FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, 

No. 07-10347 Plaintiff-Appellee,

D.C. No.

v.  CR-05-00150-CRB

JACK E. EASTERDAY,

OPINION Defendant-Appellant. 

Appeal from the United States District Court

for the Northern District of California

Charles R. Breyer, District Judge, Presiding

Argued and Submitted

June 10, 2008—San Francisco, California

Filed August 22, 2008

Before: Mary M. Schroeder and N. Randy Smith,

Circuit Judges, and Valerie Baker Fairbank,* District Judge.

Opinion by Judge Schroeder;

Dissent by Judge N.R. Smith

*The Honorable Valerie Baker Fairbank, United States District Judge

for the Central District of California, sitting by designation. 

11511
COUNSEL

Gregory V. Davis, Washington, D.C., for plaintiff-appellee

United States of America. 

Dennis P. Riordan, San Francisco, California, for defendantappellant Jack E. Easterday. 

OPINION

SCHROEDER, Circuit Judge: 

This case illustrates the enduring truth of Ben Franklin’s

sage observation that “nothing is certain but death and taxes.”

It is an appeal from a conviction for willful failure to pay over

employee payroll taxes, in violation of 26 U.S.C. § 7202. The

defendant-appellant, Jack Easterday, sought an “ability to pay

instruction” in order to contend to the jury that his failure to

pay over the taxes he owed was not “willful,” because he had

spent the money on other business expenses and therefore

could not pay it to the government when it was due. The district court refused to give the instruction, and Easterday subsequently was convicted and sentenced to thirty months in

prison. 

The requested instruction was drawn from a portion of a

1975 decision of this court, United States v. Poll, 521 F.2d

329 (9th Cir. 1975), that we have never subsequently cited

favorably in the context of a prosecution for failure to pay

taxes. Poll in turn relied upon an earlier Ninth Circuit decision, United States v. Andros, 484 F.2d 531 (9th Cir. 1973),

that two other circuits have expressly rejected. See United

States v. Tucker, 686 F.2d 230, 233 (5th Cir. 1982); United

States v. Ausmus, 774 F.2d 722, 725 (6th Cir. 1985). Most

significantly, the holding of Poll that formed the basis for the

proposed instruction was effectively eradicated by subsequent

Supreme Court authority. 

11514 UNITED STATES v. EASTERDAY
Easterday contends that Poll is binding on us because this

court has never expressly overruled it. The district court held

that Poll was no longer good law. We agree with the district

court. Poll’s requirement that the government prove that the

taxpayer had sufficient funds to pay the tax was premised on

a definition of willfulness that included some element of evil

motive. The Supreme Court subsequently rejected any such

definition of willfulness in the tax statutes. See United States

v. Pomponio, 429 U.S. 10, 12 (1976) (per curiam); see also

United States v. Cheek, 498 U.S. 192, 201-02 (1991). “Willful” in the tax context means a voluntary, intentional violation

of a known legal duty. See Cheek, 498 U.S. at 201-02; United

States v. Powell, 955 F.2d 1206, 1211 (9th Cir. 1992). In

other words, if you know that you owe taxes and you do not

pay them, you have acted willfully. Poll has continued to be

referred to occasionally in other contexts, principally in the

child support area. See United States v. Ballek, 170 F.3d 871,

874 (9th Cir. 1999); H.R. Rep. No. 102-771, at 6 (1992). It

is not, however, good tax law. We therefore affirm.

Background 

Easterday operated a chain of nursing homes in Northern

California through a parent corporation, Employee Equity

Administration (“EEA”), and its subsidiaries. Between 1998

and 2005, the total payroll tax liability for EEA and its subsidiaries for the period from the fourth quarter of 1998

through the fourth quarter of 2005 was $44,864,162, of which

$26,018,869 was paid. Although the companies’ tax filings

accurately stated its tax liabilities, Easterday, through the corporation, repeatedly failed to pay over to the Internal Revenue

Service (“IRS”) the full amount of payroll taxes due.

The IRS sent Easterday’s companies numerous notices

requesting payment of the delinquent taxes. When those

notices did not result in payment, the IRS sent notices informing Easterday’s companies of an intent to levy against each

company’s assets. Although Easterday was cooperative with

UNITED STATES v. EASTERDAY 11515
the IRS and took full responsibility for the tax delinquency,

his pattern of nonpayment continued. The IRS assessed liens

against corporate accounts, but when payment was still not

forthcoming, it eventually filed criminal charges. In 2005, the

government charged Easterday with 109 counts of failure to

pay over taxes in violation of 26 U.S.C. § 7202, with each

count representing a different quarter in which the taxes of

EEA and its subsidiaries were deficient. 

