                                                                                                                           Opinions of the United
1997 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


11-17-1997

USA v. Gollapudi
Precedential or Non-Precedential:

Docket
97-5137




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Recommended Citation
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http://digitalcommons.law.villanova.edu/thirdcircuit_1997/260


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Filed November 17, 1997

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 97-5137

UNITED STATES OF AMERICA

v.

RAO GOLLAPUDI,

       Appellant

On Appeal from the United States District Court
for the District of New Jersey
(D.C. Criminal Action No. 96-cr-00220)

Argued September 23, 1997

Before: COWEN, ROTH and LEWIS, Circuit Judges

(Opinion Filed November 17, 1997)

       Howard W. Goldstein, Esq. (Argued)
       Laura Grossfield Birger, Esq.
       Fried, Frank, Harris, Shriver &
        Jacobson
       One New York Plaza
       New York, NY 10004

        Attorneys for Appellant




       Faith S. Hochberg
       United States Attorney
       Amanda Haines (Argued)
       Kevin McNulty
       Assistant United States Attorneys
       Office of United States Attorney
       970 Broad Street
       Room 502
       Newark, NJ 07102

        Attorneys for Appellee

OPINION OF THE COURT

ROTH, Circuit Judge.
I. INTRODUCTION

This is an appeal from a twelve-count indictment
charging the defendant, Rao Gollapudi, with violating two
provisions of the Internal Revenue Code. More specifically,
Gollapudi was charged with failing to account for and pay
over to the Internal Revenue Service federal income taxes,
deducted and collected from the total taxable wages of his
employees, between 1989 and 1991, in violation of 26
U.S.C. S 7202. Additionally, Gollapudi was indicted for filing
a false personal income tax return, Form 1040, for the
years 1989 through 1991, in violation of 26 U.S.C.
S 7206(1). Gollapudi now appeals on the grounds (1) that
his prosecution for violating 26 U.S.C. S 7202 is barred by
the three-year statute of limitations of S 6531, and (2) that
because the responses on the 1040 he filed were truthful
he cannot be found guilty of filing a false statement under
S 7206(1). For reasons set forth below, we affirm the
decision of the District Court.

II. FACTS

From the company's inception in 1984, the appellant,
Rao Gollapudi, has been the president and sole shareholder
of Softstar Computer Consultants, Incorporated ("Softstar"),

                                2



a Michigan corporation involved in the business of
analyzing and improving computer systems for Fortune 500
companies. Following the departure of his partner from the
company in 1986, Gollapudi became solely responsible for
preparing and filing the company's tax returns and paying
the wages of its employees. Shortly after assuming this
responsibility, Gollapudi failed to make any payment of
employment taxes and stopped filing Employer's Quarterly
Tax Returns ("941's") with the IRS.

During the years 1989 through 1991, Softstar employed
fifteen individuals, who were paid by checks drawn from
the company's corporate checking account. Although the
checks indicated that federal income taxes and Federal
Insurance Contributions Act ("FICA") taxes were being
withheld from the employees' wages, Gollapudi did not
remit the withheld funds to the IRS. Rather, these funds,
totaling approximately $527,828, were deposited into
Softstar's corporate checking account where they were used
to pay corporate operating expenses.1 Furthermore, by
failing to file 941's, Gollapudi never reported the collection
of these withholding taxes to the IRS and, thus, avoided
detection.
After an IRS tax examiner discovered that Softstar had
failed to file the required 941's and remit any tax refunds
to the federal government, Gollapudi admitted that
although he collected the appropriate taxes from his
employees, he did not turn over the withholdings to the
IRS. Instead, he kept the money in the company. Gollapudi
further admitted that, although he was aware of his
obligations, he did not file the required 941's, W-2's, or
corporate tax forms with the IRS. Subsequently, Gollapudi
contacted an accountant, David Karpel, who on behalf of
Gollapudi filed the delinquent 941's and corporate tax
returns and paid $591,000 in back taxes.

Gollapudi's handling of the withdrawals from his own
salary was also questionable. Gollapudi filed a personal
income tax return, Form 1040, for the tax years 1989,
_________________________________________________________________

1. In addition, Gollapudi listed the corporate checking account
containing these funds on a personal mortgage application in order to
overstate his assets.

