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Mr. COOPER. Mr. Reed of New York!
difficulty in trying cases because you have to comply with the rules of evidence in the different States? It is true, is it not, that the Federal court has to follow the rules of evidence of the particular State?
Mr. ROTHWACKS. Mr. Congressman, I would say that in tax prosecutions we encounter no substantial difficulty because of problems that may arise out of rules of evidence. The difficulties, if any-and I do not mean to suggest that there are any that are of such importance to warrant comment-arise out of the nature of the testimony that is offered, and in some instances out of the reactions of juries in particular localities to the offense of tax evasion.
Mr. REED. Thank you.
Mr. JENKINS. Let me ask you this: As I read your statement, I conclude that you take the position that all taxpayers, or the majority of taxpayers, are bad, and if they ask anybody to help them it puts the burden of proof on that fellow to prove he is all right. What a terrific slam that is going to be upon the legal profession of this country. And I know in small towns all over the country a lot of lawyers fill out tax returns for these people at no more than an accommodation because they are clients that patronize them all the time. They do not hold themselves out to be experts. If they make a mistake, you are going to yank them in and subject them to a $10,000 fine. Suppose they misrepresented the story to them? They have to extricate themselves out of that trouble. At the same time, you send all of these fine inspectors all over the country and they do a fine job. They are in the courthouses and the post offices and they help everybody. But if a man has a little more than the ordinary problem, he gets himself a country lawyer and he does the best he can. But he has to make a statement to such and such an effect. In other words, if you tell him that he is no good and he is a crook, you are going to make him clarify and prove his character before he is fit to fill out a tax return for anybody.
Mr. ROTHWACKS. I believe you are referring to section 107?
Mr. JENKINS. All of these sections. I feel there is a terrific load on a lot of good people.
Mr. ROTHWACKS. It is my own personal reaction that the evil which is thought to be remedied by section 107 can in substantial part be met by vigorous investigation and by enforcement of section 3793 (b). As I listened to the proposals this morning I gathered that there wasn't any real intent to rely substantially on the application of section 107 except in certain limited situations. I think it could be argued that the substantial evil to be remedied can be met by section 3793; which is already in the Code.
Mr. JENKINS. That is exactly my position. Let me reiterate and then I am through. There are more people who pay their taxes that are withheld from them, numerically there are more people whose taxes are withheld and there is no opportunity to cheat on their salaries.
Number 2, the great bulk of the people after that go to the courthouse, to the post office, and to your inspectors., I want to say that it is my observation that the inspectors have been fine and the people have been satisfied with them. If your inspectors have been crooked, look out for them; don't look out for a lot of people who want to give assistance to others.
Take in my section nearly every auditor, every bookkeeper, maybe he does not get very much for it. Maybe a young lawyer is doing that kind of business for himself. He does not do a lot of this business. Your investigators did not find in any of those cases that there was any crookedness. The crookedness that was discovered was in the big city. That is where it came from.
Mr. Kean. On the tax form at present, I say to the gentleman from Ohio, there is a place where the taxpayer is supposed to report if someone prepares a return for him. We had testimony in New York from a Mr. Landau who is a tax expert, public accountant, that he never signed those forms because there was no penalty against his doing it. He was not going to stick his neck out colloquially by putting his name on those forms.
We know throughout the country in small towns and big just before the 15th of March a lot of people throughout the country suddenly stick a sign in their window saying, "We prepare your income taxes, we can save you money.” They go in and they propose all sorts of deductions that are not legitimate deductions in any way. All we want is to have these people put their names on the returns so that the Department will know who it is that is giving the advice. If the advice is honest, good, and everything else, it will not bother anybody. He just puts his name on it.
Mr. JENKINS. If that is true, that everybody that does that is crooked, then we have to guard against him. Here comes a man who has committed some crime. The lawyer does not have to go to the electric chair with him just because he takes his case. He has to see that he gets justice. We cannot legislate here and put the burden on these fellows who are trying to help the public out. If the majority of your experience is that most everybody is crooked, then I do not object to putting their name on.
