U.S. Supreme Court HELVERING v. MITCHELL, 303 U.S. 391 (1938)

[Page 303 U.S. 391, 399]

the double jeopardy clause provided for the defendant in criminal prosecutions is not applicable.

1. In assessing income taxes the Government relies primarily upon the disclosure by the taxpayer of the relevant facts. This disclosure it requires him to make in his annual return. To ensure full and honest disclosure, to discourage fraudulent attempts to evade the tax, Congress imposes sanctions. Such sanctions may confessedly be either criminal or civil. As stated in Oceanic Steam Navigation Co. v. Stranahan, 214 U.S. 320, 339, 29 S.Ct. 671, 676: 'In accord with this settled judicial construction the legislation of Congress from the beginning, not only as to tariff, but as to internal revenue, taxation, and other subjects, has proceeded on the conception that it was within the competency of Congress, when legislating as to matters exclusively within its control, to impose appropriate obligations, and sanction their enforcement by reasonable money penalties, giving to executive officers the power to enforce such penalties without the necessity of invoking the judicial power.'

Congress may impose both a criminal and a civil sanction in respect to the same act or omission; for the double jeopardy clause prohibits merely punishing twice, or attempting a second time to punish criminally, for the same offense. The question for decision is thus whether section 293(b) imposes a criminal sanction. That question is one of statutory construction. Compare Murphy v. United States, 272 U.S. 630, 632, 47 S.Ct. 218.

Remedial sanctions may be of varying types. One which is characteristically free of the punitive criminal element is revocation of a privilege voluntarily granted. [Footnote 2]

[Page 303 U.S. 391, 401]

2. The remedial character of sanctions imposing additions to a tax has been made clear by this Court in passing upon similar legislation. They are provided primarily as a safeguard for the protection of the revenue and to reimburse the Government for the heavy expense of investigation and the loss resulting from the taxpayer's fraud. [Footnote 4] In Stockwell v. United States, 13 Wall. 531, 547, 551, the Court said of a provision which added double the value of the goods: 'It must therefore be considered as remedial, as providing indemnity for loss. And it is not the less so because the liability of the wrongdoer is measured by double the value of the goods received, concealed, or purchased, instead of their single value. The act of abstracting goods illegally imported, receiving, concealing, or buying them, interposes difficulties in the way of a government seizure, and impairs, therefore, the value of the government right. It is, then, hardly accurate to say that the only loss the government can sustain from concealing the goods liable to seizure is their single value, or to assert that the liability imposed by the statute of double the value is arbitrary and without reference to indemnification. Double the value may not be more than complete indemnity. ... 'The act of 1823 was, as we have seen, remedial in its nature. Its purpose was to secure full compensation for interference with the rights of the United States.'5

[Page 303 U.S. 391, 402]

self, may be made 'by distraint' as well as 'by a proceeding in court.' If the section provided a criminal sanction, the provision for collection by distraint would make it unconstitutional. [Footnote 6] Compare Lipke v. Lederer, , 42 S.Ct. 549; Regal Drug Corporation v. Wardell, 260 U.S. 386, 43 S.Ct. 152. See, also, United States v. Chouteau, 102 U.S. 603, 611; Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524; Lees v. United States, 150 U.S. 476, 14 S. Ct. 163; United States v. La Franca, 282 U.S. 568, 51 S.Ct. 278. That Congress provided a distinctly civil procedure for the collection of the additional 50 per centum indicates clearly that it intended a civil, not a criminal, sanction. Civil procedure is incompatible with the accepted rules and constitutional guaranties governing the trial of criminal prosecutions, and where civil procedure is prescribed for the enforcement of remedial sanctions, those rules and guaranties do not apply. Thus the determination of the facts upon which liability is based may be by an administrative agency instead of a jury,7 or if the prescribed proceeding is in the form of a civil suit,

[Page 303 U.S. 391, 404]

against him,11 or to refuse to testify;12 and finally, in the civil enforcement of a remedial sanction there can be no double jeopardy. [Footnote 13]

4. The fact that the Revenue Act of 1928 contains two separate and distinct provisions imposing sanctions, and that these appear in different parts of the statute, helps to make clear the character of that here invoked. [Footnote 14] The sanction of fine and imprisonment prescribed by section 146( b) for willful attempts 'in any manner to evade or de-