                                3



1990, and 1991, in which he claimed that he had withheld
approximately $6,000 in federal income taxes from himself.
This amount was not turned over to the IRS. Additionally,
there was a question of whether the funds were in fact
withheld. Although the government argued that such funds
were not withheld, Gollapudi testified that, because he did
not receive a regular salary, his withholdings were
calculated in a unique manner. Gollapudi explained that
instead of receiving a regular salary, he periodically took
disbursements from the company. At the end of each year
he received the corporate records, calculated the total sum
that he had paid as salary, checked the relevant tax tables
and calculated the gross salary that would correspond to
the net salary he had actually received. The difference
between the gross and net salaries, he argued, was treated
as having been withheld from his gross pay.

On April 19, 1996, Gollapudi was indicted on nine counts
of failing to account for and pay over to the IRS federal
income taxes and FICA taxes, deducted and collected from
the total taxable wages of his employees, for thefinal
quarter of 1989 and for all four quarters of the years 1990
and 1991, in violation of 26 U.S.C. S 7202. In addition,
Gollapudi was charged with three counts of filing false
personal income tax returns for the calendar years 1989
through 1991 in violation of 26 U.S.C. S 7206(1). Prior to
trial, Gollapudi moved to dismiss the first nine counts of
the indictment as barred by the three year statute of
limitations. This motion was denied. Gollapudi was found
guilty on all counts and now appeals.

III. JURISDICTION

This is an appeal from a final judgment of the United
States District Court for the District of New Jersey, entered
March 7, 1997. An appeal was filed on March 10, 1997.
The District Court had jurisdiction pursuant to 18 U.S.C.
S 3231. We have jurisdiction pursuant to 28 U.S.C. S 1291
and 18 U.S.C. S 3742.

                                4



IV. DISCUSSION

A. Statute of Limitations.

The first issue before the court is whether a violation of
26 U.S.C. S 7202, which prohibits the willful failure "to
collect or truthfully account for and pay over" any tax,2 is
subject to a three-or six-year statute of limitations. For the
following reasons, we hold that the violation is subject to a
six-year statute of limitations and thus will affirm the
decision of the District Court on this issue.

The statute of limitations governing 26 U.S.C. S 7202, as
well as other criminal tax violations, is set forth in 26
U.S.C. S 6531. This section generally provides that criminal
tax proceedings must be initiated within three years of the
offense, unless the offense falls into one of eight exceptions
providing for a six-year period of limitations. Specifically,
the relevant section, S 6531(4), provides that:

       No person shall be prosecuted, tried, or punished for
       any of the various offenses arising under the internal
       revenue laws unless the indictment is found or the
       information instituted within 3 years next after the
       commission of the offense, except that the period of
       limitations shall be 6 years -

       * * * *

       (4) for the offense of willfully failing to pay any tax, or
       make any return (other than a return required under
       authority of part III of subchapter A of chapter 61) at
       the time or times required by law or regulations;

26 U.S.C. S 6531(4). The question here is whether a failure
_________________________________________________________________

2. Section 7202 provides:
       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 for more than 5 years, or both, together with the costs
       of prosecution.

26 U.S.C. S 7202.

                                5



to "pay over" any tax under S 7202 constitutes a failure to
"pay any tax, or make any return," under S 6531(4), and
thus is subject to a six rather than three-year statute of
limitations.

While the Third Circuit has not yet addressed the issue
of whether S 6531(4) applies to criminal offenses under
S 7202, the District Court followed the decisions of the
Second and Tenth Circuits in holding that prosecutions for
violations of S 7202 must be commenced within six years
under S 6531(4). Conversely, two district courts that have
addressed the issue have held that section 6531(4) does not
apply to S 7202 offenses and that the applicable statute of
limitations is three years. Gollapudi contends that the two
district court cases are more persuasive in their analysis
than the opinions of the circuit courts and the District
Court in this case.

Relying on United States v. Block, 497 F.Supp. 629 (N.D.
Ga. 1980), and United States v. Brennick, 908 F.Supp. 1004
(D. Mass. 1995), Gollapudi maintains that the plain
language of the statute dictates that failure "to pay any tax,
or make any return" under S 6531(4) does not encompass
"the offense of failing to collect, account for or pay over any
tax" under S 7202 (emphasis added). Gollapudi contends
that because Congress explicitly distinguished between the
failure to "pay" a tax and the failure to "pay over" a tax
collected from another in other sections of the Internal
Revenue Code and did not include such "pay over"
language in S 6531, it did not intend to include the failure
to "pay over" any tax in S 6531(4).