Mr. KEAN. The man who makes out the return just puts his name on it that he made out the return, that is all the information we want.
Mr. JENKINS. If he thought the man is crooked, the auditor could refuse to take his business.
I am just searching around. I do not like to burden the American people just because there are a few crooks around the city.
Mr. KEOGH. Coming as I do from a relatively large city, I must state now I can appreciate the problems expressed by my colleague from Ohio. I must disagree with his indication that there is any higher degree of honesty in the small towns and villages than there is in the large city.
Mr. JENKINS. I agree with you. I think they are as good in New York as every place else. I think they are good every place. They do not scare me. I think the inspectors can catch them. That is what we ought to do.
STATEMENT OF ANDREW F. OEHMANN, ASSISTANT TO ASSISTANT
ATTORNEY GENERAL JAMES M. MCINERNEY, DEPARTMENT OF JUSTICE, WASHINGTON, D. C.
Mr. COOPER. The next witness on the list is Mr. Andrew F. Oehmann. Is Mr. Oehmann here?
Mr. OEHMANN. Here, sir.
Mr. COOPER. Please give your name, address, and capacity in which you appear, for the record.
Mr. OEHMANN. My name is Andrew F. Oehmann. I am an assistant to Assistant Attorney General James M. McInerney, who is in charge of the Criminal Division, Department of Justice.
Mr. COOPER. You may proceed.
Mr. OEHMANN. The provisions of the bill relate primarily to the enforcement and administration of the Internal Revenue Code but certain of its provisions are of special interest to the Criminal Division. Sections 110 and 111, I believe, have been covered by Mr. Rothwacks' comments to the effect that the offense defined in section 111 is already covered by section 1001 of title 18 which comes under the Criminal Division. But the effect of section 110 and 111 of this bill is to make the false statement statute a 6-year statute of limitations offense with respect to the Internal Revenue Deparment or matters under the Bureau of Internal Revenue.
Section 301 of the bill would amend chapter 11 of title 18, United States Code, by adding section 224 thereto, making so-called influence peddling an offense. The new section in substance, would proscribe the use of personal influence, duress, threats, false accusation, any special inducement or promise of advantage, or any bestowal of any gift or favor or other thing of value to affect in any way (other than by ordinary professional representation) the decision of any officer or employee of the Treasury Department.
This amendment would apply only to officers and employees of the Treasury Department and it is suggested that consideration be given to making it applicable to all branches of the Government.
I believe Mr. Lynch this morning made the same suggestion. At least I am in agreement with it, although I, as Mr. Sharp has indicated, am not authorized to bind the Department or the Attorney General.
Now, the reason for the inclusion of the exception “other than by ordinary representation” is not apparent. The penalty should I believe be applicable to all those who engage in the proscribed activities whether or not such activities are in connection with professional representation. In any event, this exception would seem to be applicable only to the case of personal influence, since ordinary professional representation as usually understood would not include duress, threats, false accusations, special inducements, or promise of advantage or bestowal of a gift or any favor. The reference to a promise or agreement establishes an element of the offense which might be extremely difficult to prove. The objective of the proposed amendment would probably be obtained by prohibiting the payment or receipt of money, and so forth, as consideration for the use of personal influence, duress, threats, and so forth, without reference to any agreement or promise.
An attempt has been made, and it was rather hurried, to redraft this section so as to cure some of the defects I have noted. It is suggested that consideration be given to the following as a substitute for the section set forth in the bill.
I did not have time to have sufficient copies made for all the members of the committee. I believe I have sufficient for those who are present at this time.
As proposed, this amendment would read as follows:
Whoever pays or whoever solicits or receives any money or other thing of value for himself or another, as consideration for the use of personal influence (other than by ordinary professional representation), duress, threats, false accusations, any special inducement or promise of advantage, or any bestowal of any gift or favor or other thing of value, to affect in any way any decision of any officer or employee of, or person acting for the United States or any department or agency thereof, in any matter that is or might come before any officer or employee thereof, or to obtain any information of any kind with respect to such a matter other than information which is made available by proper authority shall be fined not more than $10,000 or imprisoned not more than one year or both.
