                     United States Court of Appeals
                              FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 99-4338
                                    ___________

United States of America,                *
                                         *
      Plaintiff - Appellee,              *
                                         * Appeal from the United States
      v.                                 * District Court for the
                                         * District of South Dakota.
Elton Howard Silkman,                    *
                                         *
      Defendant - Appellant.             *
                                    ___________

                               Submitted: June 15, 2000

                                   Filed: July 19, 2000
                                    ___________

Before LOKEN, ROSS, and HANSEN, Circuit Judges.
                            ___________

LOKEN, Circuit Judge.

       Elto n Silkman was indicted on five counts of tax evasion in violation of 26
U.S.C. § 7201 after he failed to file federal income tax returns for the years 1981
throug h 1985, sold his farm assets and transferred the proceeds to European bank
accounts ,and ignored the Internal Revenue Service’s assessments of tax deficiencies.
A jury convicted Silkman on all five counts, but we reversed the conviction because an
elemen t of the crime of tax evasion is a tax deficiency, and the district court had
improperl yinstructed the jury that the IRS tax assessments conclusively established the
fact of tax deficiencies . United States v. Silkman, 156 F.3d 833 (8th Cir. 1998).
       On remand, Silkman was again tried on all five counts. The government again
relied on the administratively final tax assessments for its prima facie case that a tax
was in fact owing in each of the five tax years. Silkman then put on evidence that no
tax was owing. The jury returned verdicts of not guilty on four of the counts but
convicted Silkman of willful tax evasion on Count III, which encompassed the calendar
1983 tax year. The district court1 sentenced Silkman to fourteen months in prison and
three years of supervised release. He appeals, arguing that the government’s prima
facie case was legally insufficient. We affirm.

        When a taxpayer fails to file a return and refuses to disclose relevant information
to the IRS, the Internal Revenue Code authorizes the agency to make and execute a
substitute return for the taxpayer which “shall be prima facie good and sufficient for all
legal purposes.” 26 U.S.C. § 6020(b)(2). One “legal purpose” is to assess the tax
liability reflected on the substitute return. See 26 U.S.C. § 6201(a)(1). The IRS
proceeded in that manner here, preparing a substitute return for each of the tax years
in question and then assessing Silkman for the deficiencies shown on those substitute
returns. When Silkman did not timely challenge the assessed deficiencies, they became
administratively final. To prove the element of tax deficiency in this criminal tax
evasion prosecution, the government introduced the five certificates of assessment into
evidence, a procedure consistent with our opinion in Silkman, 156 F.3d at 835:

      a formal tax assessment that has become administratively final is prima
      facie evidence of the asserted tax deficiency, and if unchallenged, it may
      suffice to prove this element of the crime. But the assessment is only
      prima facie proof of a deficiency. The assessed deficiency may be
      challenged by the defendant accused of tax evasion, and the issue is one
      for the jury.



      1
       The HONORABLE RICHARD H. BATTEY, United States District Judge for
the District of South Dakota.

                                           -2-
        On appeal, Silkman argues that the above-quoted passage is not controlling
because the evidence at his second trial was different in one material respect -- on cross
examination, the IRS employee who provided foundational testimony for the
certificates of assessment admitted that they were based upon substitute returns that
calculated Silkman’s tax liability from his estimated gross income, with no allowance
for estimated business expenses and other deductions. Silkman argues that this
testimony rendered the government’s evidence of a deficiency insufficient as a matter
of law because the IRS had access to additional information from which it could have
estimated his business expenses, such as his tax returns from earlier years, and its
failure to do so produced an admittedly inaccurate assessment that is not prima facie
evidence of a tax deficiency.

       In the circumstances of this case, we disagree. When a taxpayer fails to file a
return and then refuses to provide relevant information to the IRS, the agency faces a
difficult task in determining, assessing, and collecting whatever tax may be owed. It
is not compelled to file a substitute return to trigger the assessment process. See
Geiselman v. United States, 961 F.2d 1, 5 (1st Cir.), cert. denied, 506 U.S. 891 (1992).
Indeed, it is not even compelled to make a formal assessment when no return is filed,
because any deficiency is deemed to arise by operation of law on the date a return
should have been filed. See United States v. Dack, 747 F.2d 1172, 1174 (7th Cir.
1984). But a substitute return provides a valid statutory basis for an assessment, and
an assessment gives the taxpayer notice of the IRS’s position and an opportunity to
contest the assessed deficiency by administrative appeal and civil deficiency or refund
litigation. When the taxpayer declines to invoke these procedures, the assessment
becomes final for purposes of the IRS’s civil tax collection remedies. And when, as
here, the taxpayer’s other actions (such as transferring his assets abroad) permit the
jury to find willful tax evasion, it is entirely appropriate to consider the unchallenged
assessment prima facie evidence that some tax was owing, which is all the government
needs to prove to satisfy the tax deficiency element of this offense. As we said in


                                           -3-
Silkman, 156 F.3d at 836, “It is rational to infer that an assessment which the taxpayer
chose not to contest is prima facie evidence of the asserted deficiency.”

       We therefore conclude that an unchallenged certificate of assessment is prima
facie evidence of a deficiency when a taxpayer who filed no return is charged with tax
evasion. That leaves the uncooperative taxpayer free to prove that no tax was in fact
owing, for example, because the substitute return wrongly estimated his income, or
because his business expenses and other deductions and exemptions exceeded that
income. The ultimate question of deficiency is then for the jury, which in this case
resolved that issue in the government’s favor for one of the five tax years in question.
As the trial evidence in total was sufficient to support the jury’s verdict, the judgment
of the district court is affirmed.

      A true copy.

             Attest:

                 CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.




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