In support of his first argument, Gollapudi notes that in
designing the criminal tax offense set forth in 26 U.S.C.
S 7202 et seq., Congress explicitly distinguished between
the failure to pay a tax and the failure to pay over a tax
collected from another, as is evident in the comparison
between S S 7202 and 7203. Furthermore, Gollapudi
maintains that the phrase "pay over" or "paid over" was
used by Congress sixteen times in the Internal Revenue
Code and, thus, constitutes a statutory term of art,
referring to (1) third-party taxes as in S S 3505(b), 6672(a)
and 7501; (2) other amounts collected from third parties as
in S S 3304(a)(3) and 7652(b)(3); and (3) non-tax amounts as

                                6



in S S 143(g)(3)(D) and 6096(a). Gollapudi argues that
because the phrase is a term of art, "pay over" has a
specific meaning which is not included in nor
interchangeable with "pay".

Next, Gollapudi argues that because S 6531(4) applies to
"the offense" (singular) of willfully failing to pay any tax or
make any return, as opposed to any other offense, and
because S 7203 is "the offense" which criminalized such
acts, Congress intended that S 6532(4) apply only to the
offense identified in S 7203,3 and not to other criminal tax
violations. See Block, 497 F.Supp. at 632 (finding
persuasive fact that S 6531(4) is directed at"the offense" of
wilfully failing to pay tax, as opposed to class of offenses);
Brennick, 908 F.Supp. at 1019 (finding that Congress had
expressed its will "in reasonably plain terms" that S 6531(4)
applies only to single offense described in S 7203).

In interpreting a statute, the starting point is the
language of the statute itself. National Union Fire Ins. Co. of
Pittsburgh v. City Sav., F.S.B., 28 F.3d 376, 384 (3d Cir.
1984); United States v. Cicco, 10 F.3d 980, 984 (3d Cir.
1993). "In most situations, the plain language rule is the
preferred method of statutory interpretation." United States
v. Zheng, 768 F.2d 518, 523 (3d Cir. 1985), cert. denied,
474 U.S. 1060 (1986). "[O]nly the most extraordinary
showing of contrary intentions" in the legislative history will
justify a departure from that language. Garcia v. United
States, 469 U.S. 70, 75 (1984).

Under a plain reading of this statute, we find it clear that
violations of S 7202 are subject to a six-year statute of
limitations under S 6531(4). Specifically, 26 U.S.C. S 7202
_________________________________________________________________

3. Section 7203 provides in relevant part:

       Any person required under this title to pay any estimated tax or
tax,
       or required by this title or by regulations made under authority
       thereof to make a return, keep any records, or supply any
       information, who willfully fails to pay such estimated tax or tax,
       make such return, keep such records, or supply such information,
       at the time or times required by law or regulations, shall, in
addition
       to other penalties provided by law, be guilty of a misdemeanor . .
. .

26 U.S.C. S 7202.

                                7



makes it an offense for an employer to willfully fail to
"account for and pay over" to the IRS taxes withheld from
employees. Given that S 6531 pertains to "failing to pay any
tax," the District Court correctly found that the failure to
pay third-party taxes as covered by S 7202 constitutes
failure to pay "any tax," and thus, is subject to the six-year
statute of limitations under S 6531(4). United States v.
Gollapudi, 947 F.Supp. 763 (D. N.J. 1996). Accord United
States v. Musacchia, 900 F.2d 493, 500 (2d Cir. 1990), cert.
denied, 501 U.S. 1250 (1991) (holding that six-year statute
of limitations in S 6531(4) is applicable to violations of
S 7202); United States v. Porth, 426 F.2d 519, 522 (10th
Cir.) (finding that S 7202 was "clearly within the six-year
exception to the general three-year statute of limitations of
S 6531"), cert. denied, 400 U.S. 824 (1970). See also United
States v. Evangelista, Nos. 1478, 1479, Dockets 96-1712(L),
96-1718(CON), 1997 WL 459057, at *8 (2d Cir. Aug. 13,
1997) (reaffirming Musacchia, holding that six-year statute
of limitations applies to offense defined by S 7202).

Although we could conclude our analysis here as the
statutory language in S 6531(4) is plain and unambiguous,
United States v. Cicco, 10 F.3d 980, 984 (3d Cir. 1993)
(unambiguous language deemed "conclusive"), we will
address why we find the Georgia and Massachusetts cases
relied upon by Gollapudi to be unpersuasive.

