Be Careful When Using Pattern Jury Instructions -- a Tax Evasion Example (5/17/11)

In my Federal Tax Crimes book, I advise readers that pattern jury instructions for the Circuit in which a case is tried are a good beginning point for (i) understanding the elements of tax and tax related crimes and (ii) fashioning proposed instructions in a criminal tax case. However, I do caution that pattern jury instructions can be wrong or misfocused. Incident to grading examinations in the class on Tax Fraud class that I co-teach at the University of Houston Law School, I have just discovered an instance of that type of problem in the Fifth Circuit pattern jury instructions for tax evasion (which are quoted in my Federal Tax Crimes book and in the LEXIS-NEXIS Tax Crimes book). This particular error was mine (originating in an earlier version of my Federal Tax Crimes book and being uncritically brought forward), so this is my mea culpa or errata for these books; corrections will appear in the next editions. But here I will present the Fifth Circuit Pattern Instruction and also present a correct instruction from the patterned from Judge Pauley's charges to the jury in the ongoing Daugerdas case.

First the Fifth Circuit Pattern Instruction:

2.95
TAX EVASION
26 U.S.C. § 7201

Title 26, United States Code, Section 7201, makes it a crime for anyone willfully to attempt to evade or defeat the payment of federal income tax.

For you to find the defendant guilty of this crime, you must be convinced that the government has proved each of the following beyond a reasonable doubt:

First: That the defendant owed substantially more tax than he reported on his ____ [year] income tax return because he _______ [e.g., intentionally failed to report income];

Second: That when the defendant filed that income tax return he knew that he owed substantially more taxes to the government than he reported on that return; and

Third: That when the defendant filed his ____ [year] income tax return, he did so with the purpose of evading payment of taxes to the government.

The Fifth Circuit Pattern Jury Instructions may be viewed here.

Now for Judge Pauley's instruction in Daugerdas (I have modified these slightly to make them apply to taxpayers charged with evasion rather than enablers charged with evasion as in Daugerdas; the basic elements of the crime are the same as to each type of defendant charged with evasion but the wording has to be slightly different):

Elements of the Offense

In order for the crime of tax evasion to be proved, the Government must establish beyond a reasonable doubt each of the following three elements:

First, that a substantial tax was due and owing to the United States by the defendant;

Second, that the defendant committed one or more affirmative acts of evasion described in the Indictment; and

Third, that the defendant acted knowingly and willfully in attempting to evade the taxes owed.

Judge Pauley's version (as modified) crisply states the elements. The problem with the Fifth Circuit version is that it does not adequately, in my view, present the affirmative act element as required by Spies v. United States, 317 U.S. 492 (1943).

For those interested in the instruction as Judge Pauley actually gave it, here it is (just remember that the instruction is for alleged enablers):

Elements of the Offense

In order for the crime of tax evasion to be proved, the Government must establish beyond a reasonable doubt each of the following three elements:

First, that a substantial tax was due and owing to the United States by the individual at issue, namely, the tax shelter clients in Counts 2 through and Paul Daugerdas in Counts 22 through 24;

Second, that the defendant you are considering committed one or more affirmative acts of evasion described in the Indictment; and
 
Third, that the defendant you are considering acted knowingly and willfully in attempting to evade the taxes owed by the taxpayer client.

Addendum on 6/4/11:

In United States v. Maggert, 2011 U.S. App. LEXIS 10976 (11th Cir. 2011), the Eleventh Circuit had a tax evasion pattern jury instruction like the Fifth Circuit's.  (This was likely because the Eleventh Circuit was created from the Fifth Circuit and inherited its precedent.)  As noted above, I believe that instruction does not properly state the elements of the crime.  Nevertheless, the trial judge modified the pattern instruction, but did not correct it to inform the jury that an affirmative act of evasion was an element of the crime.  The defendant complained on appeal, and the Government conceded the omission of the element.  The Eleventh Circuit nevertheless susatined the conviction under the plain error standard.  The Court's reasoning is not clear to me, so rather than characterizing it, I just quote it:

Maggert has not shown plain error. First, it is not clear under our precedent whether the district court's instruction even misstated the law. Although the district court's instruction did not explicitly state that an affirmative act of evasion was an element of the offense, the instruction as a whole conveyed to the jury that it was required to find that Maggert tried to evade paying income taxes by willfully failing to report that income on a tax return. This Circuit has not directly addressed whether the willful failure to report taxable income constitutes an affirmative act of evasion, and at least one former Fifth Circuit case suggests that it does. See United States v. Buckley, 586 F.2d 498, 504 (5th Cir. 1978) ("Where one of the affirmative acts of evasion relied upon by the government in proving attempted tax evasion under the Section 7201 is the failure to file an income tax return, failure to file [under Section 7203] is a lesser included offense . . . ."). Thus, the district court's instruction was not a plainly incorrect statement of the law.

I don't find this reasoning particularly persuasive.  An affirmative act of evasion is a required element as the Eleventh Circuit conceded earlier in the opinion, United States v. Kaiser, 893 F.2d 1300, 1305 (11th Cir. 1999).  How then can an instruction that does not fairly articulate the element be adequate.  I think the court bootstrapped to find the affirmative act implicit in the other instructions.  Perhaps that is the right answer in a plain error review where the court clearly did not think the result would be any different if it reversed and remanded for a new trial.  But, still, I am not sure this reasoning is satisfying.

The broader point, of course, is not to assume that the pattern instruction is a correct statement of the law.