The opinion of the court was delivered by: BASSLER
The Defendant moves to dismiss Counts One through Nine of the indictment on the ground that the three year statute of limitations under 26 U.S.C. § 6531 precludes prosecution of offenses under 26 U.S.C. § 7202. For the following reasons, the motion of the Defendant is DENIED.
Defendant Rao Gollapudi is the president and sole shareholder of Softstar Computer Consultants, Inc., incorporated in Michigan in July 1984, and operated in New Jersey since 1987. Between 1989 and 1991, Softstar employed fifteen (15) people. Despite the fact that Defendant withheld federal income tax and Federal Insurance Contributions Act ("FICA") taxes from his employees' paychecks and issued them W-2 Statement of Wages Forms, Defendant never filed Forms 941, Employer's Quarterly Tax Returns, nor did he remit the withheld funds to the Internal Revenue Service ("IRS"). Defendant allegedly failed to remit to the IRS $ 320,313 in withheld federal income taxes and FICA taxes collected for his employees from the fourth quarter of 1989 to the fourth quarter of 1991.
On April 19, 1996, a Grand Jury for the District of New Jersey returned a twelve count indictment against Defendant Rao Gollapudi. Counts One through Nine allege violations of 26 U.S.C. § 7202 for failure to collect, account for, and pay over federal income taxes and FICA taxes for each tax quarter from the fourth quarter of 1989 continuing through the fourth quarter of 1991. Furthermore, Counts Ten through Twelve allege violations of § 7206(1) concerning Defendant's filing of false individual income tax returns for the calendar years 1989, 1990, and 1991.
Defendant challenges Counts One to Nine of his indictment as being barred by the three year statute of limitations in 26 U.S.C. § 6531. The Government asserts that Defendant's violation of § 7202 falls under one of the exceptions to the general three year statute of limitations, § 6531(4), which provides for a six year statute of limitations.
In addition to opposing the Defendant's motion to dismiss Counts One to Nine of the Indictment, the Government asks the Court to order Defendant to provide Reciprocal Discovery as mandated by Fed. R. Crim. Pro. 16(b)(1)(A)-(C).
A. 26 U.S.C. § 6531(4) Applies to 26 U.S.C. § 7202.
Defendant has been charged with nine counts of violating § 7202, "Willful failure to collect or pay taxes":
Any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $ 10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution.
The statute of limitations for all criminal tax violations is set forth in 26 U.S.C. § 6531. Under § 6531:
No person shall be prosecuted, tried, or punished for any of the various offenses arising under the internal revenue laws unless the indictment is found or the information instituted within 3 years next after the commission of the offense, except that the period of limitations shall be six years--
(1) for offenses involving the defrauding or attempting to defraud the United States or any agency thereof, whether by conspiracy or not, and in any manner;
(2) for the offense of willfully attempting in any manner to evade or defeat any tax ...