In the United States v. Williams case of 1937, the Supreme Court ruled on a matter concerning federal income tax evasion. The defendant, Claude R. Williams, was charged with willfully attempting to evade and defeat his income tax for the year 1921 by filing a fraudulent return. He appealed his conviction arguing that there was insufficient evidence to support it and that he had been denied due process because of prejudicial statements made by government counsel during trial proceedings. The Supreme Court upheld Williams' conviction stating that there was ample evidence supporting it including proof of substantial unreported net income in 1921 and subsequent years as well as significant expenditures inconsistent with reported income levels. Regarding allegations about prejudicial statements from government counsel, Justice Sutherland stated they were not so grossly improper or highly inflammatory as to prejudice jury's verdict against him. This ruling reinforced the power of federal authorities in prosecuting cases related to tax fraud while also emphasizing fair trial standards even when defendants are accused of serious financial crimes.

In the dissenting opinion for United States v. Williams, Justice McReynolds disagreed with the majority's decision to uphold a federal tax on firearms dealers. He argued that this was not within Congress' power under the Commerce Clause of the Constitution because it did not involve interstate commerce but rather intrastate business activities. Furthermore, he contended that if such a broad interpretation of Congress' powers were accepted, there would be virtually no limit to what they could regulate or tax under the guise of affecting interstate commerce. This would effectively nullify states' rights and upset the balance between state and federal authority established by our founding fathers in their design of our system of government.