A few weeks back I saw one of those funny internet memes that went viral. In the meme, a young boy’s older brother took a before and after picture of the young boy opening up his first paycheck. The before picture shows the boy with a smile on his face ear to ear while he holds up the paycheck still in the envelope. The after picture shows the young boy’s face is complete dismay while reading all of the taxes and deductions taken out from his paycheck. The older brother captioned the picture with “Congratulations to my brother on his first paycheck and his discovery of taxes!” Well I feel you younger brother!
And that little story leads us to the case at hand, State v. Fields, 2017-Ohio-400.
In Fields, Fields was a single mother of four minor children that lost her teaching position due to budget cuts. During the holidays, Fields went to the local Rotary Club for help during the holiday season. It was there that Fields met Diane Toby, who bought Field’s entire family Christmas presents for the next three years.
Fields, a huge fan of the Ellen DeGeneres Show, wrote to Ellen to help her show her appreciation to Diane. Thereafter, the producers of the Ellen DeGeneres Show flew Fields and her children to Los Angeles to attend the show. In addition, and not known to Fields, Diane was also flown to Los Angeles for a surprise reunion with Fields and her children.
When the reunion took place on the stage, Fields was given $55,000! The sum was stated as being $10,000 for each of the four children to help pay for college, $10,000 to help Fields finish her Master’s Degree, and $5,000 to help Fields pay her bills. The money was received from the website Shutterfly.com.
For the 2013 tax year, Shutterfly issued an IRS Form 1099-Miscellaneous Income to Fields. Fields alone was listed as the recipient, and $55,000 was listed in Box 7, Nonemployee Compensation. Fields had her 2013 federal, state, and city income tax returns prepared by a volunteer. The $55,000 sum was reported as income on all three returns, and a tax liability is still owing on each of the returns, which Fields has been unable to pay.
Fields was soon after charged by complaint for “knowingly failing or refusing to pay the tax, penalties or interest imposed by the Xenia Ordinances related to income tax for tax year 2013.” Fields had a balance due of $1,758.61. On advice of counsel, Fields attempted to file an amended tax return with the Xenia to reflect that the $55,000 was a gift and that no tax was due. The amended return was not accepted.
After the amended return was denied, Fields’ attorney filed a Motion to Dismiss the case.
The trial court set a hearing to “allow counsel for the parties to provide further argument (with supporting case law or other documentation) as to whether the $55,000 at issue herein is Nonemployee Compensation, a Gift, a Charitable Contribution, or has some other legal status.”
After the hearings, the trial court reasoned the following:
“The Court will state at the outset that, after watching the YouTube video, it certainly does not seem that the $55,000 Defendant received was Nonemployee Compensation. It appears to the Court the money was an unexpected gift to help Defendant and her children.
With that said, the Court is faced with City’s Exhibit 1, the IRS Form 1099-Misc which clearly lists Defendant as the sole recipient of $55,000 for Nonemployee compensation. This Court is unaware of any case law that authorizes it to change the characterization of the money as reported to the IRS by the payer, Shutterfly Inc. It would seem any change would need to occur at the behest of Shutterfly Inc.
Nonemployee compensation is taxable income as defined in Court’s Exhibit 1. Accordingly, the Court must OVERRULE Defendant’s Motion to Dismiss.”
On January 4, 2016, Fields pled no contest to the charge of failure to pay income tax. The trial court found her guilty and imposed a fine of $75 and 30 days in jail, all of which were suspended on the conditions that she (1) have no further violations within five years and (2) sign and comply with a pay agreement with the Xenia Tax Department.
Fields filed a timely appeal.
For the purposes of our discussion, I am going to only focus on Fields’ third assignment of error, Ineffective Assistance of Counsel.
Fields claimed that her attorney should have done the following:
1) Worked with her to get an amended Form 1099-Miscellaneous Income;
2) Sought a continuance;
3) Offered “facts or circumstances after the no contest plea about her lack of intent to refuse to pay the taxes or how she could not be found guilty due to valid questions about taxes owed;”
4) Not stipulated that there were sufficient circumstances upon which the trial court could make a finding of guilty on her no contest plea; and
5) Argued that she could not be found guilty and imprisoned for inability to pay.