[Page 303 U.S. 391, 405]

feat any (income) tax,' introduced into the act under the heading 'Penalties,' is obviously a criminal one. The sanction of 50 per centum addition 'if any part of any deficiency is due to fraud with intent to evade tax,' prescribed by section 293(b), introduced into the act under the heading 'Additions to the tax,' was clearly intended as a civil one. This sanction, and other additions to the tax are set forth in Supplement M, entitled 'Interest and Additions to the Tax.' The supplement includes, besides section 293(b), sections 291, 292, 293(a), and 294, 26 U.S.C.A. 291, 292, 293(a), 294 and notes. Section 291 prescribes a 25 per centum addition for failure to make and file a return; section 292 prescribes interest at the rate of 6 per cent. per annum upon the deficiency from the date prescribed for payment of the tax; section 293(a), an addition of 5 per centum if the deficiency 'is due to negligence, or intentional disregard of rules and regulations but without intent to defraud'; and section 294 prescribes an addition to the tax of 1 per centum per month in case of nonpayment. Obviously all of these 'additions to the Tax' were intended by Congress as civil incidents of the assessment and collection of the income tax. [Footnote 15]

[Page 303 U.S. 391, 406]

construing section 293(b) as imposing a penalty designed to punish fraudulent tax dodgers 'and not as a mere preventive measure,' it thought that the Coffey Case and United States v. La Franca, 282 U.S. 568, 51 S.Ct. 278, required it 'to treat the imposition of the penalty of 50 per cent. as barred by the prior acquittal of Mitchell in the criminal action.' Since we construe section 293(b) as imposing a civil administrative sanction, neither case presents an obstacle to the recovery of the $364,354.92, the 50 per centum addition here in issue.

REVERSED.

Mr. Justice McREYNOLDS is of opinion that the judgment of the Circuit Court of Appeals should be affirmed.

Mr. Justice CARDOZO and Mr. Justice REED took no part in the consideration or decision of this case. Footnotes

Footnote 1 United States v. Warner Bros. Pictures, Inc., D.C.E.D.Mo., 13 F. Supp. 614, affirmed on other grounds 298 U.S. 643, 56 S.Ct. 948; United States v. Donaldson-Shultz Co., 4 Cir., 148 F. 581; United States v. Schneider, C.C.D.Or., 35 F. 107; Sanden v. Morgan, D.C.S.D.N.Y., 225 F. 266, 268, 269.

Footnote 2 Typical of this class of sanctions is the deportation of aliens. Fong Yue Ting v. United States, 149 U.S. 698, 13 S.Ct. 1016; Low Wah Suey v. Backus, 225 U.S. 460, 32 S.Ct. 734; Zakonaite v. Wolf, 226 U.S. 272, 33 S.Ct. 31; Bugajewitz v. Adams, 228 U.S. 585, 33 S.Ct. 607; Ng Fung Ho v. White, 259 U.S. 276, 42 S.Ct. 492; United States ex rel. Bilokumsky v. Tod, 263 U.S. 149, 44 S.Ct. 54. Disbarment is likewise a sanction of this type. Ex parte Wall, 107 U.S. 265, 2 S.Ct. 569. Compare also Hawker v. New York, 170 U.S. 189, 196, 199 S., 200, 18 S.Ct. 573. Board of Trade v. Wallace, 7 Cir., 67 F.2d 402, 407; Farmers' Livestock Commission Co. v. United States, D.C.E.d.ill., 54 F.2d 375, 378.

Footnote 3 See, also, notes 7 to 13, infra. The distinction here taken between sanctions that are remedial and those that are punitive has not generally been specifically enunciated. In determining whether particular rules of criminal procedure are applicable to civil actions to enforce sanctions, the cases have usually attempted to distinguish between the type of procedural rule involved rather than the kind of sanction being enforced. Thus Hepner v. United States, 213 U.S. 103, 111, 112 S., 29 S.Ct. 474, 27 L.R.A.,N.S., 739, 16 Ann.Cas. 960, holding that a verdict may be directed for the Government, and United States v. Regan, 232 U.S. 37, 50, 34 S.Ct. 213, holding that the Government need not prove its case beyond a reasonable doubt, distinguished Boyd v. United States, , 6 S.Ct. 524, and Lees v. United States, 150 U.S. 476, 14 S.Ct. 163, holding that the defendant could not be required to be a witness against himself, on the ground that 'the guaranty in the 5th Amendment to the Constitution against compulsory self- incrimination ... is of broader scope than are the guaranties in article 3 and the 6th Amendment governing trials in criminal prosecutions.' United States v. Regan, 232 U.S. 37, at page 50, 34 S.Ct. 213, 217. Compare also Pierce v. United States, 255 U.S. 398, 401, 41 S.Ct. 365, 366.