Easterday did not dispute that he failed to pay the taxes

when due. His defense was simply that he lacked the financial

ability to comply with his tax obligations. Although the district court ruled that ability to pay was not relevant, Easterday

was able to put on testimony that the nursing homes were

struggling financially and he had trouble paying the bills, with

losses of more than $20,000,000 between 1996 and 2005. 

Easterday’s witnesses testified, in essence, that Easterday

did not pay the payroll taxes because he used the money to

pay other company bills in order to keep the nursing homes

operational. Easterday asked the court to instruct the jury that

the government, in order to prove a willful failure to pay

taxes, must prove that at the time the taxes were due, the taxpayer had the funds, and hence the ability to pay the obligation. Easterday’s proposed instruction was drawn in part from

the opinion in United States v. Poll, and provided as follows:

The word “willfully” means a voluntary, intentional violation of a known legal duty, and not

through ignorance, mistake, negligence, even gross

negligence, or accident. In other words, the defendant must have acted voluntarily and intentionally

and with the specific intent to do something he knew

the law prohibited; that is to say, with the intent

either to disobey or disregard the law. 

. . . . 

11516 UNITED STATES v. EASTERDAY
In the context of this case, in order for the government to meet its burden of willfulness beyond a reasonable doubt, it must prove that on the dates the

taxes were due the taxpayer possessed sufficient

funds to be able to meet his legal obligations to the

government or that the lack of sufficient funds on

such date was created by (or was the result of) a voluntary and intentional act, without justification in

light of the financial circumstances of the taxpayer.

The district court declined to give this instruction, but did

instruct the jury that the government had the burden of proving that the defendant did not have a good faith belief that he

was complying with the tax laws, and that a defendant’s belief

could be in good faith even if it was unreasonable. The court

also instructed the jury that “[t]he tax laws do not permit an

employer to choose to use the monies held in trust for the

United States for other purposes, such as to pay business

expenses.” 

Following a six-day jury trial, Easterday was found guilty

on 107 of 109 counts. The district court denied Easterday’s

motion for a judgment of acquittal or a new trial and sentenced him to 30 months imprisonment, followed by three

years supervised release. Easterday now appeals from the

judgment and sentence. 

Easterday’s principal contention on appeal is that pursuant

to United States v. Poll, he was entitled to a jury instruction

on the ability to pay “element” of 26 U.S.C. § 7202, and he

was entitled to present evidence to negate that “element.”

Accordingly, Easterday argues that the district court erred in

declining to give a Poll instruction and that it abused its discretion by limiting the testimony Easterday could offer concerning the financial situation of, and burdens on, his

companies. 

UNITED STATES v. EASTERDAY 11517
Discussion

[1] The statute under which Easterday was found guilty is

26 U.S.C. § 7202, a fairly rarely invoked provision that criminalizes a willful failure to pay over employees’ federal

income withholding taxes on wages. Section 7202 provides

that “[a]ny person required . . . 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 . . . be

guilty of a felony.” 

The main issue in this appeal, as well as a subject of considerable debate before the district court, pertains to the status

of Poll, and to what constitutes “willfulness” under the Tax

Code. Specifically, the parties disagree as to whether “willfulness” requires an affirmative showing by the government that

a defendant had an ability to pay his tax obligations and

whether it can be negated by a showing that a defendant was

financially unable to satisfy his tax debt. This court has not

meaningfully revisited this issue since the 1970s. 

In United States v. Andros, 484 F.2d 531, 533-34 (9th Cir.

1973), we said that to establish the “wilful failure to pay the

taxes assessed,” the government must prove that, on the date

the taxes were due, the taxpayer possessed “sufficient funds”

to pay the taxes, and that the taxpayer voluntarily and intentionally did not pay them. We went on to say: “the requirement of wilfulness connotes ‘bad faith or evil intent’ or ‘evil

motive and want of justification in view of all the financial

circumstances of the taxpayer.’ ” Id. at 534 (quoting United

States v. Bishop, 412 U.S. 346 (1973)). 

