Hudson v. Superior Court of Orange County

Filed 1/26/17

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

BLAKE A. HUDSON,

Petitioner,

v. G052324

THE SUPERIOR COURT OF ORANGE (Super. Ct. No. 14CF1252)
COUNTY,
OPINION
Respondent;

THE PEOPLE,

Real Party in Interest.

Original proceedings; petition for a writ of prohibition and/or mandate to
challenge an order of the Superior Court of Orange County, James E. Rogan, Judge.
Petition denied.
Strecker Law Offices and Marc S. Strecker, for Petitioner.
No appearance for Respondent.
Tony Rackauckas, District Attorney, and Yvette Patko, Deputy District
Attorney, for Real Party in Interest.
* * *
 Generally, a crime occurs when a person commits a wrongful act (an actus
reus) with the requisite criminal intent (a mens rea). In some cases, a person’s failure to
act (an omission) constitutes the actus reus. In California, it is a crime when a person
willfully fails to timely file a state tax return (the actus reus) with the intent to evade
paying the taxes that are owed (the mens rea). (Rev. & Tax. Code, § 19706.)1
Here, the prosecution introduced evidence at a preliminary hearing showing
that Blake A. Hudson failed to timely file tax returns for three consecutive years in which
he owed: $21,974; $27, 205; and $6,505, respectively. Hudson had filed returns in other
years and the Franchise Tax Board (FTB) had repeatedly notified Hudson of his duty to
file his tax returns. As a result, the magistrate bound Hudson over for trial; and the
superior denied his motion to set aside the information. (Pen. Code, § 995, subd.
(a)(2)(B).)
Hudson argues that there was insufficient evidence to show his intent to
evade paying taxes. We disagree. In addition to evidence of Hudson’s failure to timely
file tax returns (the actus reus), the evidence of Hudson’s intent to evade paying taxes
(the mens rea) includes: 1) the considerable amount of taxes Hudson actually owed in
multiple years; 2) the FTB’s repeated notifications; and 3) Hudson’s prior filing history.
Thus, there was some rational ground for the magistrate to assume that when Hudson
failed to timely file his tax returns he intended to evade paying the taxes that he owed.
Nevertheless, Hudson argues that in order to prove his intent, the
prosecution needed to show an additional affirmative act of fraud under section 19706.
He is mistaken. Hudson’s willful failure to timely file tax returns was the sole actus reus
required to be shown under section 19706. This court cannot rewrite the statute.
Hudson’s argument is based on a United States Supreme Court opinion
interpreting a federal tax law. (Spies v. United States (1943) 317 U.S. 492 (Spies).) But

1 Further undesignated statutory references are to the Revenue and Taxation Code.

2
unlike our state statute, the federal tax law at issue in Spies does not explicitly make the
failure to timely file a tax return a criminal act. That distinction is ultimately fatal to
Hudson’s claim in this writ proceeding.
I
FACTUAL AND PROCEDURAL SUMMARY
In a felony complaint, the prosecution charged Hudson with three counts of
willfully failing to timely file tax returns for three consecutive years with the intent to
evade paying a tax. (§ 19706.)2 A magistrate presided over a preliminary hearing in
which an FTB agent testified as the prosecution’s sole witness. The agent testified that
generally a person must file tax returns by either April 15, or October 15, for the prior
taxable year.
The evidence at the preliminary hearing showed that for the first year
(count one), Hudson owed $21,974 in tax. Hudson filed a return about five years late, but
he did not pay the taxes that were due. For the second year (count two), Hudson owed
$27,205 in tax. Hudson filed a return about five years late, but he did not pay the taxes
that were due. For the third year (count three), Hudson owed $6,505 in tax. This time,
Hudson filed a return about three years late and paid $400 of the taxes that were due.
For each of the three years, the FTB had mailed Hudson a “Demand for
Tax Return,” asking him to file his returns. According to the FTB agent, the FTB also
mailed Hudson: 1) a letter telling him that they would publicly disclose him as one of the
500 largest tax delinquents in the state; 2) a notice of proposed assessment; and 3) a
notice of collection. Further, the FTB agent prepared a document showing that Hudson
“had a filing history,” meaning he had filed returns and had paid his taxes in other years.

2 In relevant part: “Any person . . . who, within the time required by or under the
provisions of this part, willfully fails to file any return . . . with intent to evade any tax
imposed . . . , is punishable by imprisonment in the county jail not to exceed one year, or
in the state prison . . . .” (§ 19706, italics added.)

3
 The magistrate found that there was sufficient cause to hold Hudson to
answer on the felony complaint. (Pen. Code, § 872, subd. (a).) The prosecution filed an
information charging Hudson with the same counts that had been alleged in the
complaint.3
Hudson filed a Penal Code section 995 motion to dismiss the felony
charges. Hudson argued that the prosecution had failed to establish sufficient evidence of
his intent to evade paying taxes. (Pen. Code, § 995, subd. (a)(2)(B).) The superior court
denied the motion.
Hudson petitioned for a writ of prohibition and/or mandate in this court
challenging the denial of his Penal Code section 995 motion by the respondent superior
court. (Pen. Code, § 999a.) This court summarily denied the writ petition.
Hudson subsequently filed a petition for review. The California Supreme
Court granted Hudson’s petition and transferred the matter to this court with directions to
vacate our order denying the petition for writ of prohibition and/or mandate and issue an
order to show cause.4 We did so and stayed the trial court proceedings. The district
attorney, as real party in interest, filed a return. Hudson filed a reply.

3The information was not part of the writ petition; however, this court takes judicial
notice of the information on its own motion. (Evid. Code, §§ 452, subd. (d), 459.)

