when no objection has been made in the trial court." Henderson v. Kibbe,
431 U.S. 145, 154, 97 S.Ct. 1730, 1736, 52 L.Ed.2d 203 (1977). To determine
whether a jury instruction was plain error, we must examine the entire trial
record to see if the instruction had a probable impact on the jury's finding.
United States v. Bressler, 772 F.2d 287 (7th Cir.1985), cert. denied, 474 U.S.
1082, 106 S.Ct. 852, 88 L.Ed.2d 892 (1986); Witvoet, 767 F.2d at 339-40; United
States v. Verkuilen, 690 F.2d 648, 653 (1982). In Bressler, another tax protestor
case, the court held that the district court's instruction on the good faith
defense--which required the misunderstanding to be "objectively reasonable"--did
not constitute plain error because the court had properly instructed the jury
that willfulness is a "voluntary and intentional violation of a known
legal obligation," and because the "evidence clearly established
that the defendant did not 'misunderstand' the law." Bressler, 772 F.2d
The same considerations are present in this case. The jury received the correct
definition of willfulness and Mr. Sloan specifically concedes that he does
not misunderstand the law. Moreover, this concession is consistent with the
evidence introduced at trial showing that he filed correct tax returns and
paid the appropriate amount of income tax in 1978, 1979 and 1980. In the following
years, because of his disagreement with the federal income tax law he did not
file tax returns and submitted false W-4 forms which claimed he was exempt
and had owed no income tax the previous year. We therefore conclude that even
if the defective jury instruction had not been given, the outcome of the trial
would have been the same and thus there was no plain error.
The real tragedy of this case is the unconscionable waste of Mr. Sloan's time,
resources, and emotion in continuing to pursue these wholly defective and unsuccessful
arguments about the validity of the income tax laws of the United States. Despite
our rejection of Mr. Sloan's legal analysis of the tax laws, we are not unmindful
of the sincerity of his beliefs. On the other hand, we are less sure of the
sincerity of the professional tax protestors who promote their views in literature
and meetings to persons like Mr. Sloan, yet are unlikely ever to face the type
of penalties incurred by him. It may be that our decision will not alter Mr.
Sloan's views regarding the tax laws of this country, for he has stated that
if we affirm his conviction without applying the law as he understands it,
our decision will be "a sham to which I WILL NOT SUBMIT." It may
also be that serving his sentence in prison will not alter Mr. Sloan's view.
We hope this pessimistic assessment is incorrect.
We AFFIRM the conviction of Lorin G. Sloan on all counts.
to Tax Protestor Exhibit