[2] Two years later, in United States v. Poll, this court

apparently found plausible the taxpayer’s contention that the

failure to pay over the taxes could not be considered “willful”

because he had offered to prove “that the corporation lacked

the liquid resources to pay the full amounts due and that he

intended to make up the deficiencies later.” 521 F.2d at 330-

11518 UNITED STATES v. EASTERDAY
31. Citing to Andros and Spies v. United States, 317 U.S. 492,

497-98 (1943), we held that Poll’s offer of proof regarding the

liquid resources of the corporation was relevant to the determination of whether the failure to pay over taxes was willful.

521 F.2d at 332. In the language that Easterday sought to

include as part of the charge to the jury in this case, we said:

[T]o establish willfulness the Government must

establish beyond a reasonable doubt that at the time

payment was due the taxpayer possessed sufficient

funds to enable him to meet his obligation or that the

lack of sufficient funds on such date was created by

(or was the result of) a voluntary and intentional act

without justification in view of all the financial circumstances of the taxpayer. 

Id. at 333. 

This holding in Poll regarding ability to pay relied upon a

definition of willfulness, taken from Spies and Andros, that

included an element of “evil motive.” 521 F.2d at 333 (citing

Spies, 317 U.S. at 498)). We recognized this in Sorenson v.

United States, 521 F.2d 325, 328 n.3 (9th Cir. 1975) (quoting

Spies, 317 U.S. at 498), where we said: “The Poll holding is

only applicable to the criminal test of willfulness which

requires ‘some element of evil motive and want of justification in view of all the financial circumstances of the taxpayer.’ ” 

[3] The year after this court decided Poll, the United States

Supreme Court decided United States v. Pomponio, 429 U.S.

10 (1976) (per curiam), in which it repudiated this formulation of willfulness. In Pomponio, the Court examined the various formulations that had been used for the definition of

“willfully” in the Tax Code. See id. at 12. The Court

attempted to dissipate the confusion that had arisen from its

decision in United States v. Bishop, 412 U.S. 346 (1973), in

which the Court referred to a number of formulations of the

UNITED STATES v. EASTERDAY 11519
standard, including the formulation it used in Spies, of “evil

motive and want of justification in view of all the financial

circumstances of the taxpayer.” 

The troublesome paragraph in Bishop was the following:

The Court, in fact, has recognized that the word

‘willfully’ in these statutes generally connotes a voluntary, intentional violation of a known legal duty.

It has formulated the requirement of willfulness as

‘bad faith or evil intent,’ United States v. Murdock,

290 U.S. 389, 398, or ‘evil motive and want of justification in view of all the financial circumstances of

the taxpayer,’ Spies v. United States, 317 U.S. 492,

498, or knowledge that the taxpayer ‘should have

reported more income than he did.’ Sansone v.

United States, 380 U.S. 343, 353. See James v.

United States, 366 U.S. 213, 221; McCarthy v.

United States, 394 U.S. 459, 471. 

412 U.S. at 360. 

[4] The court in Pomponio endeavored to erase the misconception that such different formulations, including the “evil

motive” formulation of Spies, actually established different

standards. The Court clarified that “willfulness” means a voluntary, intentional violation of a known legal duty, and does

not “require[ ] proof of any [other] motivative.” 429 U.S. at

12. The Court said, “Our references to other formulations of

the standard did not modify [that] standard.” Id. The Court

explained that Bishop “did not . . . hold that the term requires

proof of any motive other than an intentional violation of a

known legal duty.” Id. 

Accordingly, the portion of our decision in Poll which created an additional requirement of proving ability to pay has

been undermined by the Supreme Court’s subsequent decision

in Pomponio. Poll is not consistent with the intervening

11520 UNITED STATES v. EASTERDAY
authority of the United States Supreme Court that must control our decision here. 

In support of his contention that Poll nevertheless remains

good law, Easterday argues that Pomponio is “coextensive”

with this court’s earlier determination in United States v.

Hawk, 497 F.2d 365, 368 (9th Cir. 1974), that neither bad purpose nor evil motive is an independent element of willfulness.

Easterday reasons that because Poll stated that it was consistent with Hawk, and Pomponio approved Hawk, then Poll is

still good law. This argument fails. While Hawk stated that

neither bad purpose nor evil motive is an independent element

of willfulness, Poll seems to assume the opposite. See 521

F.2d at 331-33; see also Sorenson, 521 F.2d at 328 n.3. Poll

is thus in tension with Hawk. Although Pomponio did cite

Hawk with approval for its willfulness holding, see 429 U.S.

at 13, Pomponio did not approve Poll’s holding regarding

ability to pay. On the contrary, Pomponio eliminated the basis

for Poll’s requirement of proving ability to pay. It did so by

clarifying that there is no requirement of proving “evil

motive” beyond a specific intent to violate the law. Pomponio, 429 U.S. at 11-12. Pomponio and Poll are thus irreconcilable.