In United States v. Block, the court found that Congress
had the statutory scheme of 26 U.S.C. S 7201 et seq. in
mind when fashioning S 6531. 497 F.Supp. at 632. This
was inferred from the facts that there are specific references
to S 7201 et seq. provisions in S 6531, and that the
language of S 6531 borrows extensively from various S 7201
et seq. sections. The Block court reasoned "[i]t seems
unlikely . . . that Congress would have used the language
of so many of the S 7202 et seq. code sections when
drafting the subsections of S 6531 but omit use of the key
words of S 7202 if it had intended to make failure to `pay
over' third-party taxes subject to the six-year statute of
limitations." Id.

We find this line of reasoning in Block unpersuasive. The
statute of limitations for all criminal tax violations is set
forth in 26 U.S.C. S 6531. The offenses which fall under the

                                8



eight exceptions to S 6531 are included either by general
description of the proscribed conduct or by a reference to a
specific section of the code. It is clear to us that where
Congress intended to limit the applicability of theS 6531
exceptions, it unambiguously did so. Thus, whereas
subsections five, six, seven and eight of S 6531 are
expressly limited to offenses arising under S S 7206(1) and
7202, 7212(a), 7214(a), and 18 U.S.C. S 371 respectively,
the District Court correctly held that subsection four
contains a general description of offenses, not limited to
violations of S 7203 or to any other specific offense.
Gollapudi, 947 F.Supp. at 766. Musacchia, 900 F.2d at 500.
As the District Court stated, "[t]he focus must be on the
duty imposed by these specific sections of the Code, not on
the particular words present or absent in an attempt to
reconstruct congressional intent. An employer's duty to pay
taxes withheld from his employees is at least as great as
the duty to pay personal income taxes." Gollapudi, 947
F.Supp. at 767.

Furthermore, the fact that S 6531(4) uses the word
"offense" rather than "offenses" does not convince us that
Congress intended S 6531(4) to be limited to violations of
S 7203. Conversely, we agree with the rationale of the
Second Circuit in United States v. Musacchia that "the
language of section 6531(4) -- applying the six-year statute
of limitations to `the offense of willfully failing to pay any
tax, or make any return . . . at the time or times required
by law or regulations' -- suggests that it applied to any of
several sections of the Code that define such an offense."
900 F.2d at 500 (citing 26 U.S.C. S 6531(4)).

Moreover, we find the District Court's reliance on the
Second Circuit's decision that it would be inconsistent for
Congress to have prescribed a six-year limitation period for
the misdemeanor offense defined in 26 U.S.C. S 7203
(failure to file a return or pay a tax) while providing only a
three-year limitation period for the felony offense defined in
S 7202, to be well-founded. Gollapudi, 947 F.Supp. at 766
(citing Musacchia, 900 F.2d at 500). As the court in
Musacchia concluded, it would make little sense if the
period in which an offense could be prosecuted for the
misdemeanor of failing to file a tax return was twice as long

                                9
as the period in which an offender could be prosecuted for
the felony of failure to pay taxes over to the IRS collected on
behalf of employees.4 As the District Court stated, "[t]he
focus must be on the duty imposed by these specific
sections of the Code, not on the particular words present or
absent in an attempt to reconstruct congressional intent.
An employer's duty to pay taxes withheld from his
employees is at least as great as the duty to pay personal
income taxes." Gollapudi, 947 F.Supp. at 767.

B. Filing False Income Tax Return.

The second issue before us is whether the District Court
erred in finding Gollapudi guilty of violatingS 7206(1), for
filing a false personal tax return.5 In order to find Gollapudi
_________________________________________________________________

4. In support of the application of the three year statute of limitations
to
an employer's failure to "pay over" withheld taxes, the dissent argues
that it is more difficult for the IRS to detect an individual's failure to
pay
his own taxes than it is to discover an employer's failure to transfer
funds withheld from employees. The Assistant U.S. Attorney took the
opposite position at oral argument due to the fact that the IRS does not
routinely cross-check employees' W-2 forms against the employers'
payments into the IRS of taxes withheld from the employees:

        HAINES: Judge Cowen, what I was told in my office is that if
        someone, in this case Mr. Gollapudi, is filing false withholding so
        the individual employees file returns that look like there have
been
        taxes withheld because they had W-2s attached, and then in not
        filing the 941s, it is virtually impossible -- there is no cross-
        referencing there so the IRS can tell automatically that the
        withholdings coming from the employees' personal income taxes are
        not being actually . . .

        COURT:   Who told you that in your office?