4 By ordering this court to issue an order to show cause, we do not infer that the Supreme
Court expressed any view on the merits of Husdon’s arguments. (See People v. Superior
Court (Sanchez) (2014) 223 Cal.App.4th 567; see also In re Orosco (1978) 82
Cal.App.3d 924, 927 [“Issuance of the order to show cause represents a preliminary
determination by the Supreme Court that the petitioner has stated sufficient facts to
justify relief by way of habeas corpus. It is not, however, the equivalent of a final
appellate decision on questions of law, nor does it constitute law of the case”].)

4
 II
DISCUSSION
In a Penal Code section 995 motion to set aside an information, the superior
court determines “‘if there is some rational ground for assuming the possibility that an
offense has been committed and the accused is guilty of it.’” (People v. Chapple (2006)
138 Cal.App.4th 540, 545.) In reviewing a denial of a motion to dismiss under Penal
Code section 995, “an appellate court must draw every legitimate inference from the
evidence in favor of the information.” (Sea Horse Ranch, Inc. v. Superior Court (1994)
24 Cal.App.4th 446, 454.)
“‘[A]lthough there must be some showing as to the existence of each
element of the charged crime [citation] such a showing may be made by means of
circumstantial evidence supportive of reasonable inferences on the part of the magistrate.’
[Citations.]” (People v. Superior Court (Jurado) (1992) 4 Cal.App.4th 1217, 1226.)
A defendant can properly challenge an order denying a motion to dismiss an information
under Penal Code section 995 in a petition for writ of prohibition. (Pen. Code, § 999a.)

A. It Is Rational to Assume That Hudson Intended to Evade Paying His Taxes.
Section 19706 states in relevant part: “Any person . . . who, within the time
required by or under the provisions of this part, willfully fails to file any return . . . with
intent to evade any tax imposed . . . , is punishable by imprisonment in the county jail not
to exceed one year, or in the state prison . . . .” Thus, the prosecution needed to make
some showing as to each of four elements: (1) Hudson was required to file a tax return;
(2) Hudson did not file a tax return within the required time; (3) Hudson willfully chose
not to file a tax return; and (4) when Hudson made that choice, he intended to evade
paying a tax. (See § 19706; see also CALCRIM No. 2801.)
In this writ proceeding, as in the trial court, Hudson challenges only the
fourth element. That is, he argues there was insufficient evidence presented at the

5
preliminary hearing to show that when he chose not to file his tax returns in a timely
manner he intended to evade paying a tax. We disagree.
It is important to keep in mind that a person’s intent “is a question of fact to
be determined from all the circumstances of the case, and usually must be proven
circumstantially.” (See People v. Fujita (1974) 43 Cal.App.3d 454, 469, 471 [conspiracy
to commit theft may be inferred from the close association of those promoting an illegal
scheme]; see also In re Leanna W. (2004) 120 Cal.App.4th 735, 741 [in a burglary charge
the “theft of property from a dwelling may create a reasonable inference that there was
intent to commit theft at the time of entry”].) “In every crime or public offense there
must exist a union, or joint operation of act and intent . . . .” (Pen. Code, § 20.)
Again, what is at issue in this case is Hudson’s failure to timely file tax
returns “with intent to evade any tax.” (§ 19706, italics added.) The word “evade” is a
synonym for “avoid,” “elude,” or “get out of.” (Roget’s International Thesaurus (4th ed.
1977) p. 486; compare Civ. Code, § 1714.41 [assisting a person who seeks to “escape,
evade, or avoid” paying child support].) There is no indication that the Legislature
intended the word “evade” to have any technical meaning peculiar to the law. (See
CALCRIM No. 200 [“Words and phrases not specifically defined in [jury] instructions
are to be applied using their ordinary, everyday meanings”].)
Here, the evidence presented at the preliminary hearing showed that
Hudson failed to timely file tax returns for three consecutive years and for those three
years he owed $21,974 in taxes in the first year, $27,205 in the second year, and $6,505
in the third year. Had Hudson not owed any tax, or if he was entitled to a tax refund, it
would of course be irrational to assume that by not timely filing tax returns he intended to
avoid paying taxes he did not owe. (See People v. Mojica (2006) 139 Cal.App.4th 1197,
1203-1204, fn. 4 (Mojica) [there must be some evidence of a tax deficiency under section
19706, although the amount need not be substantial].) Conversely, it is entirely rational

6
to assume that Hudson willfully failed to timely file his tax returns precisely because he
intended to evade or avoid paying the substantial taxes that he owed.
But beyond the evidence that Hudson, in fact, owed taxes when he failed to
timely file his returns, there was additional evidence of Hudson’s intent to evade paying
taxes. The evidence showed that Hudson had filed and paid his taxes in other years.
Further, the FTB had notified Hudson of his obligation to file returns for each of the three
years charged in the complaint and he had only paid a small portion ($400) of the total
amount due ($55,684). Thus, Hudson’s substantial tax obligations, his knowledge of his
obligation to file (as demonstrated by his prior filing history), his failure to respond to the
FTB’s delinquency notices, and ultimately his failure to fully comply with his tax
obligations, is all circumstantial evidence that he had intended to evade paying taxes at
the time when they were due.
There may be other conceivable reasons why Hudson failed to timely file
his tax returns. However, based on the evidence at the preliminary hearing, it cannot be
said that it was irrational for the magistrate to assume that when Hudson failed to timely
file his tax returns he intended to evade or avoid paying the taxes that he owed.