Footnote 4 Taylor v. United States, 3 How. 197, 210; Bartlett v. Kane, 16 How. 263, 274; Cliquot's Champagne, 3 Wall. 114, 145; Dorsheimer v. United States, 7 Wall. 166, 173; Passavant v. United States, 148 U.S. 214, 221, 13 S.Ct. 572. Compare McDowell v. Heiner, D.C.W.D.Pa., 9 F.2d 120, affirmed on opinion below, 3 Cir., 15 F.2d 1015; Doll v. Evans, C.C.E.D.Pa., 7 Fed.Cas. p. 855, No. 3,969; Stearns v. United States, C.C., 22 Fed.Cas. p. 1188, No. 13,341.

Footnote 5 Compare United States v. Claflin, 97 U.S. 546, 552, 553 S..

Footnote 6 Even though Congress may not provide civil procedure for the enforcement of punitive sanctions, nothing in the Constitution prevents the enforcement of distinctly remedial sanctions by a criminal instead of a civil form of proceeding. Compare United States v. Stevenson, , 30 S.Ct. 35, with United States v. Regan, 232 U.S. 37, 34 S.Ct. 213, both enforcing the sanction prescribed in 34 Stat. 898. The fact that a criminal procedure is prescribed for the enforcement of a sanction may be an indication that it is intended to be punitive, but cannot be deemed conclusive if alternative enforcement by a civil proceeding is sustained.

Footnote 7 Passavant v. United States, 148 U.S. 214, 13 S.Ct. 572; Oceanic Steam Navigation Co. v. Stranahan, 214 U.S. 320, 29 S.Ct. 671; Elting v. North German Lloyd, 287 U.S. 324, 327, 328 S., 53 S. Ct. 164, 166; Lloyd Sabaudo Societa v. Elting, 287 U.S. 329, 334, 53 S.Ct. 167, 170; cf. Hamburg-American Line v. United States, , 54 S.Ct. 491; Osaka Shosen Kaisha Line v. United States, 300 U.S. 98, 57 S.Ct. 356. Compare, also, San Souci v. Compagnie Francaise de Navigation A Vapeur, 1 Cir., 71 F.2d 651, 653; Lloyd Royal Belge, S.A., v. Elting, 2 Cir., 61 F.2d 745, 747; Navigazione Libera Triestina v. United States, 9 Cir., 36 F.2d 631, 633; Clay v. Swope, C.C.D.Ky., 38 F. 396. And see cases cited in note 2, supra.

Administrative determination of sanctions imposed by the income tax laws has likewise been upheld. Berlin v. Commissioner, 2 Cir., 59 F.2d 996, 997; McDowell v. Heiner, D.C.W.D.Pa., 9 F.2d 120, affirmed on opinion below, 3 Cir., 15 F.2d 1015; Board v. Commissioner, 6 Cir., 51 F.2d 73, 76; Wickham v. Commissioner, 8 Cir., 65 F.2d 527, 531, 532; Little v. Helvering, 8 Cir., 75 F.2d 436, 439; Bothwell v. Commissioner, 10 Cir., 77 F.2d 35, 38; Doll v. Evans, C.C.E.D.Pa., Fed.Cas.No.3,969.

Footnote 8 Hepner v. United States, 213 U.S. 103, 29 S.Ct. 474, 27 L.R.A., N.S., 739, 16 Ann.Cas. 960; Four Packages v. United States, 97 U.S. 404, 412; Chicago, B. & Q. Ry. Co. v. United States, 220 U.S. 559, 578, 31 S.Ct. 612. Compare United States v. Thompson, C.C.S.D.N.Y., 41 F. 28; United States v. Atlantic Coast Line Ry. Co., D.C.S.D.Ga., 182 F. 284.