        HAINES: Someone who worked for the Tax Division and is now a
        specialist in tax crimes, that actually tried this case below. In
fact,
        this particular case shows that. Because -- they only caught Mr.
        Gollapudi because the W-2s themselves were hand-written and
        looked kind of sloppy and that triggered something in one of the
IRS
        agents' minds that these might be fraudulent. Then after trying a
        bunch of blind alley ways, they finally were able to track it back
to
        Mr. Gollapudi and find out he wasn't filing the 941s. But that was
        the only way he was ever caught. He could have gone on for years
        and years.
5. Section 7206(1) provides that any person who,"[w]illfully makes and
subscribes any return, statement, or other document, which contains or

                                10



guilty of that offense, the government had to prove that (1)
defendant made and subscribed a return which was false
as to a material matter; (2) the return contained a written
declaration that it was made under the penalties of perjury;
(3) defendant did not believe the return was true and
correct as to every material matter; and (4) defendant
falsely subscribed to the return willfully, with the specific
intent to violate the law. United States v. Bishop, 412 U.S.
346, 350 (1973).

Gollapudi contends that because his tax return was
accurate as to the amount of federal income tax withheld
from his gross pay and because the form did not ask
whether the withholdings were ever submitted, he cannot
be found guilty of this offense. Gollapudi argues that the
amount of withholdings were accurate in that they reflected
a "gross up" process. In addition, relying on two Seventh
Circuit decisions, Gollapudi argues that the literal truth of
the information on a tax return is a complete defense, even
if the response on the return was highly misleading. United
States v. Reynolds, 919 F.2d 435 (7th Cir. 1990), cert.
denied, 499 U.S. 942 (1991); United States v. Borman, 992
F.2d 124, 126 (7th Cir. 1993) (in establishing violation of
S 7206(1), "the untruth must be found in a statement of
some material information called for by the form itself, and
any implication drawn from the filing of a particular form
. . . is simply not enough.").

We must examine the evidence in the light most favorable
to the government and sustain the verdict if "any rational
trier of fact could have found the essential elements of the
crime beyond a reasonable doubt." Jackson v. Virginia, 443
U.S. 307, 318 (1979). We conclude that there was ample
evidence for the District Court to find that Gollapudi filed a
false statement. First, an IRS agent testified that Gollapudi
admitted that he prepared and signed the W-2 forms and
that they were false. Additionally, although Gollapudi
presented evidence that the withholding amounts were true
_________________________________________________________________

is verified by a written declaration that it is made under the penalties
of
perjury, and which he does not believe to be true and correct as to every
material matter . . . shall be guilty of a felony . . . ."

                                11
based on his "gross up" method, the District Court found
this theory to be without merit based on the testimony of
another IRS agent who demonstrated that no withholding
was actually made. Moreover, it was established that the
alleged withholding was never submitted to the IRS, but
rather, was maintained in Gollapudi's corporate checking
account.

Furthermore, Gollapudi's reliance on Reynolds and
Borman is misguided. Both of those cases involved
S 7206(1) charges for filing the wrong tax form. Reynolds,
919 F.2d at 437 ("Using the wrong form does not violate
S 7206(1)."); Borman, 992 F.2d at 126 (holding that filing of
improper form is not enough to establish false statement
for S 7206(1) purposes). Furthermore, in Reynolds, the
theory in the indictment was that one specific line (line 7)
of the form which was filed was false. 919 F.2d at 437. The
Seventh Circuit held that because line 7 was merely derived
arithmetically from two other lines, and was thus an
accurate reflection of the difference between the other two
lines on the form, that the literal truth of the answer was
a defense to perjury. Id. The Seventh Circuit indicated,
however, that if the charge in the indictment had not been
limited to that one line or if the defendant had left
something blank indicating that he was hiding something,
its decision would have been different. Id.

Regardless, we hold that the District Court was correct in
finding that Gollapudi filed a false statement on a tax
return in violation of S 7206(1), in that he misstated the
amount of his withholdings. Despite the fact that he
understood his obligations, he submitted a form which he
did not believe was true and accurate as to every material
matter.

V. CONCLUSION

For the above reasons, we will affirm the decision of the
District Court.

                                12



COWEN, Circuit Judge, dissenting.