B. Section 19706 Does Not Require Acts Beyond the Willful Failure to Timely File.
Hudson argues that in order to sustain a magistrate’s ruling under section
19706, the prosecution—in addition to showing a failure to timely file a tax return—is
required to show that the defendant committed an affirmative act of fraud (such as
concealing information or creating false documents). But Hudson’s argument
fundamentally confuses the necessary mens rea of section 19706 (an intent to evade
paying taxes) with the necessary actus reus (a failure to timely file a return). An
additional affirmative act of fraud is simply not required under section 19706.
In construing a statute, there are well-established principles of statutory
interpretation. The primary goal is to ascertain legislative intent so as to effectuate the

7
purpose of the law. (People v. Jefferson (1999) 21 Cal.4th 86, 94.) The words of a
statute, which are the most reliable indicator of legislative intent, are to be given their
“‘usual and ordinary meaning.’” (People v. Lawrence (2000) 24 Cal.4th 219, 230-231.)
Where the statutory language is unambiguous, courts are to presume the Legislature
meant what it said, and the plain meaning of the language governs. (Ibid.)
Courts may not insert words or add provisions to an unambiguous statute.
(People v. Hunt (1999) 74 Cal.App.4th 939, 946.) “The powers of state government are
legislative, executive, and judicial. Persons charged with the exercise of one power may
not exercise either of the others except as permitted by this Constitution.” (Cal. Const.,
art. III, § 3.) “In construing this, or any, statute, our office is simply to ascertain and
declare what the statute contains, not to change its scope by reading into it language it
does not contain or by reading out of it language it does. We may not rewrite the statute
to conform to an assumed intention that does not appear in its language.” (Vasquez v.
State of California (2008) 45 Cal.4th 243, 253.)
Again, generally “every crime has two components: (1) an act or omission,
sometimes called the actus reus; and (2) a necessary mental state, sometimes called the
mens rea.” (People v. Williams (2009) 176 Cal.App.4th 1521, 1528.) Usually, the actus
reus is a willful physical act; however, the actus reus can also be a willful omission or a
willful failure to act. (Ibid.) “‘Criminal conduct may arise not only by overt acts, but by
an omission to act where there is a legal duty to do so.’” (People v. Ogg (2013) 219
Cal.App.4th 173, 182, quoting People v. Stancial (1992) 153 Ill.2d 218, 236 [failure of
parent to protect child].) This type of actus reus is sometimes referred to as a “negative
act.” (1 Witkin & Epstein, Cal. Criminal Law (4th ed. 2012) Elements, § 23, p. 296.)
Once more, section 19706 states, in relevant part: “Any person . . . who,
within the time required by or under the provisions of this part, willfully fails to file any
return . . . with intent to evade any tax imposed . . . , is punishable by imprisonment in
the county jail not to exceed one year, or in the state prison . . . .” (Italics added.) The

8
only required actus reus or “negative act” occurs when a person “willfully fails to file any
return.” (§19706.) The language is plain and its meaning is unambiguous. Under our
state Constitution, this court cannot rewrite the statute to require the prosecution to show
an additional affirmative act of fraud when the Legislature has not required such an act in
order to establish a crime under section 19706.
Here, it is undisputed that Hudson willfully failed to timely file his tax
returns. And, as we already discussed, there was some evidence that Hudson did so with
the intent to evade paying his taxes. Accordingly, the evidence is sufficient to sustain the
magistrate’s ruling and the superior court’s denial of his Penal Code section 995 motion.
Thus, Hudson’s petition for a writ of prohibition and/or mandate must be denied.

C. Unlike Section 19706, The Federal Tax Law Interpreted in Spies Does Not Make a
Defendant’s Willful Failure to File a Tax Return a Criminal Act.
Hudson relies on Spies, a United States Supreme Court decision
interpreting a federal tax evasion law to support his argument that an additional
affirmative act of fraud is required under section 19706. (Spies, supra, 317 U.S. 492.)
But generally, a decision of the United States Supreme Court based solely on federal law
is not binding on state courts in the interpretation of state law. (See People v. Guiton
(1993) 4 Cal.4th 1116, 1126.) And more specifically in this case, Spies is inapposite
because the federal tax evasion law analyzed in Spies—unlike section 19706— does not
explicitly make the willful failure to file a tax return a criminal act.
In relevant part, the federal tax evasion law analyzed in Spies is a felony
and reads as follows: “Any person who willfully attempts in any manner to evade or
defeat any tax imposed . . . shall, in addition to other penalties provided by law, be guilty

9
of a felony . . . .” (Int.Rev. Code, § 7201, italics added.)5 The federal tax scheme also
criminalizes the willful failure to file a return and other omissions, but those crimes are
treated as misdemeanors under a different code section. (See Int.Rev. Code, § 7203
[willful failure to file, supply information, keep records, etc.].) In Spies, the United
States Supreme Court observed that under the federal felony tax evasion law, “Congress
did not define or limit the methods by which a willful attempt to defeat and evade [taxes]
might be accomplished . . . .” (Spies, supra, 317 U.S. at p. 499, italics added.) In other
words, the felony tax evasion law as written was ambiguous: Congress had not stated
what form of actus reus was required to be proven in order to show an attempt to “evade
or defeat” federal taxes under its provisions. (Int.Rev. Code, § 7201.)
As a result of this ambiguity, the Supreme Court in Spies was obligated to
construe what acts Congress intended to make criminal: “We think that in employing the
terminology of attempt to embrace the gravest of offenses against the revenues Congress
intended some willful commission in addition to the willful omissions that make up the
list of misdemeanors.” (Spies, supra, 317 U.S. at p. 499.) The Supreme Court then noted
what additional acts (in addition to misdemeanor omissions) the Congress may have
intended to be required within the scope of the felony tax evasion law: “By way of
illustration, and not by way of limitation, we would think affirmative willful attempt may
be inferred from conduct such as keeping a double set of books, making false entries of
alterations, or false invoices or documents, . . . and any conduct, the likely effect of which
would be to mislead or to conceal.” (Ibid., italics added.)
Here, under California law—unlike the ambiguous federal tax evasion law
interpreted in Spies—the Legislature has explicitly stated what criminal act is required to
be shown under section 19706. The required actus reus is the willful failure of a person

5In Spies, the defendant was actually charged with section 145, subdivision (b), of the
Revenue Act of 1936, which later became section 145, subdivision (b), of the Internal
Revenue Code, and is now section 7201. (See Spies, supra, 317 U.S. at pp. 492-493.)

