Opinion ID: 200974
Heading Depth: 2
Heading Rank: 2

Heading: Expert Testimony on Ordinary and Necessary Business Expenses

Text: 24 Mikutowicz next challenges the testimony of the government's tax computation expert, Michael Pleshaw. Pleshaw, an Internal Revenue Service (IRS) agent, explained to the jury the basis for the IRS's conclusion that deductions claimed by Mikutowicz and his companies were improper. Mikutowicz challenges the admission of Pleshaw's testimony concerning the non-deductibility of AGM's payments to Ellis Engineering. We review the admission of Pleshaw's testimony for an abuse of discretion. See United States v. Santana, 342 F.3d 60, 68 (1st Cir.2003), cert. denied, 540 U.S. 1206, 124 S.Ct. 1478, 158 L.Ed.2d 129, 2004 WL 323919 (U.S. Feb. 23, 2004). 25 Pleshaw provided the jury with a summary of why the IRS determined that the deductions claimed by Mikutowicz and his companies were improper. It is well established in several circuits that [e]xpert testimony by an IRS agent which expresses an opinion as to the proper tax consequences of a transaction is admissible evidence. United States v. Windfelder, 790 F.2d 576, 581 (7th Cir.1986); see United States v. Sabino, 274 F.3d 1053, 1067 (6th Cir.2001), amended on other grounds, 307 F.3d 446 (2002); United States v. Monus, 128 F.3d 376, 386 (6th Cir.1997); United States v. Townsend, 31 F.3d 262, 270 (5th Cir.1994); United States v. Toushin, 899 F.2d 617, 620 n. 4 (7th Cir.1990); United States v. Gold, 743 F.2d 800, 817 (11th Cir.1984); United States v. Fogg, 652 F.2d 551, 557 (5th Cir.1981). The primary limitation on this type of evidence is that the agent may not testify about the defendant's state of mind when the challenged deductions were claimed. See Fed.R.Evid. 704(b) (expert may not testify to mental state of defendant where mental state is element of charged offense); Sabino, 274 F.3d at 1067 ([I]n a tax case, the summary witness is allowed to summarize and analyze the facts indicating willful tax evasion so long as the witness does not directly embrace the ultimate question of whether the defendant did in fact intend to evade income taxes.) (internal quotations and citations omitted); Windfelder, 790 F.2d at 582 (stating that it was error, in tax fraud case, to admit IRS agent's testimony that defendant intentionally understated his income because this testimony impermissibly state[d] an opinion as to the defendant's knowledge or willfulness, a mental state which constitutes an element of the crimes charged); see also United States v. Valle, 72 F.3d 210, 216 (1st Cir.1995) (Rule 704(b) prohibits all direct expert testimony concerning a criminal defendant's intent, regardless of the witness's field of expertise, so long as intent is an element of the crime charged.). 26 Pleshaw's testimony adhered to these standards. He described the IRS's audit of Mikutowicz and his businesses and the results of the audit. In addition, he testified to the rationale which led the IRS to reach its conclusions. Pleshaw offered no testimony concerning Mikutowicz's state of mind when claiming the challenged deductions. There was no abuse of discretion in the admission of Pleshaw's testimony. 27 Mikutowicz also asserts that the district court violated his rights under the Confrontation Clause of the Sixth Amendment by limiting his cross-examination of Pleshaw. The court refused to let Mikutowicz question Pleshaw about various judicial opinions, which Mikutowicz claims would have established that the deductions were properly taken. 28 A defendant is entitled to cross-examine a government witness to test the truth of his testimony. See United States v. Gonzalez-Vazquez, 219 F.3d 37, 45 (1st Cir.2000). But the court retains wide latitude to impose reasonable limits on cross-examination in order to avoid confusion of the issues or extended discussion of marginally relevant material. Id. (internal quotations and citations omitted). Defendants cannot run roughshod, doing precisely as they please simply because cross-examination is underway. United States v. Boylan, 898 F.2d 230, 254 (1st Cir.1990). We review this challenge de novo to determine whether defense counsel was afforded a reasonable opportunity to impeach adverse witnesses. See United States v. Balsam, 203 F.3d 72, 87 (1st Cir.2000). Should that threshold be reached, any restrictions that were placed on the extent and manner of the cross-examination will be reviewed for abuse of discretion. Id. 29 Pleshaw was not qualified as an expert on tax law. As the IRS agent who audited Mikutowicz and his businesses, Pleshaw provided detailed testimony on the process used to conduct the audit, the conclusions reached, and the computations made to arrive at Mikutowicz's tax deficiency. The government attempted to elicit from Pleshaw neither an opinion on the precise meaning of terms used in the Internal Revenue Code nor a discussion of legal sources that could bear on such an interpretation, as well it should not have. [E]xpert testimony proffered solely to establish the meaning of a law is presumptively improper. United States v. Prigmore, 243 F.3d 1, 18 n. 3 (1st Cir.2001); see Nieves-Villanueva v. Soto-Rivera, 133 F.3d 92, 99-101 (1st Cir.1997) (ruling that it was error to admit expert testimony explaining the holdings of various Puerto Rico Supreme Court opinions). 30 Yet, this is precisely what Mikutowicz sought to do. Even though Pleshaw is not a lawyer and did not mention the United States Tax Court on direct examination, defense counsel attempted to question Pleshaw about three Tax Court opinions from the early 1980's. 3 Even a tax lawyer would have found it difficult to respond intelligently to questions about the precise facts and holdings of several twenty-year old Tax Court cases and then apply those holdings to the facts of the instant case, without having had a prior opportunity to prepare. Had the cross-examination proceeded as Mikutowicz proposed, it would have involved defense counsel reading excerpts of the cases to the jury, without the jury having a context for evaluating the import of the information that it was receiving. See Curtis, 782 F.2d at 600 (The jury is not comprised of lawyers ... To attempt to explain the myriad rules of judicial construction, the complexity of legal principles, or the function of precedent would hopelessly divert the jury from their preeminent duty of assessing ... guilt.). The district court was well within its discretion in concluding that such an examination would have exceeded the scope of the direct examination and confused the jury. See United States v. Ingredient Technology Corp., 698 F.2d 88, 97 (2d Cir.1983); Benjamin A. Vernia, Annotation, Admissibility of expert testimony regarding questions of domestic law, 66 A.L.R. 5th 135 (1999) (noting that the bases for the rule against an expert explaining the law to the jury relate to jury confusion). 4