The majority errs in concluding that the criminal conduct
of an employer in failing to pay over taxes withheld from the
wages of employees, in violation of 26 U.S.C. S 7202, falls
within the fourth exception to the three-year statute of
limitations for violations of the Internal Revenue Code
(I.R.C.), 26 U.S.C. S 6531(4). I respectfully dissent from
section IV-A of the majority's opinion that the statute of
limitations for violations of S 7202 is six years rather than
the normal three years. The conviction of the defendant,
Rao Gollapudi, should be vacated due to the expiration of
the three-year statute of limitations.

I.

Gollapudi was convicted of failing to transfer funds
withheld from his employees' salaries in violation of S 7202.
Section 7202 is entitled "Willful failure to collect or pay over
tax" and reads as follows:

        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.

The statute of limitations for prosecutions under the
I.R.C. in general and S 7202 in particular is contained
within 26 U.S.C. S 6531. Section 6531 institutes a general,
three-year statute of limitations for criminal prosecutions
under the I.R.C. but lists eight exceptions qualifying for a
six-year statute of limitations. Section 6531 is entitled
"Periods of limitation on criminal prosecutions" and reads
in relevant part:

        No person shall be prosecuted, tried, or punished for
       any of the various offenses arising under the internal
       revenue laws unless the indictment is found or the
       information instituted within 3 years next after the
       commission of the offense, except that the period of
       limitation shall be 6 years-

                                13



       * * *

        (4) for the offense of willfully failing to pay any tax, or
       make any return

        (other than a return required under authority of part
       III of

        subchapter A of chapter 61) at the time or times
       required by law or
        regulations....

II.

The majority makes several arguments why S 7202 falls
within S 6531(4). First, the majority argues that, "[u]nder a
plain reading of this statute," it is "clear" that S 7202 falls
within S 6531(4). Maj. Op. at 7-8. The majority seizes on the
word "any" from the language of 6531(4), "failing to pay any
tax," and argues that, since paying over withheld funds is
a type of tax, it qualifies as "any tax" under S 6531(4). The
meaning of S 6531(4), according to the majority, is "plain
and unambiguous[.]" Maj. Op. at 8.

The majority then attempts to confront the argument
that, since the exceptions to the three-year statute of
limitations which are contained in S 6531 track and
explicitly mention the list of offenses in 26 U.S.C. S 7201 et
seq., the failure of S 6531(4) to mention S 7202 specifically
means that Congress did not intend S 7202 to be included
in S 6531(4). The majority offers two responses. First, the
majority argues that the exceptions in S 6531 not
specifically mentioning sections of S 7201 et seq. are to be
viewed expansively rather than restrictively. In other words,
exceptions (5)-(8) of S 6531 refer to specific sections among
S 7201 et seq. and thus apply only to the sections
enumerated, while S 6531(4) does not delineate specific
sections to which it applies and thus covers an array of
offenses including S 7202. Second, the majority rejects
Gollapudi's claim that, since S 6531(4) refers to "offense"
rather than "offenses," S 6531(4) refers only to one offense,
namely S 7203, which uses language very similar to
S 6531(4) and covers the offense of failing to "pay any

                                14



estimated tax...or make a return[.]"1 The majority points to
S 6531(4)'s language of "failing to pay any tax, or make any
return" as evincing that S 6531(4) applies to more than one
type of offense and therefore encompasses S 7202 in
addition to S 7203 and possibly other offenses.

The majority subsequently argues that it would be
"inconsistent" for Congress to prescribe a six-year statute of
limitations for S 7203, the misdemeanor of failing to file a
return or pay a tax, and a three-year statute of limitations
for S 7202, which is a felony offense. According to the
majority, the need to prevent a disparity between the
statutes of limitations for a misdemeanor and for a felony
should motivate us to subsume S 7202 within S 6531(4). In
addition, the majority dismisses Gollapudi's claim that,
because S 7202 talks of "paying over" taxes (referring to
transferring employees' withheld taxes to the government)
while S 6531(4) covers "pay[ing]" a tax (referring to one's
own tax obligations), S 6531(4) cannot subsume S 7202.

III.

As the majority states, two circuit courts ruled that
S 7202 receives a six-year statute of limitations by virtue of
S 6531(4). See United States v. Porth, 426 F.2d 519, 521
(10th Cir. 1970); see also United States v. Musacchia, 900
F.2d 493, 500 (2d Cir.), vacated in part on other grounds,
955 F.2d 3 (2d Cir. 1991). In contrast, two district courts
rejected any linkage between S 6531(4) and S 7202,
_________________________________________________________________

1. Title 26, United States Code, S 7203 is entitled "Willful failure to
file
return, supply information, or pay tax" and reads in relevant part:

       Any person required under this title to pay any estimated tax or
tax,
       or required by this title or by regulations made under authority
       thereof to make a return, keep any records, or supply any
       information, who willfully fails to pay such estimated tax or tax,
       make such return, keep such records, or supply such information,
       at the time or times required by law or regulations, shall, in
addition
       to other penalties provided by law, be guilty of a misdemeanor and,
       upon conviction thereof, shall be fined not more than $26,000
       ($100,000 in the case of a corporation), or be imprisoned not more
       than 1 year, or both, together with the cost of prosecution....