[5] We therefore hold that insofar as Poll may be interpreted as requiring the government, in a failure to pay case

under § 7202, to prove that defendant had the money to pay

the taxes when due, and allowing the defendant to defend on

the ground that he had spent the money for other expenses,

Poll is inconsistent with Pomponio. It is also inconsistent with

common sense, for we think it unlikely that even under Poll

and Spies, a defendant could succeed in arguing that he did

not willfully fail to pay because he spent the money on something else. Cf. United States v. Gilbert, 266 F.3d 1180, 1185

(9th Cir. 2001) (concluding that defendant’s “act of paying

wages to his employees, instead of remitting withholding

taxes to the IRS, shows that he voluntarily and intentionally

violated § 7202”).

UNITED STATES v. EASTERDAY 11521
Indeed, in rejecting Andros and Poll, two of our sister circuits have made that very point. In United States v. Tucker,

686 F.2d 230 (5th Cir. 1982), a prosecution for willfully failing to pay income taxes, under 26 U.S.C. § 7203, the defendant argued that he could not pay the taxes when they were

due because he had no assets to satisfy the debt and that his

failure to pay was not willful. The Fifth Circuit said that

“[t]his argument borders on the ridiculous. . . . [A] financial

ability to pay the tax when it comes due is not a prerequisite

to criminal liability under § 7203. Otherwise, a recalcitrant

taxpayer could simply dissipate his liquid assets at or near the

time when his taxes come due and thereby evade criminal liability.” Id. at 233. In United States v. Ausmus, 774 F.2d 722,

725 (6th Cir. 1985), the Sixth Circuit “rejected” the language

in Andros that suggested financial ability to pay was relevant

to criminal liability. The court said, “[o]therwise, a recalcitrant taxpayer could spend his money as fast as he earns it and

evade criminal liability while not paying taxes as long as his

bank balance is zero when the taxpayer’s taxes are due.” Id.

Despite what we consider to be the unassailable logic presented by our sister circuits here, Easterday asks us to follow

the contrary reasoning of Andros and Poll essentially because

we have never formally repudiated it before now. 

While we may not have explicitly overruled Poll or Andros

in the more than three decades since we issued those opinions,

neither have we cited them for the proposition that Easterday

asserts here. Poll is not completely dead, for it has been used

as a shorthand term describing the standard of “willful failure” to pay that has been discussed in the context of child support. See United States v. Ballek, 170 F.3d 871, 874 (9th Cir.

1999); H.R. Rep. No. 102-771, at 6 (1992). In the tax field,

however, it now exists only as a nearly completely buried

obstacle to traffic that generally has run over it or passed it by

for more than thirty years. 

[6] The only remaining question is whether we are nevertheless bound by Poll because it has not been overruled by an

11522 UNITED STATES v. EASTERDAY
en banc court. Generally, a panel opinion is binding on subsequent panels unless and until overruled by an en banc decision

of this circuit. See, e.g., In re Complaint of Ross Island Sand

& Gravel v. Matson, 226 F.3d 1015, 1018 (9th Cir. 2000) (per

curiam) (“[A]bsent a rehearing en banc, we are without

authority to overrule [controlling circuit precedent].”).

[7] In Miller v. Gammie, 335 F.3d 889 (9th Cir. 2003), we

convened an en banc court to consider the question of when

a panel decision may be overruled by intervening higher

authority that, while not on an identical issue or expressly

repudiating the panel decision, is inconsistent with its reasoning. We held that en banc review is not required to overturn

a case where “intervening Supreme Court authority is clearly

irreconcilable with our prior circuit authority.” Id. at 900. We

explained that we must avoid inconsistencies between our

decisions and the decisions of a court of last resort. We said:

We must recognize that we are an intermediate

appellate court. A goal of our circuit’s decisions,

including panel and en banc decisions, must be to

preserve the consistency of circuit law. The goal is

codified in procedures governing en banc review.

