Essay on U.S. v. Greenberg and U.S. v. Garber

The cases of US v. Greenberg and US v. Garber pertain to the failure to pay by both taxpayers of their duty to pay taxes to the government.  Though the defendants in these cases committed similar infractions in failing to pay their income taxes, the outcome was different in the sense that one was adjudged not guilty of any criminal liability while the other was adjudged guilty of a criminal liability.  In the end, the courts reached different conclusion insofar as determining the defendants’ intent to evade the payment of their taxes.

In US v. Greenberg, a case was filed against Jack Greenberg for filing a materially false corporate income tax return, a materially false personal income tax return and failure to file a federal income tax return.  In contrast, in the case of US v. Garber, Dorothy Clark Garber was charged for filing a false and fraudulent income tax return on behalf of her and her husband.

In US v. Greenberg, the applicable law is Section 7206 (1) of 26 USC which makes it unlawful for a person to willfully make and subscribe any return under the penalties of perjury which he does not believe to be true and material.  In the case, In the case of US v. Garber, the applicable law is Section 61(a) of the Internal Revenue Code which defines gross income as all income from whatever source derived including but not limited to compensation for serves, including fees, commissions and similar items and gains derived from dealings in property;

Jack Greenberg did not dispute the fact that he assisted in the filing of false income tax return.  However, he argues that his convictions should be revised because of the issue of materiality essential in the governing provision of Section 7206 which he said should be submitted to the jury rather than decided by the court as a matter of law.  He argued that issue of materiality is a question of fact should be decided by the jury.

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Dorothy Clark Garber, however, argues that the money she received from different companies was not within the legal definition of income under Section 61(a) of Internal Revenue Code and alleged that she participated in tax-free exchanges based on the theory that the funds obtained by conversion of capital assets and which represented only the actual value of such assets was not a taxable income.

In the Greenberg case, the court decided that the false statements were material and making and subscribing to the income tax returns is punishable under the law.  Citing the case of US v. Whyte, 699 F.2d 375, the court ruled that the issue of materiality is a question of law which should be decided by the court.

In contrast, the court in Garber case ruled that the defendant should not be held guilty of evading and defeating income taxes on income where the liability for the payment of which is uncertain that even co-ordinate branches of the government reached different conclusions.  Citing the case of US v. Critzer, 498 F.2d 1160, the court ruled that the defendant cannot be held guilty of willfully evading taxes on income when the taxability of the same is so uncertain that even the other branches of government have different views on its taxability.

 

As a matter of law, defendant cannot be guilty of willfully evading and defeating income taxes on income, the taxability of which is so uncertain that even co-ordinate branches of the United States Government plausibly reach directly opposing conclusions.  Because of the uncertainty in the existing laws and jurisprudence, intent to evade and defeat income tax is missing.

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