Opinion ID: 761781
Heading Depth: 2
Heading Rank: 5

Heading: Omission of Element of Materiality in Tax Count Charge

Text: 39 Roz Ben Zvi claims that his convictions for filing false tax returns, in violation of 26 U.S.C. § 7206(1), 3 must be reversed because the district court did not instruct the jury that the false statements at issue must be material. The instruction read: 40 In order to sustain its burden of proof ... the government must prove the following four essential elements beyond a reasonable doubt. 41 .... 42 3. That the defendant Roz Ben Zvi did not believe the returns to be true and correct as to the gross sales and receipts of Josi Jewelry Corporation or as to the personal income of himself. 43 Because defendants failed to object to the instruction, we review the district court's instruction for plain error under the Olano test referred to above. 44 The omission of materiality from the jury charge was probably not error at all; and, in any event, it was not plain error. This circuit has held that the issue of materiality on false tax returns is a matter for the court to decide. See United States v. Klausner, 80 F.3d 55, 60-61 (2d Cir.1996); United States v. Greenberg, 735 F.2d 29, 31 (2d Cir.1984). But see United States v. Neder, 136 F.3d 1459, 1464 (11th Cir.1998) (noting that every other circuit addressing the question has held that materiality under § 7206(1) is a question for the jury). Here the jury heard the district court read the indictment and the statute, both of which recite the element of materiality. The district court further instructed the jury that it could find Roz Ben Zvi guilty only if it found the particular misrepresentations contained in the indictment; all of those misrepresentations entailed the failure to report substantial amounts of income and were therefore material as a matter of law. See Klausner, 80 F.3d at 60 (test for materiality is whether particular item must be reported in order for taxpayer to assess tax liability correctly). 45 In Johnson and Knoll, there was no plain error in the trial court's failure to charge the jury on materiality because the materiality was apparent from the evidence, even though under the statute at issue in those cases materiality is a jury issue. See Johnson, at 469-70, 117 S.Ct. at 1550; Knoll, 116 F.3d at 1000-02. In light of these decisions, a fortiori, we cannot find plain error for lack of a materiality charge when materiality is both an issue for the court and apparent from the evidence. 46 The better practice in false tax return cases is for the district court to make a determination of materiality, and then inform the jury that the alleged misrepresentation, if found, is material under the statute as a matter of law. Such a charge ensures that the question is not left to the jury by implication. The failure of a district court to give such an instruction could result in a wrongful acquittal if the jury decided materiality in the defendant's favor. In the face of a conviction, such a failure could never be prejudicial to a defendant even if the defendant had objected; under the law of this circuit, the jury in a false tax return case is not empowered to resolve the question of materiality in a defendant's favor. 47 Materiality was an issue for the court, and materiality was apparent because the tax return at issue involved the under-reporting of income by thousands of dollars. Accordingly, we affirm Roz Ben Zvi's convictions for filing false tax returns.