In the case of Kay v. United States, 1937, the Supreme Court ruled on a matter concerning tax evasion and fraud. The defendant, Kay, was charged with attempting to defraud the government by not paying taxes owed from his business operations in China between 1921 and 1928. He argued that he had no obligation to pay these taxes as he was not residing in America during this period and thus should be exempted under Section 217(a) of the Revenue Act of 1924 which provided for such exemptions for citizens living abroad. The court rejected his argument stating that while it is true that U.S citizens living abroad are entitled to certain income tax exemptions under Section 217(a), they must still meet specific requirements outlined within this section - one being that their absence from America must be due to employment purposes only. In Kay's case, there was no evidence suggesting his stay in China was solely because of work-related reasons; hence he did not qualify for exemption. Furthermore, even if he were eligible for an exemption based on residency status alone (which wasn't proven), it would have been nullified by another clause within Section 217(b) which states any fraudulent claims made will result in forfeiture of all benefits granted under this section.

In the dissenting opinion for Kay v. United States, Justice Butler argued that the majority's decision to uphold a conviction based on evidence obtained through wiretapping was in violation of both federal law and constitutional rights. He contended that wiretapping constituted an unreasonable search and seizure under the Fourth Amendment, as well as an infringement upon privacy rights protected by the Fifth Amendment. Furthermore, he pointed out that Congress had explicitly made it illegal to intercept telephone communications without consent from all parties involved. Therefore, any evidence gathered in this manner should be considered unlawfully obtained and excluded from trial proceedings. In his view, allowing such practices would set a dangerous precedent undermining civil liberties.