Footnote 9 Lilienthal's Tobacco v. United States, , 265-267, 271; United States v. Regan, 232 U.S. 37, 34 S.Ct. 213; Grant Bros. Const. Co. v. United States, 232 U.S. 647, 660, 34 S.Ct. 452. Compare New York Cent. & H.R.R. Co. v. United States, 1 Cir., 165 F. 833, 839; Grain Distillery No. 8 v. United States, 4 Cir., 204 F. 429; Pocahontas Distilling Co. v. United States, 4 Cir., 218 F. 782, 786; United States v. Louisville & N. Ry. Co., D.C.S.D.Ala., 162 F. 185, affirmed, 5 Cir., 174 F. 1021; St. Louis-South Western Ry. Co. v. United States, 5 Cir., 183 F. 770, 771; United States v. Illinois Cent. Ry. Co., 6 Cir., 170 F. 542, 545, 546; Atchison, T. & S.F. Ry. Co. v. United States, 8 Cir., 178 F. 12, 14; Missouri, K. & T. Ry. Co. v. United States, 8 Cir., 178 F. 15, 17, 18. Compare also Act of March 2, 1799, c. 22, 718 1 Stat. 627, 678; Locke v. United States, 7 Cranch 339, 348; Cliquot's Champagne, 3 Wall. 114, 143, 144.

Footnote 10 Compare United States v. Claflin, ; United States v. Zucker, 161 U.S. 475, 16 S.Ct. 641; United States v. Regan, 232 U.S. 37, 34 S.Ct. 213. See, also, United States v. Baltimore & O.S.W. Ry. Co., 6 Cir., 159 F. 33, 38, modified 220 U.S. 94, 31 S.Ct. 368; United States v. Louisville & N. Ry. Co., 6 Cir., 167 F. 306, 307, 308; United States v. Illinois Cent. Ry. Co., 6 Cir., 170 F. 542, 545. Compare United States v. Sanges, 144 U.S. 310, 12 S.Ct. 609.

Similarly, if the Government is successful it may recover costs as in other civil suits. Grant Bros. Const. Co. v. United States, 232 U.S. 647, 665, 34 S.Ct. 452. See, also, United States v. Southern Pac. Co., C.C.D.Or., 172 F. 909, 911; United States v. Minneapolis, St. P. & S. S.M. Ry. Co., D.C.D.Minn., 235 F. 951, 952, 953.

Footnote 11 United States v. Zucker, , 16 S.Ct. 641; Grant Bros. Construction Co. v. United States, 232 U.S. 647, 660, 34 S.Ct. 452.

Footnote 12 Compare United States ex rel. Bilokumsky v. Tod, 263 U.S. 149, 155, 44 S.Ct. 54, 56. We do not construe Boyd v. United States, , 6 S.Ct. 524, or Lees v. United States, 150 U.S. 476, 14 S.Ct. 163, as holding to the contrary where the sanction involved is remedial, not punitive. See note 3, supra.

Footnote 13 Murphy v. United States, 272 U.S. 630, 47 S.Ct. 218; Various Items v. United States, 282 U.S. 577, 51 S.Ct. 282. Compare Egner v. United States, 3 Cir., 16 F.2d 597; Wood v. United States, 4 Cir., 204 F. 55, 57; United States v. St. Louis-South Western Ry. Co., 5 Cir., 184 F. 28, 32; Slick v. United States, 7 Cir., 1 F.2d 897, 898. See, also, United States v. Three Copper Stills, D.C.D.Ky., 47 F. 495, 499; United States v. Olsen, D.C.N.D.Cal., 57 F. 579, 582-586; Castle v. United States, Ct.Cl., 17 F.Supp. 515, 518-520. Compare Hanby v. Commissioner, 4 Cir., 67 F.2d 125.

Footnote 14 The Board of Tax Appeals said in Mitchell v. Commissioner, 32 B.T. A. 1093, 1136: 'A careful study of the two sections convinces us that they are basically different in character and were enacted for wholly different purposes. The language of the two sections differs widely and contemplates situations which may require entirely dissimilar proof.'

Footnote 15 Section 104, Revenue Act of 1928, 45 Stat. 814, imposes a somewhat similar additional tax of 50 per cent. of the net income in the case of corporations formed or availed of for the purpose of avoiding surtax on their shareholders through improper accumulation of surplus. Compare United Business Corporation v. Commissioner, 2 Cir., 62 F.2d 754.