Now, this proposal is not considered to be entirely satisfactory. Additional time and study will be required to further improve it.
For instance, in order to meet the standards of certainty and definiteness required in criminal statutes, it would apparently be necessary to provide definitions for some of the terms used, such as “personal influence," "ordinary professional representation," "special inducement," and perhaps others.
It is not uncommon for a person, a taxpayer or other person, to retain as his counsel a most eminent and highly respected member of the bar whose participation in any case will carry with it a certain amount of personal influence because of the counsel's reputation, integrity, and standing in his profession. Where the line should be drawn with respect to such personal influence might be difficult to determine. What conduct is and what conduct is not "ordinary professional representation” and what “special inducement” should come within the proscription of the statute also appear to involve distinctions difficult to define, at least on short notice.
It is suggested that the question of providing a criminal penalty for influence peddling be given further careful study with the view to the eventual enactment of a statute which will be more workable thar the one herein proposed appears to be.
Section 302 of the bill relates to the unauthorized practice before the Treasury Department. It would amend chapter 15 of title 18, United States Code, by adding a section 292. In effect this section would make it an offense for a person to represent another before the Treasury Department without a license issued under regulations promulgated by the Secretary of the Treasury. The penalty for violation would be a fine of not more than $10,000 or imprisonment for not more than a year, or both. No comment appears to be necessary, although I heard the discussion this morning with Mr. Lynch and this section may raise some problems that require further study, the extent to which a person can go and beyond which he cannot go, when is he representing, when is he just making an inquiry?
Now, with respect to section 304, which provides an amendment of section 281 of title 18, section 281, in substance makes it an offense for a Congressman, or oflicer or employee of a Government department or agency, to receive compensation for services rendered in any matter affecting the Government before any department, agency, court martial, oflicer, or civil, military, or naval commission.
The opinion has been expressed that this section does not prevent a Member of Congress or other Government official from appearing in a Federal criminal case, and this is supported to some extent by the legislative history of the statute.
Section 304 of the bill proposes an amendment of section 281, consisting of the addition of the phrase “or in any judicial proceeding, civil or criminal (except as trial or appellate counsel).” The effect of such amendment would apparently be to provide that Members of Congress or other Government officials are not prohibited from rendering service for compensation in matters affecting the Government when such services consist solely of acting as trial or appellate counsel in judicial proceedings, at least in criminal cases.
Section 283 of title 18, of course, prohibits officers and employees of the United States or of any department or agency or of the Senate or of the House of Representatives from prosecuting or assisting in prosecution of claims against the Government, which would bar participation in civil claims against the Government by Government officials and also by Congressmen if they are considered officers of the United States or of the Senate or of the House of Representatives.
In this connection the Department has now ụnder consideration a restatement of these conflicts of interest statutes, that is, sections 281, 283, and 284, and the committee may desire to defer action on this particular section of the bill pending an official recommendation from the Attorney General, based upon that study.
That is the extent of the prepared statement I have.
Mr. Mason. Mr. Chairman, I do not have a question, but I do have a statement.
The witness who just testified has testified to the fact that we had better give further study to some of these things. Mr. Sharpe testified that we had better give further study to this trial-by-jury proposition. Our colleague, Mr. Jenkins, says we had better give further study to what the other gentlemen proposed to us. Is there anything to this bill that we should not give further study to? I am just wondering how can we correct the things that are being discovered by our subcommittee if we are not to act upon some of these things. there certain sections of the bill that we can all agree upon that do not need further study and we can pass that part and leave these for further consideration ?
That is my statement.
Mr. FORAND. I believe that decision will be reached in executive session.
Mr. COOPER. Any other question? (No response.)
Mr. COOPER. If not, we thank you gentlemen for your appearance and the information given the committee.
The committee will stand adjourned until 10 o'clock in the morning(The following statements were submitted for the record :)