Appeal from the United States District Court for the Central District of Illinois, Springfield Division, No. 85-3000063, Richard Mills, Judge.
Before COFFEY and FLAUM, Circuit Judges, and PELL , Senior Circuit Judge.
COFFEY, Circuit Judge. Paul R. Thompson appeals his conviction for ten counts of excise tax evasion under 26 U.S.C. § 7201 (1982). We affirm.
The indictment in this case charged that Paul Thompson evaded more than $38,000 in federal excise taxes owed for diesel fuel sales made over a period of ten consecutive fiscal quarters beginning in May, 1979 and ending September 30, 1981 in violation of 26 U.S.C. § 7201.*fn1 Thompson owned and operated both the Auburn Oil Company as well as the Thompson Oil Company. The Auburn Oil Company operated a truck stop located near an interstate highway in Springfield, Illinois, known as the Big Chief Truck Plaza. The Thompson Oil Company made diesel fuel purchases from the Clark Oil Company and resold that fuel to the Auburn Oil Company for subsequent resale at the Big Chief Truck Plaza. During this period of time (May, 1979 through September, 1981) the federal government was imposing a four cent per gallon excise tax on all fuel sold for use in diesel powered highway vehicles.*fn2
Retail sellers of diesel fuel had the responsibility of collecting the tax. Retailers could shift the responsibility for the collection of the tax to their suppliers by having the diesel fuel suppliers include the tax in their purchase price. Federal law further required that an excise tax return be filed with the Internal Revenue Service for each fiscal quarter in which a person made sales of taxable diesel fuel.
Evidence presented at trial revealed that Thompson used his Thompson Oil Company to make diesel fuel purchases from the Clark Oil Company without having Clark charge the excise tax in its sale price to its purchasers. Thompson had the Thompson Oil Company resell the fuel with the tax included in the price to his Auburn Oil Company for eventual retail sale at the Big Chief Truck Plaza. The government contended at trial that the defendant Thompson pocketed the excise tax money included in the Thompson Oil Company's price of diesel fuel sold to Auburn Oil. On the other hand, Thompson maintained that he used the Thompson Oil Company to make purchases for Auburn Oil because Thompson Oil had a long-standing credit relationship with the Clark Oil Company and further contended that he thought that Clark was including an amount for the federal excise tax in its sales price. Thompson produced a copy of a handwritten speed memo directing Clark Oil to include all state and federal taxes in its sales price to Thompson Oil, but a search by a representative of the Clark Oil Company of the Clark Oil Company records revealed that Clark received a memo from Thompson requesting that only state taxes be included in the price of the fuel.
Thompson, through his Auburn Oil Company, also purchased diesel fuel for retail sale at the Big Chief Truck Plaza from the Ben-Al Oil Company. Ben Jones, the owner of the Ben-Al Oil Company, testified at trial that Thompson instructed him not to include the amount of the federal excise tax in his price for diesel fuel sold to Auburn Oil for resale at the Big Chief Truck Plaza. Thompson, on the other hand, contended that he was unaware of Ben-Al's failure to include the tax in the sales price and requested that it be included once the fact came to his attention. At trial Jones also testified that Thompson gave him a number to place on Ben-Al's invoices and stated that this number authorized Thompson to make "tax free" purchases for the Big Chief Truck Plaza. In reality, the number was unrelated to the collection of federal excise taxes since it was the Thompson Oil Company's federal employer identification number. The number appeared on Ben-Al's original invoices but was missing or otherwise illegible on the customer copies of the invoices. Because Thompson purchased diesel fuel from the Ben-Al Company without having Jones withhold the excise tax and then resold it to retail customers at the Big Chief Truck Plaza, he became liable for the tax.