(emphasis added).

                                15



therefore applying the three-year statute of limitations to
S 7202. See United States v. Brennick, 908 F.Supp. 1004,
1019 (D.Mass. 1995); see also United States v. Block, 497
F.Supp. 629, 632 (N.D.Ga. 1980). However, the Tenth
Circuit's decision, holding that S 6531(4) covers S 7202, is
conclusory and furnishes no analytical assistance or
weighty precedential authority. The decision offers a string
of citations, but none deals with the relationship between
S 7202 and S 6531(4). See Porth, 426 F.2d at 521; see also
Block, 497 F.Supp. at 631 (the cases mentioned in Porth do
not support Porth's conclusion); Brennick, 908 F.Supp.
1018 n.6 (none of the cases cited by Porth supports Porth's
conclusion). In addition to the lack of analysis, the Tenth
Circuit in Porth also argued in the alternative, stating
immediately after its S 6531(4) pronouncement that the first
indictment in the case, which occurred within three years
of the offenses, should be looked to for statute of limitations
purposes despite the fact that the first indictment was
dismissed for technical reasons. See Porth, 426 F.2d at 521.
The Tenth Circuit itself appears uncertain of the strength of
its own S 6531(4) conclusion, undermining the authority of
its decision.

IV.

I respectfully disagree with the arguments raised by the
majority and by the Second Circuit in Musacchia. The
majority claims that the plain meaning of S 6531(4) clearly
encompasses S 7202, vitiating any need for other
techniques of statutory interpretation. However, the
meaning of S 6531(4) is anything but plain and
unambiguous. While the majority claims that S 6531(4) is
clear by stressing the importance of the word "any[,]" the
majority ignores the fact that applying S 6531(4) effectively
swallows the general rule of a three-year statute of
limitations for tax offenses. Nearly every violation of the
I.R.C. translates into an attempt not to pay taxes. Seizing
on "any" to broaden the reach of S 6531(4) in order to
include S 7202 has the net effect of vastly expanding
S 6531(4), shrinking the applicability of the three-year
statute of limitations to near oblivion and rendering the
other seven exceptions to the three-year statute of

                                16



limitations nugatory. The majority provides no principled
rationale for delineating the contours of its expanded
S 6531(4). As I argue below, the term "any" could properly
refer only to tax obligations encompassed by the word "pay"
but not obligations to "pay over" taxes. Accordingly, the
meaning of S 6531(4) is far from plain and unambiguous. It
calls for judicial interpretation.

Resolving S 6531(4)'s ambiguity activates two venerated
members of the canon of statutory interpretation which the
majority ignored. First, `excepting' clauses are to be
interpreted narrowly. See United States v. McElvain, 272
U.S. 633, 639, 47 S. Ct. 219, 220 (1926); see also United
States v. Scharton, 285 U.S. 518, 521-2, 52 S. Ct. 416, 417
(1932). Second, criminal statutes are to be interpreted in
favor of repose. See United States v. Marion, 404 U.S. 307,
322 n.14, 92 S. Ct. 455, 464 n.14 (1971). These principles
provide the framework for determining the meaning and
scope of S 6531(4). As a result, the excepting clause of
S 6531(4) must be interpreted narrowly, especially given
that the instant statute deals with criminal liability.

Moving to the text at issue here, the majority dismisses
the difference between the terms "pay" and "pay over" too
handily.2 Both S 7202 and its civil analogue, 26 U.S.C.
S 6672, use the term "pay over" in the context of
transferring employees' withheld funds to the government,
strongly implying that "pay over" is a statutory term of art
referring to transferring a third-party's taxes to the
government. While the use of the term "pay over" by the
United States Code does not rise to the level of a statutory
term of art, the term "pay over" does have a strong
tendency to refer to transferring a third-party's taxes to the
government. Accordingly, the majority misses the point by
stressing the importance of "any" in S 6531(4). Even if "any"
is to be interpreted expansively as referring to all taxes
owed, the expansiveness is only within the category of taxes
that are `paid,' not the category of funds `paid over.'
_________________________________________________________________

2. The Block Court rejected   the argument that "pay" includes "pay over,"
noting that "although a lay   person would probably use this approach,
the drafters of s 6531 more   likely would have used the terms as are
reflected in ss 7201 et seq   [sic]." Block, 497 F.Supp. at 632 n.2.