10
to timely file a tax return—an omission or a negative act—along with the intent to evade
the taxes that are due. Thus, the Spies holding, in so far as it requires an additional
affirmative act of fraud under the federal tax evasion law, is inapposite and has no
bearing on our analysis.

D. The California Opinions Cited By Hudson Are Distinguishable.
There are no California opinions that directly support Hudson’s argument
that section 19706 requires proof of an additional affirmative act of fraud beyond the
willful failure to timely file a tax return. That is, no California case has ever applied the
holding of Spies to section 19706, as Hudson urges us to do. Nevertheless, Hudson cites
two cases that generally touch on the interplay between federal and state tax laws, People
v. Hagen (1998) 19 Cal.4th 652 (Hagen) and Mojica, supra, 139 Cal.App.3d. 1197. But
Hagen and Mojica are distinguishable and they do not alter our holding.
In Hagen, supra, 19 Cal.4th at pages 656-657, a jury convicted a husband
and his wife of willfully filing false tax returns. (Former § 19405, subd. (a)(1); now
§ 19705, subd. (a)(1).) The wife had stolen a substantial sum of money from her
employer, but the couple did not include the stolen income on their tax return. (Hagen, at
pp. 656-657.) At issue was the interpretation of the particular state tax statute they were
charged with, currently section 19705, subdivision (a)(1).6 (Hagen, at pp. 658-659.)
In resolving the matter, our Supreme Court relied on federal opinions interpreting a

6 The state statute makes it a crime to: “Willfully make[] and subscribe[] any return,
statement, or other document, that contains or is verified by a written declaration that it is
made under penalty of perjury, and he or she does not believe to be true and correct as to
every material matter.” (§ 19705, subd. (a)(1).)

11
“virtually identical” provision of the Internal Revenue Code.7 (Hagen, at p. 659;
Int.Rev. Code, § 7206(1).) The court noted that “federal decisions in the area of income
tax law can be persuasive on the interpretation of parallel California provisions.”
(Hagen, at p. 666, italics added.)
But here, unlike the “virtually identical” federal and state tax laws that were
compared in Hagen, the federal tax law interpreted in Spies is not “virtually identical” to
section 19706, particularly as to the criminal act or actus reus that needs to be proven.
That is, Internal Revenue Code section 7201 makes it a crime to attempt to evade a tax,
while section 19706 makes it a crime to willfully fail to timely file a tax return. Hagen is
distinguishable and did not apply the holding of Spies to section 19706 as Hudson urges
us to do. Thus, Hagen does not alter our holding.
In Mojica, supra, 139 Cal.App.4th at page 1200, a jury convicted the owner
of a small business of willfully failing to file tax returns. (§ 19706.) The FTB had
notified the defendant that he was required to file his returns, but he did not comply.
(Mojica, at p. 1200.) The appellate court found that the jury should have been instructed
that the existence of a tax deficiency is an element of section 19706. (Mojica, at p.
1203.) The appellate court had compared our state statute, section 19706, to the federal
statute, Internal Revenue Code section 7201, and found that they were “substantially
identical.” (Mojica, at p. 1205.)
We agree with Mojica that Internal Revenue Code section 7201 and section
19706 are “substantially identical,” but only when it comes to the issue of a defendant’s
intent or mens rea. That is, both statutes require that a defendant intend to evade paying
taxes and therefore both statutes require proof of a tax deficiency. And, as we have

7 The federal statute makes it a crime to: “Willfully make[] and subscribe[] any return,
statement, or other document, which contains or 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 . . . .” (Int.Rev. Code, § 7206(1).)

12
already discussed, there was evidence that Hudson had a substantial tax deficiency for
each of the three years he was charged with violating section 19706. Thus, there was a
rational basis for the magistrate to assume that Hudson harbored the requisite intent to
evade paying his taxes when he failed to timely file his tax returns.
However, Mojica did not consider the issue we are presented with in this
case: the actus reus that is required to be shown under section 19706. Mojica did not
find that section 19706 requires any additional affirmative act of fraud beyond the willful
failure to file a tax return. That is, Mojica did not apply Spies to section 19706 as
Hudson urges us to do. Thus, Mojica does not alter our holding.

III
DISPOSITION
The petition for writ of prohibition and/or mandate is denied. The order to
stay proceedings in the trial court is lifted.

MOORE, ACTING P. J.

I CONCUR:

ARONSON, J.

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Aronson, J., Concurring:
I fully concur with Justice Moore’s analysis, but write separately to

highlight the differences I see between our position and Justice Fybel’s thoughtful and

well-argued dissent.

The dissent views Revenue and Taxation Code section 19706 (section

19706) and 26 United States Code section 7201 (section 7201) as “substantially

identical,” explaining that neither statute “on its face requires evidence of an affirmative

act.” (Dis. opn., post, p. 9.) Consequently, the dissent reasons that the United States

Supreme Court’s interpretation of the phrase “willfully attempts . . . to evade or defeat a

tax” to require an affirmative act, such as destruction of records, applies equally to

section 19706. (See Spies v. United States (1943) 317 U.S. 492, 498-499 (Spies)

[interpreting section 7201].) But our Legislature in enacting section 19706 did not use

the word “attempt” or any similar language. In my view, that makes all the difference,

rendering the statutes entirely dissimilar in that crucial aspect.