The four cent excise tax on the 956,212 gallons of diesel fuel purchased by Thompson from Clark and Ben-Al and resold at the Big Chief Truck Plaza from 1979 to 1981 amounted to $38,248.48. The pump price paid for diesel fuel at the Big Chief Truck Plaza included the excise tax. Further the record reflects that the defendant failed to pay the excise tax collected to the Internal Revenue Service. Thompson's claim at trial was that he made many sales of diesel fuel to tax exempt customers such as farmers who were exempt from paying the excise tax. At trial Thompson failed to produce any records to support his contention that he made extensive tax exempt sales. In fact, on cross-examination Thompson admitted that according to his own estimate only 10 to 15 percent of the sale of diesel fuel at the Big Chief Truck Plaza were tax exempt.
Prior to trial, Thompson made a motion in limine to exclude any evidence at trial of his prior convictions for tax evasion. The trial court denied Thompson's motion in limine ruling that his prior state tax fraud convictions were admissible under Federal Rule of Evidence 609. The court held that Thompson's prior convictions were admissible as conforming to the requirements of Rule 609 as they were crimes involving dishonesty and his trial would commence within less than 10 years of his release from confinement for his state tax fraud convictions. Thompson had pled guilty to thirty charges of violating the Illinois state tax laws on August 22, 1975 in Sangamon County Circuit Court. The thirty convictions stemmed from Thompson's filing of false Illinois sales tax returns, false Illinois motor fuel tax returns, and a false Illinois corporate income tax return. After the trial court denied the motion in limine, counsel for Thompson requested that the court inquire on voir dire examination of potential jury members whether any panel members would be prejudiced against Thompson because of his prior convictions. The court complied with Thompson's request that it inquire on voir dire examination whether any potential jury members would be prejudiced against Thompson due to his prior convictions.
Initially, Thompson contends that his tax evasion conviction should be reversed because the government failed to prove that he owed taxes on all his sales of diesel fuel. Specifically, Thompson seems to maintain that the government did not meet its burden of proof because it failed to prove the specific amount of excise tax owed by Thompson. Thompson contends that the government cannot "prove that a defendant has evaded a specific amount of tax in a specific quarter by simply multiplying the number of gallons sold by the amount of excise tax applicable." In Sansone v. United States, 380 U.S. 343, 13 L. Ed. 2d 882, 85 S. Ct. 1004 c, (1965), the United States Supreme Court stated that "the elements of § 7201 are willfulness; the existence of a tax deficiency; and an affirmative act constituting an evasion or attempted evasion of the tax." Id. at 351 (citations omitted). See also United States v. Marabelles, 724 F.2d 1374, 1377 (9th Cir. 1984); United States v. Callahan, 588 F.2d 1078, 1081 (5th Cir. 1979); United States v. Voorhies, 658 F.2d 710, 713 (9th Cir. 1981). On appeal, Thompson argues that the government failed to prove the existence of a tax deficiency.
The indictment charged that for ten successive quarters in 1979, 1980 and 1981, Thompson attempted to evade a total of $38,248.48 in federal excise taxes. WHile the indictment did allege that a specific amount of tax was due and owing for each of the ten quarters, the government did not and is not required to prove the specific dollar amount of tax due for each of the ten quarters. In a prosecution under 26 U.S.C. § 7201, the government "must prove 'every element of the offense beyond a reasonable doubt though not to a mathematical certainty.'" United States v. Gardner, 611 F.2d 770, 775 (9th Cir. 1980), quoting Holland v. United States, 348 U.S. 121, 138, 99 L. Ed. 150, 75 S. Ct. 127 (1954). In Olender v. United States, 237 F.2d 859 (9th Cir. 1956) the court stated:
"We affirm that the government must establish some deficiency for each of the years. Otherwise, there could be no violation. However, it seems equally plain that it is not incumbent upon the government to prove the amount of the deficiency with mathematical exactitude for each year in a prosecution involving consecutive years. A contrary rule would enable the guilty to say, 'Yes, I am guilty, but since you cannot allocate the deficiencies to each particular year with exactness, although there was some deficiency in each year, I must go free.' We reject the idea that ...