To establish ineffective assistance of counsel, a defendant must demonstrate both that trial counsel’s conduct fell below an objective standard of reasonableness and that the errors were serious enough to create a reasonable probability that, but for the errors, the outcome of the case would have been different. State v. Bradley, 42 Ohio St.3d 136 (1989). Trial counsel is entitled to a strong presumption that his or her conduct falls with the wide range of reasonable assistance. Strickland v. Washington, 466 U.S. 668 (1984).
The appellate court, addressed each of Fields’ claims of ineffective assistance in the same order she presented them in her brief.
First, the appellate court concluded that defense counsel’s conduct did not fall below an objective standard of reasonableness due to counsel’s alleged failure to help Fields obtain an amended 1099-Miscellaneous Income form. Fields’ attorney was appointed to provide legal assistance in a criminal matter; counsel was not appointed to act as a tax attorney for Fields.
Second, counsel was not ineffective for not seeking a continuance because it is unknown whether Shutterfly would have agreed to amend the 1099 form, and one can only speculate whether the outcome of Field’s case would have been different. Thus, Fields did not demonstrate ineffective assistance of counsel on this basis.
Third, by pleading no contest, Fields agreed that she “knowingly failed or refused” to pay the tax, and she was aware that the court would find her guilty based on her plea and the facts contained in the complaint and supporting documentation. Thus, Fields waived her ability to challenge whether she owed income tax and counsel did not rendered ineffective counsel with regards to this claim.
Fourth, the appellate court questioned counsel’s agreement to stipulate to the facts and waive the reading of the facts as said stipulation directly counteracts the protections of R.C. 2923.07 for misdemeanor defendants and fails to ensure that the court’s finding of guilty on a defendant’s no contest pleas is other than perfunctory. Nevertheless, the appellate court still found that counsel did not render ineffective assistance of counsel through agreeing to a stipulation and waiver because the trial court on its own accord reviewed the criminal complaint and attached documents to determine Fields’ guilt.
Looking at Fields last claim of ineffective assistance of counsel, the appellate court dove into some more very fascinating case law. Let’s take a look!
Section 15, Article I, of the Ohio Constitution forbids imprisonment for debt in a civil action.
In Cincinnati v. DeGolyer, 25 Ohio St.2d 101, the Ohio Supreme Court held that municipal income tax, due and unpaid, is a debt within the meaning of this constitutional provision. The court further held that a sovereign could provide, by law, that a willful failure or refusal to pay taxes was a crime and impose sanctions, including imprisonment, for a violation of such a law. Id.
In order to convict a defendant accused of a violation of a municipal income tax ordinance which imposes a penalty of imprisonment for a refusal to pay said taxes, the municipality must allege and prove, beyond a reasonable doubt, that the failure to pay was willful or intentional or fraudulent. Id.
The inability to pay due to indigence, lack of control over the withheld monies, or the like would tend to negate the element of willfulness. Toledo v. Micham, 6th Dist. Lucas No. L-90-377, 1991 WL 192147, *3 (Sept. 30, 1991). The inability to pay in this situation is an affirmative defense. R.C. 2901.05 (A) and (C)(2). As such, the burden in on the defendant to show impossibility of payment by a preponderance of the evidence. Micham.
Based on the record, and the supported case law above, the appellate court believed there was a reasonable probability that the outcome of the case would have been different had Fields proceed to trial. Thus, counsel was ineffective for not raising the issues raised in the Motion to Dismiss in a trial.
A very tough case for Fields! One moment she is being helped out by her community to get through a difficult time and the next moment she is facing jail time for being poor. I want to point out that the trial court judge in this case wanted to side with Fields. In fact, the trial court stated on the record that it was not happy with the decision it wrote.
As the great Mark Twain once said, “What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin.”