It is a crucial distinction because in expressly criminalizing willful

“attempts,” the federal statute necessarily requires an affirmative act. Both in the

ordinary meaning of an “attempt” and in its longstanding legal interpretation, an attempt

does not occur until there is some direct or overt act.

Thus, our Penal Code requires for a criminal attempt “a direct but

ineffectual act” (Pen. Code, § 21a), and our Supreme Court has explained that an attempt
involves “an act that ‘goes beyond mere preparation and shows that the perpetrator is

putting his or her plan into action.’” (People v. Toledo (2001) 26 Cal.4th 221, 230.)

Similarly, the federal high court recently explained, “Not only does the word ‘attempt’ as
used in common parlance connote action rather than mere intent, but more importantly,

1
as used in the law for centuries, it encompasses both the overt act and intent elements.”

(U.S. v. Resendiz-Ponce (2007) 549 U.S. 102, 107.)

Based on this established understanding of attempt, Spies explained the

difference between the federal misdemeanor offense of failing to pay a tax when due and

the felony offense of attempting to evade a tax “is found in the affirmative action implied

from the term ‘attempt.’” (Spies, supra, 317 U.S. at p. 498.) Spies reasoned: “We think

that in employing the terminology of attempt to embrace the gravest of offenses against

the revenues Congress intended some willful commission in addition to the willful

omissions that make up the list of misdemeanors. Willful but passive neglect of the

statutory duty may constitute the lesser offense, but to combine with it a willful and

positive attempt to evade tax in any manner or to defeat it by any means lifts the offense

to the degree of felony.” (Id. at pp. 498-499.)

Notably, section 19706 is distinct from federal law interpreted in Spies in

two important respects. First, it is a wobbler. Consequently, unlike the tax evasion

statutes in Spies, which consisted of separate misdemeanor and felony provisions

differentiated by the “attempt” requirement in the latter, there is nothing in the language

our Legislature chose to employ in section 19706 to elevate the offense from a
misdemeanor to a felony. Instead, the exact same statutory language governs both and,

as with any wobbler, whether to charge a misdemeanor or felony rests in the prosecutor’s

sound discretion.

Second and related, the presence or absence of “attempt” or a word of

similar import makes all the difference. There is in section 19706 no word or phrase

requiring as in Spies “the affirmative action implied from the term ‘attempt.’” In

contrast, section 19706 expressly criminalizes the exact omission Spies held was

2
insufficient. Specifically, the Legislature based criminal liability, including felony

liability, on a defendant’s omission or failure to timely file a tax return with the intent to

evade the payment of taxes. The omission described in section 19706 is consistent with

California law defining “a crime or public offense” as “an act committed or omitted in

violation of a law forbidding or commanding it.” (Pen. Code, § 15, italics added.) In

light of these differences, I cannot agree the state and federal statutes are substantially

identical as the dissent claims.

Perhaps the following example best illustrates my disagreement with the

dissent: Assume the prosecution presented evidence a defendant failed to timely file tax

returns for three consecutive years, owed a substantial amount of taxes for that period,

and confessed he failed to file the returns because he intended to avoid payment, but the

prosecution offered no evidence of Spies acts. The logical extension of the dissent’s

interpretation would require the court to dismiss the charges because no affirmative Spies

acts were shown, even though the defendant admitted he intended to evade paying his

taxes when he failed to file his return. I cannot agree the law requires that result.

ARONSON, J.

3
FYBEL, J., Dissenting.
I respectfully dissent. Based on authorities of the United States Supreme
Court, the California Supreme Court, and the federal and state appellate courts, including
an opinion from the Second District Court of Appeal, I conclude that at the preliminary
hearing the prosecution did not present evidence of intent to evade paying a tax sufficient
to commit Blake A. Hudson to answer the felony charges. Revenue and Taxation Code
section 197061 punishes a willful failure to file a tax return only when coupled with the
intent to evade paying a tax. At the preliminary hearing, the prosecution presented
evidence that Hudson did not timely file tax returns for 2007, 2008, and 2009, and only
filed tax returns for those years after receiving notices from the California Franchise Tax
Board. This evidence of omission, though sufficient to show a misdemeanor willful
failure to file returns, was not enough to show, even at the preliminary hearing stage, that
Hudson acted with intent to evade paying a tax. The prosecution presented no evidence
that Hudson engaged in affirmative conduct from which intent to evade could be inferred.
California’s tax evasion statutes were modeled after the federal tax evasion
statutes, and, therefore, California Supreme Court authority holds that federal decisions
interpreting federal tax laws are “unusually strong persuasive precedent on construction
of our own laws.” (People v. Hagen (1998) 19 Cal.4th 652, 661 (Hagen).) In People v.
Mojica (2006) 139 Cal.App.4th 1197, 1205 (Mojica), the Court of Appeal held that
section 19706 and the federal tax evasion statute are substantially the same, the only real
difference being that section 19706 makes explicit what federal courts, including the

1 Further references to California code sections are to the Revenue and Taxation Code.
In relevant part, section 19706 states: “Any person . . . who, within the time required by
or under the provisions of this part, willfully fails to file any return or to supply any
information with intent to evade any tax imposed by Part 10 (commencing with
Section 17001) or Part 11 (commencing with Section 23001), . . . is punishable by
imprisonment . . . , or by fine . . . , or by both the fine and imprisonment, at the discretion
of the court.”

