The facts are of the tax protestor type -- failing to file returns based on tax protestor notions. The defendant did file a return for one year -- extending his protest -- by claiming a refund of $774,052. The IRS rejected the claim and notified him that he was required to file a return in 30 days to avoid a civil penalty. The defendant then filed a return reporting $113 taxable income and, obviously, no tax due.
He was convicted for "one count of corruptly endeavoring to impede the due administration of the tax laws under 18 U.S.C. § 7212(a), ("Count 1"), one count of filing a false claim for a refund under 18 U.S.C. § 287, ("Count 2"), and four counts of willful failure to file a tax return under 26 U.S.C. § 7203, ("Counts 3-6")." He appealed on several grounds. Here are the parts of the opinion I find interesting:
Tax Obstruction / Section 7212
As noted, the court reversed this conviction because of a defect in the instructions. Here is the Court's discussion:
In this case, the district court's instruction on Count 1 misled the jury as to the controlling law and we cannot say that the error was harmless. To prove a violation of § 7212(a), "the government must prove that the defendant: 1) corruptly; 2) endeavored; 3) to obstruct or impede the administration of the Internal Revenue Code." United States v. Wilson, 118 F.3d 228, 234 (4th Cir. 1997). To act corruptly is to act "with the intent to secure an unlawful benefit either for oneself or for another." Id.\
The district court's instructions do not properly explain the Government's burden to the jury. Violation of § 7212(a) is a crime of specific intent. A defendant must not only endeavor to impede due administration but must do so with the specific intent to secure an unlawful benefit. See Wilson, 118 F.3d at 234. Although the district court correctly defined "due administration," "obstruct or impede," and "corruptly," it instructed the jury that it could convict Jaensch by finding that he committed acts listed in the indictment without finding that he committed those acts with the requisite intent to secure an unlawful benefit.
The jury instructions state, in relevant part, that:
If the jury concludes that the government did prove beyond a reasonable doubt that one, the defendant employed at least one act set forth in Section 1-M through U of the indictment and that the defendant did commit an act identified in Section 1-V through Y of the indictment, and two, that the defendant acted knowingly and intentionally, then the jury must find the government [sic] guilty of the offenses in Count 1 of the indictment.
This instruction improperly transforms violation of § 7212(a) into a crime of general intent. The import of the instruction as given is that the jury should convict if it finds that Jaensch committed acts listed in the indictment knowingly and intentionally, not that he committed them for a specific purpose or to achieve a specific result.
The Count 1 instruction, when viewed in light of the entire record, misled the jury as to the controlling legal principles necessary to make its determination. Because Jaensch argued that he acted in good faith, we cannot say beyond a reasonable doubt that a rational jury would have convicted Jaensch under the stringent specific intent standard required by § 7212(a) merely because it convicted him under a lesser general intent standard. Jaensch's conviction under Count 1 of the indictment will be VACATED and remanded for further proceedings. n1For further reading on the crime of tax obstruction, see John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough, 9 Hous. Bus. & Tax. L.J. 255 (2009),. here. In that article, I make the same basic point that the obstruction crimes (most prominently Section 7212(a) and Klein conspiracy, 18 USC 371(a), require a level of specific intent / mens rea that are the same or parallel to the willfully required for tax crimes under Cheek's definition of an intent to violate a known legal duty.
n1 We have considered whether the erroneous instruction in Count 1 could have affected the remaining counts and have concluded that it could not. Jaensch has not argued that it could have, nor could he convincingly do so on these facts.
Denial of Good Faith Instruction for False Claim, Section 287
As is often the case in unpublished cases, the Court dealt cryptically with this argument:
Jaensch also argues that the district court's refusal to give a good faith instruction on Count 2 constituted an abuse of discretion.
Jaensch's argument is precluded by our precedent. Pursuant to Count 2, the district court instructed the jury that the Government was required to prove Jaensch submitted a claim "with a knowledge that it was false and with a consciousness that he was either doing something which was wrong or which violated the law." J.A. 611. In United States v. Maher, we held that § 287 includes a specific intent element, n2 and that an essentially identical instruction was adequate to instruct the jury on specific intent. 582 F.2d 842, 847 (4th Cir. 1978). "If the district court gives adequate instruction on specific intent, a separate instruction on good faith is not necessary." United States v. Mancuso, 42 F.3d 836, 847 (4th Cir. 1994). The district court's specific intent instruction was adequate and no additional good faith instruction was required. The district court, therefore, did not abuse its discretion by declining to give the requested instruction.Note that the Court gives the standard dodge that the good faith defense is inherent in a robust -- well, let's say adequate -- specific intent instruction. The notion is that specific intent cannot exist in the presence of good faith and that a well informed / instructed jury on specific intent would know that. Most defense lawyers don't really believe that. With an adequate foundation, I think a trial court may commit error in not giving the good faith instruction. The only issue is whether it commits reversible error if it does not. I don't think trial judges should not view this typical dodge as a license to deny good requested instructions. Some courts of appeals may well take the view that a less than robust specific intent instruction does not cover the ground that should be covered, on an adequate foundation, by a specific good faith defense instruction.
n2 As we recognized in United States v. Daughtry, the Maher court adopted the specific intent requirement that the district court read into the statute. 43 F.3d 829, 832 n.1 (4th Cir. 1995) (vacated on other grounds by Daughtry v. United States, 519 U.S. 984 (1995)). Section 287 is silent on the intent necessary to commit a violation, but we are bound by our precedent to require proof of specific intent.
Finally, offer the following from the current draft of my Federal Tax Crimes book which addresses this issue (cumulatively to above; footnotes omitted) regarding the good faith defense in the context of a crime requiring willfulness, such as most Title 26 crimes that we as practitioners encounter:
The next question is whether, when there is a record predicate for the good faith defense, the defendant is entitled to the separate good faith defense instruction separate from the willfulness instruction. If the trial court gives the separate instruction, then the issue never arises. Where, however, the trial court refuses to give the instruction and the defendant is convicted, the defendant will often raise the issue on appeal as to whether the trial court erred in refusing to give the instruction, which is to say that the defendant was “entitled” to the instruction and did not get it. Courts of Appeals are reluctant to make that holding because, they reason, the Cheek willfulness instructions will advise the jury that the defendant must violate a known legal duty and, if he or she acted in good faith (certainly as to whether or not he or she had a known legal duty), then the jury would know willfulness could not exist if the defendant acted in good faith. Hence, these courts reason, it is not reversible error for the trial judge to decline to give a separate good faith defense instruction. Note that this holding is not that the good faith defense instruction may not be given if a proper willfulness instruction is given; it is just that there is no reversible error if the good faith defense instruction is not given. Most judges, I suspect, will give some form of a good faith instruction if the proper record predicate has been made.