                                  17



V.

The majority argues that having different statutes of
limitations for S 7202 and S 7203 would reflect inconsistent
decisionmaking on the part of Congress. The answer to the
inconsistency charge lies in observing the difference
between the crimes of failure to transfer withheld funds and
failure to pay one's own taxes. In the case of transferring
withheld funds, an employer fails to transfer the funds
withheld from several if not hundreds of employees. The
more employees affected, the greater the chances that the
I.R.S. will discover the crime. In the case of an individual
failing to pay his own taxes, such a crime is harder for the
I.R.S. to detect since only one individual's return is
involved. Accordingly, it would make sense to apply the
normal statute of limitations (three years) to the crime of
failing to pay withheld taxes since the I.R.S. has greater
potential to discover the crime; in the case of the single
individual, the I.R.S. has greater difficulty in discovering
the crime and needs an extended statute of limitations.3
Furthermore, even if Congress was inconsistent in
authorizing a three-year statute of limitations forS 7202
and a six-year statute of limitations for S 7203, it is not our
prerogative to remedy the inconsistency. To interpret a
statute in a manner designed to resolve a putative policy-
based inconsistency brings the court into the forbidden
realm of legislative policy-making.
VI.

Finally, the majority selects the wrong inference from the
fact that S 6531 tracks S 7201 et seq. While SS 6531(5)-(8)
specifically refer to sections in S 7201 et seq., S 6531(4)
_________________________________________________________________

3. The majority contests this by citing the statement of the Assistant
U.S.
Attorney during oral argument that the I.R.S. does not routinely cross-
check employees' W-2 forms against employers' payments of funds
withheld from employees' wages. See Maj. Op. at 10 n.4. However, this
statement by the AUSA, attributed to "[s]omeone who worked for the Tax
Division and is now a specialist in tax crimes," is not contained in the
record and reflects a litigation position taken during oral argument. This
court should not adopt such a counter-intuitive notion without adequate
evidentiary support.

                                18



does not contain an explicit reference. The majority infers
from this lack of a specific reference in S 6531(4) that it
covers more than just the section it clearly parallels,
S 7203, and encompasses S 7202 as well.4 However, the
majority ignores the need to construe excepting clauses
restrictively and to interpret criminal statutes in favor of
repose. Indeed, S 6531's tracking of S 7201 et seq. gives rise
to an alternative inference, namely that even though
S 6531(4) fails to mention S 7203, S 6531(4) still should be
viewed in the context of the tracking by its sister
exceptions. In other words, since exceptions (5)-(8) explicitly
track sections of S 7201 et seq., Congress may have
intended S 6531(4) to track S 7203 by virtue of the similarity
in language between the two provisions even thoughS 7203
is not mentioned explicitly. In fact, the close similarity
between the diction of S 7203 and S 6531(4) may have
obviated the need for S 6531(4) to mentionS 7203 explicitly.
This argument is buttressed by the contention that
S 6531(4) refers to only one "offense" rather than "offenses,"
which must be S 7203 rather than S 7202 given the
similarity of language between S 7203 and S 6531(4). In
sum, while the majority's inference is plausible, another
possible inference exists. Our duty to construe S 6531(4)
restrictively and in favor of repose requires selecting the
inference that S 6531(4) tracks only S 7203, not S 7202 as
well.

VII.

For the above reasons, I respectfully dissent from the
majority's conclusion that violations of S 7202 receive a six-
year rather than a three-year statute of limitations. The
district court's decision should be reversed and the
conviction of Gollapudi vacated due to the expiration of the
three-year statute of limitations prior to the commencement
of prosecution.
_________________________________________________________________

4. Section 6531(4) is closely aligned with S 7203 since S 6531(4) refers
to
"the offense of willfully failing to pay any tax, or make any return[,]"
S 7203 covers "[a]ny person...who willfully fails to pay such estimated
tax
or tax, make such return" and S 7202 merely adverts to "[a]ny person
required to collect, account for, and pay over any tax...."

                                19



A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

                                20