1
United States Supreme Court, have interpreted the federal tax evasion statute to mean. In
Spies v. United States (1943) 317 U.S. 492, 499 (Spies), the United States Supreme Court
interpreted the federal tax evasion statute as requiring proof of “some willful
commission” or “positive attempt to evade tax,” in addition to willful omissions, to
support a conviction. Such acts of willful commission are a necessary element of the
offense of tax evasion.
Thus, section 19706 must be interpreted in accordance with Spies, which
requires proof of “some willful commission” or “positive attempt to evade tax,” in
addition to willful omissions (Spies, supra, 317 U.S. at p. 499). In this case, the
prosecution presented no evidence at the preliminary hearing of “some willful
commission” or “positive attempt to evade tax.” The district attorney concedes no
evidence of such “Spies acts” was presented. Because there was “a total absence of
evidence” to support the element of intent to evade, which is a necessary element of a
violation of section 19706, the trial court should have granted Hudson’s motion to
dismiss the information. (People v. Caffero (1989) 207 Cal.App.3d 678, 684.)
The majority’s conclusion that intent to evade can be inferred from the
failure to file tax returns alone fails to acknowledge the substantive identity between the
state and federal tax evasion statutes, as interpreted by the United States Supreme Court
in Spies. The majority twice asserts that requiring evidence of willful commission is an
attempt to rewrite California’s tax evasion statutes. Requiring proof of willful
commission is not a matter of rewriting section 19706. It is a matter of interpreting the
requirements of section 19706 in accordance with United States Supreme Court authority,
and as directed by the California Supreme Court.
I.
The State and Federal Tax Evasion Statutes
To understand why we must follow federal decisions on the issue in this
case, it is important to lay out and compare the state and federal tax evasions statutes.

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California’s tax evasion statutes were modeled after the federal tax evasion statutes
(Hagen, supra, 19 Cal.4th at p. 661), and, like the federal statutes, provide “a graduated
scheme of civil penalties and misdemeanor and felony punishment to deter both honest
mistakes and willful fraud” (id. at p. 662).
“Our Legislature has generally followed the federal statutes in designing
California’s personal income tax system, making federal decisions interpreting
substantially identical statutes unusually strong persuasive precedent on construction of
our own laws. [Citations.]” (Hagen, supra, 19 Cal.4th at p. 661; see id. at pp. 660-661
[federal tax law definition of “willfully” applied to former section 19405,
subdivision (a)(1) (now section 19705)].) Federal court opinions interpreting federal
income tax statutes are relevant to interpreting California income tax statutes because the
Legislature, in enacting the California statutes, consistently followed federal law.
(Hagen, supra, at p. 661.)
A. Lowest Gradation: Misdemeanor and Civil Penalty
The first gradation is failure to file a return or to supply information under
section 19701, subdivision (a) (section 19701(a)). Violation of section 19701(a) is a
misdemeanor offense or results in a civil penalty. Section 19701(a) states: “Any person
who does any of the following is liable for a penalty of not more than five thousand
dollars ($5,000): [¶] (a) With or without intent to evade any requirement of Part 10
(commencing with Section 17001), Part 11 (commencing with Section 23001), or this
part or any lawful requirement of the Franchise Tax Board, repeatedly over a period of
two years or more, fails to file any return or to supply any information required, or who,
with or without that intent, makes, renders, signs, or verifies any false or fraudulent return
or statement, or supplies any false or fraudulent information, resulting in an estimated
delinquent tax liability of at least fifteen thousand dollars ($15,000).” A person who
violates section 19701(a) “is also guilty of a misdemeanor and shall upon conviction be
fined not to exceed five thousand dollars ($5,000) or be imprisoned not to exceed one

3
year, or both, at the discretion of the court, together with costs of investigation and
prosecution.” (§ 19701, subd. (c).)
The effect of the phrase “[w]ith or without intent to evade” in
section 19701(a) is that such intent need not be proven to establish the misdemeanor
violation. The misdemeanor violation requires only the act of willful failure to file a tax
return, supply required information, or make, render, sign, or verify a false or fraudulent
return, for the requisite time period and resulting in a tax delinquency meeting the
statutory minimum.
The federal analog to section 19701(a) is title 26 United States Code
section 7203. It reads: “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 $25,000 ($100,000 in the case of a corporation), or imprisoned not more
than 1 year, or both, together with the costs of prosecution. In the case of any person
with respect to whom there is a failure to pay any estimated tax, this section shall not
apply to such person with respect to such failure if there is no addition to tax under
section 6654 or 6655 with respect to such failure. In the case of a willful violation of any
provision of section 6050I, the first sentence of this section shall be applied by
substituting ‘felony’ for ‘misdemeanor’ and ‘5 years’ for ‘1 year.’” (26 U.S.C. § 7203.)
Title 26 United States Code section 7203 has no intent to evade element.
Section 7203 has a willful requirement, but it refers to the failure to pay the estimated tax
or tax, make a tax return, or supply information.

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 B. Highest Gradation: Felony
The highest gradation under the California scheme is section 19705. It
gives a list of prohibited acts with the preamble that any person who commits any of the
prohibited acts “shall be guilty of a felony and, upon conviction, shall be fined not more
than fifty thousand dollars ($50,000) or imprisoned . . . , or both.” (§ 19705, subd. (a).)
Hudson was not charged under section 19705. It primarily, though not exclusively,
concerns willfully subscribing a false return and removing or concealing assets subject to
a tax levy.
C. Middle Gradation: Section 19706
The middle gradation under the California scheme is section 19706. It
states: “Any person or any officer or employee of any corporation who, within the time
required by or under the provisions of this part, willfully fails to file any return or to
supply any information with intent to evade any tax imposed by Part 10 (commencing
with Section 17001) or Part 11 (commencing with Section 23001), or who, willfully and
with like intent, makes, renders, signs, or verifies any false or fraudulent return or
statement or supplies any false or fraudulent information, is punishable by imprisonment
in the county jail not to exceed one year, or in the state prison, or by fine of not more than
twenty thousand dollars ($20,000), or by both the fine and imprisonment, at the discretion
of the court, together with the costs of investigation and prosecution.” (§ 19706.)
Section 19706 appears to be a wobbler because the offense is punishable by
imprisonment in jail for not more than one year, or in state prison. Here, the district
attorney charged Hudson with a felony violation of section 19706.
Both section 19701 and section 19706 prohibit the willful failure to “file
any return or to supply any information.” The primary difference between the two
statutes is that section 19706, unlike section 19701, includes the element that the willful
failure to file the return or supply information must have been made “with intent to evade
any tax” (§ 19706).