See 28 U.S.C. § 46; Fed. R. App. P. 35. That objective, however, must not be pursued at the expense of

creating an inconsistency between our circuit decisions and the reasoning of state or federal authority

embodied in a decision of a court of last resort. 

We hold that the issues decided by the higher

court need not be identical in order to be controlling.

Rather, the relevant court of last resort must have

undercut the theory or reasoning underlying the prior

circuit precedent in such a way that the cases are

clearly irreconcilable. 

335 F.3d at 900. 

UNITED STATES v. EASTERDAY 11523
[8] Pursuant to Miller, we conclude that it is not necessary

to convene an en banc court in order to hold that Poll, and its

antecedent Andros, are no longer binding authority for the

proposition that a defendant’s ability to pay his tax liability is

relevant to the determination of willfulness under 26 U.S.C.

§ 7202. In keeping with Pomponio, 429 U.S. at 12, and

Cheek, 498 U.S. at 201-02, we hold that willfulness does not

require the government to prove that a defendant had the ability to meet his tax obligations. The district court’s refusal to

give a Poll instruction to the jury and the instruction it did

give on willfulness were thus proper. 

[9] For similar reasons, the district court did not abuse its

discretion in refusing to admit evidence proffered by Easterday in order to show how and why he spent money owed to

the IRS to pay other business expenses. Such evidence would

have been relevant only if a defendant were entitled to defend

on the ground that he had spent the tax money for other needs.

Because the financial circumstances of a defendant do not

bear on the determination of willfulness under § 7202, Easterday’s proffered evidence was irrelevant, and the district court

did not abuse its discretion by excluding it. See Fed. R. Evid.

401. 

Easterday’s remaining contentions are without merit.

AFFIRMED. 

N.R. SMITH, Circuit Judge, dissenting: 

In this case, I find myself between “the proverbial rock and

a hard place.” I can either adhere to precedent (with which I

do not agree) or I can join the majority and try to overrule bad

circuit precedent. Although I agree that United States v. Poll,

521 F.2d 329 (9th Cir. 1975) is bad law, Poll is the controlling law of this circuit and I understand a three-judge panel

11524 UNITED STATES v. EASTERDAY
is not able to undo precedent set forth by another three-judge

panel. See Hulteen v. AT&T Corp., 498 F.3d 1001, 1009 (9th

Cir. 2007) (“A three-judge panel must follow a prior circuit

decision unless a subsequent decision by a relevant court of

last resort either effectively overrules the decision in a case

‘closely on point’ or undercuts the reasoning underlying the

circuit precedent rendering the cases ‘clearly irreconcilable.’ ”

(citation omitted)). In my view, because Poll is not irreconcilable with United States v. Pomponio, 429 U.S. 10 (1976) (per

curiam), we are required to either follow Poll or make a sua

sponte en banc call. See In re Complaint of Ross Island Sand

& Gravel, 226 F.3d 1015, 1018 (9th Cir. 2000) (per curiam)

(“[A]bsent a rehearing en banc, we are without authority to

overrule [controlling circuit precedent].”). 

The majority, however, has chosen to write around circuit

precedent in order to avoid a result that they do not like. I

therefore respectfully dissent for the following reasons. First,

the majority legally errs by finding that Poll is no longer good

law. Second, because of its error in finding that Poll was

overruled by Pomponio, the majority incorrectly affirms the

district court in its refusal to instruct the jury that the government must prove that Easterday had the financial ability to

meet his tax obligations. Thus, I would reverse and remand

for a new trial, because Easterday’s ability to pay was an element of the crime the government needed to prove beyond a

reasonable doubt. 

I. Discussion

Poll discusses two separate questions: (a) willfulness, and

(b) the relevance of evidence demonstrating an inability to

pay in order to rebut the willfulness of a failure to pay over

employee payroll taxes. See 521 F.2d at 331 (“These actions

raise two questions: Viz. whether the foregoing definition of

‘willfully’ is correct and whether the evidence offered to rebut

the presence of willfulness was irrelevant and inadmissible.”).

In Poll, we held that the willfulness definition was correct,

UNITED STATES v. EASTERDAY 11525
and that the evidence of inability to pay was relevant to rebut

the presence of willfulness. See id. 

