1. Gains from illicit traffic in liquor are subject to the
income tax. P.
274 U. S.
263.
2. The Fifth Amendment does not protect the recipient of such
income from prosecution for willful refusal to make any return
under the income tax law. P.
274 U. S.
263.
3. If disclosures called for by the return are privileged by the
Amendment, the privilege should be claimed in the return. P.
274 U. S. 264.
15 F.2d 809 reversed.
Certiorari (273 U.S. 689) to a judgment of the circuit court of
appeals which reversed a judgment of the district court sentencing
Sullivan for willfully refusing to make a return of net income
under the Revenue Act of 1921.
Page 274 U. S. 262
MR. JUSTICE HOLMES delivered the opinion of the Court.
The defendant in error was convicted of willfully refusing to
make a return of his net income as required by the Revenue Act of
1921, Act Nov. 23, 1921, c. 136, §§ 223(a), 253, 42 Stat. 227, 250,
268. The judgment was reversed by the circuit court of appeals.
Sullivan v. United States, 15 F.2d 809. A writ of
certiorari was granted by this Court.
We may take it that the defendant had sufficient gross income to
require a return under the statute unless he was exonerated by the
fact that the whole or a large
Page 274 U. S. 263
part of it was derived from business in violation of the
National Prohibition Act. The circuit court of appeals held that
gains from illicit traffic in liquor were subject to the income
tax, but that the Fifth Amendment to the Constitution protected the
defendant from the requirement of a return.
The Court below was right in holding that the defendant's gains
were subject to the tax. By § 213(a), gross income includes
"gains, profits, and income derived from . . . the transaction
of any business carried on for gain or profit, or gains or profits
and income derived from any source whatever."
"These words are also those of the earlier Act of October 3,
1913, c. 16, § II, B, 38 Stat. 114, 167, except that the word
'lawful' is omitted before 'business' in the passage just quoted.
By § 600, 42 Stat. 285, and by another Act approved on the same
day, Congress applied other tax laws to this forbidden traffic. Act
of Nov. 23, 1921, c. 134, § 5, 42 Stat. 222, 223.
United States
v. One Ford Coupe, 272 U. S. 321,
272 U. S.
327;
United States v. Stafoff, 260 U. S.
477,
260 U. S. 480. We see no
reason to doubt the interpretation of the Act, or any reason why
the fact that a business is unlawful should exempt it from paying
the taxes that, if lawful, it would have to pay."
As the defendant's income was taxed, the statute, of course,
required a return.
See United States v. Sischo,
262 U. S. 165. In
the decision that this was contrary to the Constitution, we are of
opinion that the protection of the Fifth Amendment was pressed too
far. If the form of return provided called for answers that the
defendant was privileged from making, he could have raised the
objection in the return, but could not on that account refuse to
make any return at all. We are not called on to decide what, if
anything, he might have withheld. Most of the items warranted no
complaint. It would be an extreme, if not an extravagant,
application
Page 274 U. S. 264
of the Fifth Amendment to say that it authorized a man to refuse
to state the amount of his income because it had been made in
crime. But if the defendant desired to test that or any other
point, he should have tested it in the return, so that it could be
passed upon. He could not draw a conjurer's circle around the whole
matter by his own declaration that to write any word upon the
government blank would bring him into danger of the law.
Mason
v. United States, 244 U. S. 362;
United States ex rel. Vajtauer v. Commissioner of
Immigration, 273 U. S. 103. In
this case, the defendant did not even make a declaration, he simply
abstained from making a return.
See further the decision
of the Privy Council,
Minister of Finance v. Smith [1927]
A.C.193.
It is urged that, if a return were made, the defendant would be
entitled to deduct illegal expenses, such as bribery. This by no
means follows, but it will be time enough to consider the question
when a taxpayer has the temerity to raise it.
Judgment reversed.