5
 Section 19706 requires proof both that the defendant willfully failed to file
a tax return and that the defendant failed to file a tax return with the intent to evade
paying a tax. These two mental states—willful failure and intent to evade—“together
comprise the mental state involved in a section [19706] violation.” (People v. Smith
(1984) 155 Cal.App.3d 1103, 1157, disapproved on another ground in Baluyut v.
Superior Court (1996) 12 Cal.4th 826, 832-835.)
Accordingly, to establish a violation of section 19706, the prosecution must
prove (1) the defendant was required to file a tax return with or supply information to the
Franchise Tax Board; (2) the defendant did not file a tax return with or supply
information to the Franchise Tax Board within the required time; (3) the defendant
willfully chose not to file a tax return with or supply information to the Franchise Tax
Board; and (4) the defendant chose not to file a tax return with or supply information to
the Franchise Tax Board with the intent to evade paying a tax. (See CALCRIM
No. 2801.)
If the prosecution cannot show intent to evade paying a tax, the defendant
might still be guilty of the misdemeanor offense or subject to a civil penalty under
section 19701. But without proof of intent to evade, the defendant cannot be guilty of
violating section 19706.
D. Federal Analog to Section 19706
The federal analog to section 19706 (the statute at issue here) is 26 United
States Code section 7201. It states: “Any person who willfully attempts in any manner
to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to
other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall
be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned
not more than 5 years, or both, together with the costs of prosecution.” (26 U.S.C.
§ 7201.)

6
 E. Analysis of California and Federal Law
A literal comparison of section 19706 and 26 United States Code
section 7201 reveals they are phrased somewhat differently: Section 19706 makes it a
crime to “willfully fail[] to file any return . . . with intent to evade any tax,” while
26 United States Code section 7201 makes it a crime to “willfully attempt[] in any
manner to evade or defeat any tax.”
These federal and state statutes are, in substance, identical. The reason is
this: The federal courts have interpreted “willfully attempt[] . . . to evade or defeat any
tax” in 26 United States Code section 7201 or its predecessor as requiring acts showing
motive or specific intent to evade tax. (See Spies, supra, 317 U.S. at p. 494, fn. 2; U.S. v.
Dack (7th Cir. 1984) 747 F.2d 1172, 1174.) “Thus the willfulness involved in failing to
pay the tax when due, resources being available, is not enough. For a felony conviction,
there must be ‘proof of willfulness in the sense of a specific intent to evade or defeat the
tax or its payment.’” (U.S. v. DeTar (9th Cir. 1987) 832 F.2d 1110, 1114.) “To support a
conviction for attempted tax evasion, . . . the government must prove beyond a reasonable
doubt that there was a tax deficiency, an affirmative act constituting an attempt to evade
or defeat the tax, and willfulness.” (U.S. v. Bishop (5th Cir. 2001) 264 F.3d 535, 550.)
In Mojica, supra, 139 Cal.App.4th at page 1205, our colleagues in
Division Eight of the Second District Court of Appeal explained: “Thus, the federal
statute has been interpreted to mean that failing to file a tax return while intending to
violate a known legal duty, with the intent to evade taxes imposed by the federal income
tax laws, is a felony. Section 19706 makes explicit what the federal courts have read into
26 United States Code section 7201, providing that a felony occurs as to ‘[a]ny person
. . . who, . . . willfully fails to file any return . . . with intent to evade any tax imposed by
[the state income tax laws].’” (Italics added.)
The analysis of Mojica is correct. Because section 19706 is substantially
the same as 26 United States Code section 7201, federal decisions interpreting 26 United

7
States Code section 7201 provide “unusually strong persuasive precedent” in our
construction of section 19706. (Hagen, supra, 19 Cal.4th at p. 661.) Indeed, if anything,
section 19706 more forcefully imposes intent to evade as an element of the offense
because section 19706 expressly sets forth that element.
The majority agrees with Mojica that section 19706 and 26 United States
Code section 7201 are substantially identical, “but only when it comes to the issue of a
defendant’s intent or mens rea.” (Maj. opn., ante, at p. 12.) This statement is perplexing.
The substantial identity between the two statutes on the issue of the defendant’s intent is
precisely why section 19706 must be interpreted in accordance with Spies.
II.
Evidence Necessary to Prove Intent to Evade
The United States Supreme Court, in Spies, supra, 317 U.S. at page 499,
interpreted the federal tax evasion statute as requiring proof of “willful commission in
addition to the willful omissions.” The court compared federal tax evasion (current 26
United States Code section 7201) with the lesser offense of willful failure to file a tax
return (current 26 United States Code section 7203). (Spies, supra, at p. 498.) The court
expressly rejected the argument that willful failure to file a return, coupled with a willful
failure to pay a tax, is enough to constitute willful attempt to evade or defeat a tax. (Id. at
p. 499.) “Willful but passive neglect of the statutory duty may constitute the lesser
offense, but to combine with it a willful and positive attempt to evade tax in any manner
or to defeat it by any means lifts the offense to the degree of felony.” (Ibid.) The
Supreme Court provided examples of conduct from which willful attempt to evade can be
inferred. Such conduct would include keeping double books, making false bookkeeping
entries, destruction of records, concealment of assets, and “any kind of conduct, the likely
effect of which would be to mislead or to conceal.” (Ibid.) “If the tax-evasion motive
plays any part in such conduct the offense may be made out even though the conduct may
also serve other purposes such as concealment of other crime.” (Ibid.)