The majority, however, incorrectly concludes that “Poll’s

requirement that the government prove that the taxpayer had

sufficient funds to pay the tax was premised on a definition

of willfulness that included some element of evil motive.” In

Poll, we based our holding, in part, on Supreme Court precedent found in Spies v. United States, 317 U.S. 492, 498

(1943), which states that “[w]e would expect willfulness . . .

to include some element of evil motive and want of justification in view of all the financial circumstances of the taxpayer.” Poll, 521 F.2d at 333. We also, however, relied on United

States v. Hawk, 497 F.2d 365 (9th Cir. 1974) to recognize that

it is “not error to fail to include the words ‘and/or evil

motive’ ” when determining the “willfully” standard. Poll,

521 F.2d at 332. 

The majority correctly recognizes that the Supreme Court

“in Pomponio endeavored to erase the misconception that

such different formulations, including the ‘evil motive’ formulation of Spies, actually established different standards.” In

Pomponio, the Court held that the term “willfully” does not

require “proof of any motive other than an intentional violation of a known legal duty.” 429 U.S. at 12. The Court

explained the meaning of willfulness by stating that 

The Court, in fact, has recognized that the word

“willfully” . . . generally connotes a voluntary, intentional violation of a known legal duty. It has formulated the requirement of willfulness as “bad faith or

evil intent,” or “evil motive and want of justification

in view of all the financial circumstances of the taxpayer,” or knowledge that the taxpayer “should have

reported more income than he did.” 

Our references to other formulations of the standard did not modify the standard [that the word

11526 UNITED STATES v. EASTERDAY
‘willfully’ . . . generally connotes a voluntary, intentional violation of a known legal duty]. 

Id. (internal citations and quotations omitted). 

Thus, even when the formulation of “evil motive” or “bad

purpose” is used in explaining the standard for willfulness, the

standard is not modified. Willfulness, in the context of tax

laws, “simply means a voluntary, intentional violation of a

known legal duty.” Id. at 12-13 (emphasis added) (citing

Hawk, 497 F.2d at 368); see also United States v. Cheek, 498

U.S. 192, 201-02 (1991). There is no requirement the government prove bad purpose or evil motive and want of justification. See Pomponio, 429 U.S. at 12-13; Hawk, 497 F.2d at

368. The holding in Poll is therefore consistent with the Pomponio definition of willfulness. 

In Poll, we held that “to establish willfulness the Government must establish beyond a reasonable doubt that at the

time payment was due the taxpayer possessed sufficient funds

to enable him to meet his obligation or that the lack of sufficient funds on such date was created by (or was the result of)

a voluntary and intentional act without justification in view of

all the financial circumstances of the taxpayer.” 521 F.2d at

333 (emphasis added). Our holding in Poll therefore relied on

the same definition of willfulness as determined in Pomponio

(“a voluntary, intentional violation of a known legal duty”).

In fact, Pomponio actually supports that idea that Poll used

the correct definition of willfulness. See 429 U.S. at 12-13

(noting that “as the other Courts of Appeals that have considered the question have recognized, willfulness in this context

simply means a voluntary, intentional violation of a known

legal duty” (citing Hawk, 497 F.2d at 366-69)). 

As discussed, our determination of willfulness in Poll

relied, in part, on Hawk, which the Supreme Court approved

in Pomponio. In Hawk, we noted that the Supreme Court, in

Murdock v. United States, 290 U.S. 389 (1933), held that 

UNITED STATES v. EASTERDAY 11527
[W]illfulness requires proof that the act was done

with knowledge it was wrongful. The Court discussed a number of ways of expressing this type of

specific intent, and among the terms mentioned were

“bad purpose” and “evil motive.” 

However, neither bad purpose nor evil motive is

an independent element of a willful failure to file

under § 7203. The term “evil motive” is merely a

“convenient shorthand expression to distinguish liability based on conscious wrongdoing from liability

based on mere carelessness or mistake.” Thus the

term expresses, in a brief way, the more cumbersomely stated concept of specific intent in Murdock,

a concept the instructions must ultimately convey.

This, we think, was all that Murdock- and Bishopmeant by the use of that term. 

Hawk, 497 F.2d at 368 (internal citations omitted). 

