Source: http://federaltaxcrimes.blogspot.com/2016/01/should-proof-of-no-tax-evaded-be.html
Timestamp: 2019-04-20 14:56:41+00:00

Document:
The Constitution affords "criminal defendants a meaningful opportunity to present a complete defense." United States v. Petters, 663 F.3d 375, 381 (8th Cir. 2011) (quotations and citations omitted). But a criminal defendant's "right to present relevant testimony is not without limitation. The right may, in appropriate cases, bow to accommodate other legitimate interests in the criminal trial process." Id. (quotation and citations omitted). "For instance, '[t]he accused does not have an unfettered right to offer testimony that is incompetent, privileged, or otherwise inadmissible under standard rules of evidence.'" Id. (alteration in original) (quoting Taylor v. Illinois, 484 U.S. 400, 410 (1988)). As a result, "the 'Constitution leaves to the judges who must make these decisions wide latitude to exclude evidence that is repetitive . . . , only marginally relevant or poses an undue risk of harassment, prejudice, [or] confusion of the issues.'" Id. (alterations in original) (quoting Crane v. Kentucky, 476 U.S. 683, 689-90 (1986)).
Because the government need not establish an actual tax deficiency to prove a violation of §§ 7212(a) or 7206(1), the question arises whether a defendant may put on evidence that he did not owe any taxes as a defense to such charges. Like our sister circuits, we conclude that the answer is no. This is because "the amount of taxes owed is irrelevant to a prosecution for tax fraud." United States v. Minneman, 143 F.3d 274, 279 (7th Cir. 1998) (emphasis added) (citing United States v. Marashi, 913 F.2d 724, 736 (9th Cir. 1990) ("Section 7206(1) is a perjury statute; it is irrelevant whether there was an actual tax deficiency." (citation omitted)).
The district court's ruling is in accord with our precedent. "We have previously said that 'there is no doubt that self-serving exculpatory acts performed substantially after a defendant's wrongdoing is discovered are of minimal probative value as to his state of mind at the time of the alleged crime.'" United States v. Ellesfen, 655 F.3d 769, 778 (8th Cir. 2011) (quoting United States v. Radtke, 415 F.3d 826, 840-41 (8th Cir. 2005) (holding that the district court did not abuse its discretion in excluding evidence that the defendant filed an amended tax return after he had been indicted for willfully subscribing to a known false tax return)).
[t]o obtain a conviction on the [§ 7206(1)] tax offense at issue, the Government must prove that the defendant filed a tax return "which he does not believe to be true and correct as to every material matter." 26 U.S.C. § 7206(1). In general, a false statement is material if it has "a natural tendency to influence, or [is] capable of influencing, the decision of the decisionmaking body to which it was addressed." United States v. Gaudin, 515 U.S., at 509, 115 S. Ct. 2310 (quoting Kungys v. United States, 485 U.S. 759, 770, 108 S. Ct. 1537, 99 L. Ed. 2d 839 (1988) (internal quotation marks omitted)).
Neder v. United States, 527 U.S. 1, 16 (1999) (third alteration in original) (emphasis added).
We have recognized that "the government need not establish an actual tax deficiency to demonstrate that [a defendant's] false statements in [his tax] returns were material." United States v. Peiker, 2 F. App'x 685, 687 (8th Cir. 2001) (per curiam) (citing Young, 804 F.2d at 119). Similarly, the Seventh Circuit has held "that proof of a tax deficiency was not essential to prove materiality." United States v. Bouzanis, 2003 WL 920717, at *2 (N.D. Ill. Mar. 7, 2003) (citing United States v. Peters, 153 F.3d 445, at 461-62 (7th Cir. 1998)).
Giambalvo also argues that evidence of the lack of a tax deficiency was relevant to showing that he did not act "corruptly" under § 7212(a). 26 U.S.C. § 7212(a) ("Whoever corruptly . . . endeavors to intimate or impede any officer or employee of the United States acting in an official capacity under this title, or in any other way corruptly . . . obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title . . . ."). We have previously indicated our inclination to reject the argument "that the term corruptly is limited to situations in which the defendant wrongfully sought or gained a financial advantage." United States v. Yagow, 953 F.2d 423, 427 (8th Cir. 1992) (citing United States v. Reeves, 782 F.2d 1323, 1325 (5th Cir. 1986)).
More recently, the Fifth Circuit has held that, § 7212(a) does not require that the defendant obtain benefits or advantages "under the tax laws." United States v. Saldana, 427 F.3d 298, 305 (5th Cir. 2005). The Fifth Circuit observed that "the language of the statute itself does not require that an individual intend to procure a benefit for himself under the tax laws to have formed the requisite mens rea." Id. Similarly, "the Sixth Circuit [has] affirmed a defendant's conviction for violation of § 7212(a) when the defendant had filed false 1099 and 1096 forms for the sole purpose of intimidating and harassing his creditors." Id. (citing United States v. Bowman, 173 F.3d 595, 596-97 (6th Cir. 1999)). The Sixth Circuit "held that the defendant's conduct fell within the  ambit of § 7212(a)'s proscribed conduct even though he sought no financial advantage or benefit for himself under the tax laws." Id. (citing Bowman, 173 F.3d at 600).
In line with the Fifth Circuit's and Sixth Circuit's more recent conclusions, we now hold—as we were inclined to do in Yagow—that "corruptly" is not limited to situations where the defendant wrongfully sought or gained a financial advantage under the tax laws. If the government was not required to prove that the benefit that Giambalvo sought by his "corrupt" actions to obstruct or impede the IRS was financial in nature, then evidence of the non-existence of a tax loss was not relevant to refute the "corruptly" element of § 7212(a).
Additionally, Giambalvo argues that evidence of the lack of a tax deficiency was relevant to showing that he did not act "willfully" under § 7206(1). See 26 U.S.C. § 7206(1) ("Any person who . . . [w]illfully makes and subscribes any return, statement, or other document . . . ."). According to Giambalvo, he is permitted to present circumstantial evidence tending to show his good faith as a defense. Giambalvo asserts that, for approximately eight years, he "subscribed to a belief that was so against his financial interest that it literally cost him more than $30,000—i.e.  , had he filed proper tax returns, he would have been entitled to receive more than $30,000 back in tax refunds." He maintains that such evidence was admissible evidence of his good-faith belief because his actions were against his financial interest.
Giambalvo does not have "'an unfettered right to offer testimony that is . . . otherwise inadmissible under the standard rules of evidence.'" Petters, 663 F.3d at 381 (quoting Taylor, 484 U.S. at 410). As explained supra, because the issue of tax deficiency is not an element that the government must prove—or attempted to prove—then the existence of such deficiency is irrelevant in such prosecutions. While the district could have admitted Giambalvo's evidence of no tax deficiency, it was not an abuse of discretion to exclude it.
JAT Comment: I am unconvinced that the judge properly excluded the evidence. Still, I suppose, that in the discretion to manage the boundaries of a case, so long as the defendant is given a fair trial, these type of evidentiary rulings, even if technically incorrect, may not require reversal. But, when they go to the heart of a defense in tax crimes -- usually the defense of nonwillfulness or, for tax obstruction, noncorruptness -- I think the defendant's right to a broad defense is appropriate.

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