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 “A wide range of conduct can support a finding of willful attempt to evade
taxation, for instance: keeping a double set of books, making false entries or alterations,
creating false invoices or documents, destroying books or records, concealing assets or
covering up sources of income, handling one’s affairs to avoid making the records
normally accompanying transactions of a particular kind, any conduct likely to mislead or
conceal, holding assets in others’ names, providing false explanations, giving inconsistent
statements to government agents, failing to report a substantial amount of income, a
consistent pattern of underreporting large amounts of income, or spending large amounts
of cash that cannot be reconciled with the amount of reported income.” (U.S. v. Bishop,
supra, 264 F.3d at p. 550.) Here, the district attorney concedes no evidence was
presented of any Spies acts.
The majority takes the position that section 19706 on its face does not
require evidence of affirmative acts of evasion. But neither 26 United States Code
section 7201 nor its predecessor on its face requires evidence of an affirmative act. The
United States Supreme Court in Spies interpreted the predecessor to 26 United States
Code section 7201 as requiring proof of affirmative acts of commission in addition to
omissions. We must interpret section 19706 in the same fashion because it is
substantively identical to 26 United States Code section 7201. Doing so does not
constitute rewriting the statute but interpreting it in accordance with binding authority.
The concurring opinion finds importance in the fact the federal tax evasion
statute criminalizes “attempt” while section 19706 does not include the word “attempt”
and criminalizes only the completed act. But Spies confirmed the term “attempt” in the
federal statute is not the same as the common law concept of attempt. Rather, as Spies
explained: “The attempt made criminal by this statute does not consist of conduct that
would culminate in a more serious crime but for some impossibility of completion or
interruption or frustration. This is an independent crime, complete in its most serious
form when the attempt is complete, and nothing is added to its criminality by success or

9
consummation, as would be the case, say, of attempted murder.” (Spies, supra, 317 U.S.
at pp. 498-499.) Section 19706, which punishes the completed act, is thus substantively
the same as the federal statute. Section 19706 does no more than “make[] explicit what
the federal courts have read into 26 United States Code section 7201,” and, therefore,
“section 19706 is substantially identical to 26 United States Code section 7201.”
(Mojica, supra, 139 Cal.App.4th at p. 1205.)
The concurring opinion also finds importance in the fact that section 19706
is a wobbler. Were Hudson being prosecuted for misdemeanor tax evasion, that point
might be significant. But Hudson is being prosecuted for felony tax evasion. The issue is
whether the prosecution presented sufficient evidence at the preliminary hearing to
commit Hudson to answer charges of felony tax evasion. Felony tax evasion requires
evidence of affirmative conduct (Spies acts) from which intent to evade can be inferred.
III.
The Absence of Evidence in This Case of Intent to Evade
Here, the only evidence presented at the preliminary hearing was that
Hudson did not file tax returns for several years, filed returns only after receiving notice,
and did not pay taxes when filing the returns. No evidence of Spies acts was presented.
Why can’t specific intent to evade be inferred from a pattern of failing to file returns?
The answer is, Spies instructs that is not a permissible inference for tax evasion cases. A
pattern of not filing returns might prove that the defendant willfully failed to file a
return—the misdemeanor offense under both United States and California law—but more
evidence is needed to prove specific intent to evade and to lift the offense from a
misdemeanor to a felony. Without evidence of some willful act of commission, there was
no “rational ground” (People v. Chapple (2006) 138 Cal.App.4th 540, 545), for the
magistrate to conclude that Hudson had harbored the requisite intent to evade.
If the prosecution cannot present evidence of Spies acts, the defendant does
not necessarily go free, but might be guilty of a misdemeanor and/or be subject to a civil

10
penalty. Such result is anticipated by the graduated scheme of penalties for tax evasion
under both United States and California law.
IV.
Conclusion
An element of a violation of section 19706 is intent to evade any tax. In
contrast, the misdemeanor offense of willful failure to file a tax return or provide required
information, etc., does not have an element of intent to evade any tax. Section 19706 is
substantively identical to the federal tax evasion statute, 26 United States Code
section 7201. Section 19706 therefore must be interpreted in line with 26 United States
Code section 7201. In Spies, the United States Supreme Court held that 26 United States
Code section 7201 requires evidence of affirmative conduct, such as keeping double
books, making false bookkeeping entries, destruction of records, and concealment of
assets, to show attempt to evade. (Spies, supra, 317 U.S. at p. 499.)
In this case, the prosecution presented no evidence of affirmative conduct,
as required by Spies. While it might be sufficient in other situations to prove the element
of intent (the mens rea) with evidence of the actus reus, that is not the law for tax evasion.
Tax evasion is different. In Spies, the United States Supreme Court held that evidence of
willful commission is necessary for the intent to evade element of the federal tax evasion
statute. (Spies, supra, 317 U.S. at p. 499.) The California tax evasion statutes were
modeled on the federal tax evasion statutes and, in particular, section 19706 is
substantively identical to its federal counterpart. The California Supreme Court has held
that federal decisions interpreting federal tax evasion statutes are “unusually strong
persuasive precedent” in interpreting state law counterparts. (Hagen, supra, 19 Cal.4th at
p. 661.) The majority opinion is inconsistent with Spies, Hagen, and Mojica, and places
section 19706 at odds with 26 United States Code section 7201.
We, as the Court of Appeal, must therefore interpret section 19706 as
requiring evidence of a willful act of commission—a Spies act—to prove intent to evade.

11
The prosecution presented no proof of willful acts of commission at the preliminary
hearing. I would issue a writ of mandate directing the trial court to grant Hudson’s
motion to dismiss the felony charges.

FYBEL, J.

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