Thus, although Poll quoted Supreme Court precedent

regarding the inclusion of “evil motive and want of justification” to determine willfulness, we were referencing the “voluntary, intentional violation of a known legal duty”

formulation discussed in Pomponio. Even though the wording

was different, Supreme Court precedent dictates that the

meaning underlying the term “willfulness” in Poll was the

same as used in Hawk and Pomponio. Poll’s definition of

willfulness was not premised on a belief that willfulness

requires an evil motive or bad purpose. Poll, therefore, still

holds that the ability to pay is relevant to demonstrate willfulness, and Pomponio did not state otherwise. Although Pomponio did discuss the willfulness question, see 429 U.S. at 12-

13, the portion of our decision in Poll that created an additional requirement of proving ability to pay was not undermined by Pomponio. The basis for Poll’s requirement of

proving ability to pay has therefore not been eliminated. No

subsequent decision from this circuit or from a relevant court

11528 UNITED STATES v. EASTERDAY
of last resort has overruled the requirement presented in Poll

that evidence regarding inability to pay is relevant to rebut the

presence of willfulness. See Poll, 521 F.2d at 332 (“We

believe, and so hold, that the defendant’s offer of proof

regarding the liquid resources of the corporation and his

intention to make up the deficiencies later was relevant and

admissible in his effort to refute the willfulness of the failure

to pay over.”). 

Pomponio also did not overrule Poll because Pomponio and

Poll address different issues. In Pomponio, the Supreme

Court, affirming this court’s holding in Hawk, held that evil

motive is not an independent element of filing false income

tax returns under 26 U.S.C. § 7206 and that instructions

regarding evil motive are thus unnecessary. 429 U.S. at 12-13.

In Poll, by contrast, this court considered whether the government must prove that a defendant was capable of meeting his

tax obligations. 521 F.2d at 333. We specifically noted that

the ability to pay rule was not contrary to Hawk because

Hawk addressed “a [w]illful failure to file [a] federal income

tax return[ ],” not a crime “involving a failure to pay.” 521

F.2d at 332. Because Pomponio affirmed Hawk, and because

this court held, in Poll, that the ability to pay rule is consistent

with Hawk, Poll is consistent with Pomponio. Thus, Pomponio is not “clearly irreconcilable” with Poll, and Poll

remains good law. See Hulteen, 498 F.3d at 1009. We are

therefore bound by Poll because it has not been overruled by

an en banc court. See In re Complaint of Ross Island Sand &

Gravel, 226 F.3d at 1018. 

The majority also references this court’s decision in United

States v. Gilbert, 266 F.3d 1180 (9th Cir. 2001), for the proposition that Poll is inconsistent with both Pomponio and common sense. In Gilbert, the defendant argued “that his failure

to pay over the withholding tax was not willful because [his

business] did not have the funds to pay the taxes.” 266 F.3d

at 1185. The government responded “that it presented sufficient evidence at trial that Gilbert voluntarily and intentionUNITED STATES v. EASTERDAY 11529
ally paid net wages to his employees with knowledge that

withholding taxes were not being remitted to the IRS.” Id.

This court affirmed on the basis that the evidence was sufficient. See Id. This court, however, did not explicitly or implicitly overrule the ability to pay rule. The district court in

Gilbert had given a Poll instruction, and this court did not

criticize the district court for having done so. In fact, this

court did not reference the ability to pay rule or Pomponio.

This court instead discussed how Poll did not concern

“whether § 7202 required the failure [to both account for and

pay over withholding tax], but instead addressed the issue of

how to define willfulness under § 7202.” Id. at 1183. This

court held that “whether § 7202 required the failure to both

account for and pay over the tax, were dicta.” Id. That holding, however, does not address whether the ability to pay can

be used as a defense. Gilbert therefore merely discusses

whether § 7202 requires the failure to both account for and

pay over withholding tax. Thus, there is no basis in Gilbert

for the proposition that Pomponio overruled Poll. 

To the extent the district court excluded evidence regarding

the financial situation of Easterday’s companies and his

inability to pay (based on its flawed interpretation of Pomponio), the district court abused its discretion. See United

States v. Gallagher, 99 F.3d 329, 331-32 (9th Cir. 1996).

Moreover, the district court’s failure to instruct the jury that

the government must prove that Easterday had the ability to

meet his tax obligations is a constitutional error “because the

jury did not have the opportunity to find each element of the

crime beyond a reasonable doubt.” Martinez v. Borg, 937

F.2d 422, 423 (9th Cir. 1991). The district court rejected a

large amount of evidence regarding Easterday’s nursing

homes’ financial difficulties. Because this evidence “could

rationally lead to a contrary finding with respect to the omitted element,” the district court’s error was not harmless and

Easterday is entitled to a new trial. Neder v. United States,

527 U.S. 1, 19 (1999). 

11530 UNITED STATES v. EASTERDAY