Opinion ID: 6624
Heading Depth: 2
Heading Rank: 3

Heading: Evidence of Townsend's liability for the excise tax

Text: 30 Townsend contends that the district court abused its discretion in prohibiting cross-examination into areas of the Comptroller's decision and Mr. Maxwell's letter, dated March 27, 1989. The Comptroller held that Petrolife rather than Townsend was liable for state excise tax. In the Maxwell letter Mr. Maxwell allegedly expressed the desire to align himself with the IRS's position in order to avoid Petrolife's tax liability. Appellant contends that he had a right to impeach the witness and reveal the motivation and bias of Mr. Maxwell's adversarial testimony. Appellant has failed to show any evidence in the record indicating an arrangement under which Mr. Maxwell would receive any benefit for cooperating with the government. The district court found, under Rule 403, that the probative value of the testimony was substantially outweighed by the danger of confusion of the issues. Because Appellant has failed to show that the district court abused its discretion, we affirm the district court on this point. York, 888 F.2d at 1056; see also United States v. Sutherland, 929 F.2d 765, 777 (1st Cir.) cert. denied, --- U.S. ----, 112 S.Ct. 83, 116 L.Ed.2d 56 (1991) (holding that appellant failed to demonstrate a basis for suspecting bias other than a conclusory allegation). 31 Agent Vitz testified that Townsend was liable for the excise tax. Appellant contends that he had a right to cross-examine Agent Vitz concerning the Maxwell letter and the Comptroller's decision holding Petrolife liable for state excise tax. The district court excluded this testimony under Rule 403. We find no error requiring reversal. Anyone who willfully evades a tax is in violation of I.R.C. Sec. 7201 regardless of who owed the tax. 8 Thus, exclusion of testimony that Townsend was not personally liable was harmless error. 3. Expert Testimony 32 The government called Agent Vitz as a summary witness and an expert on excise tax. Agent Vitz testified that Townsend became liable for the excise tax when he sold it to Mr. Boulos. Agent Vitz also calculated the tax deficiency owed on the gas sold to Mr. Boulos. Appellant contends that the district court erred in admitting this testimony because it interfered with the jury's function, it was inadmissible under Fed.R.Evid. 704(b), and it was inadmissible under Fed.R.Evid. 403. 33 The admissibility of expert testimony rests within the sound discretion of the district court and will be reversed only upon a clear showing of abuse of discretion. United States v. Charroux, 3 F.3d 827, 833 (5th Cir.1993). Rule 703 provides that a qualified expert may testify in the form of an opinion if scientific, technical, or other specialized knowledge will assist the trier of fact in understanding the evidence. To qualify as an expert, the witness must have specialized knowledge or training such that his or her testimony will assist the fact finder in the determination of a fact issue. United States v. Bourgeois, 950 F.2d 980, 987 (5th Cir.1992). Agent Vitz's training in accounting and experience in tax prosecutions qualifies him as an expert. There is no evidence that the district court abused its discretion in accepting Agent Vitz as an expert as Townsend failed to object to Agent Vitz's qualifications. Accordingly, we will address the substance of his testimony rather than his qualifications. 34 Appellant contends that Agent Vitz's testimony was an usurpation of the jury's role in violation of Rule 704(b). Rule 704(b) states that an expert shall not testify with respect to the mental state of a defendant in a criminal trial. Agent Vitz did not opine that Townsend intended to file a fraudulent Form 637, rather he testified that the form was invalid. Agent Vitz did not express an opinion about Appellant's state of mind. Accordingly, his testimony was not excludable under Rule 704(b). United States v. Webster, 960 F.2d 1301, 1308-09 (5th Cir.) cert. denied, --- U.S. ----, 113 S.Ct. 355, 121 L.Ed.2d 269 (1992). 35 Rule 403 operates to exclude otherwise admissible evidence if the probative value is substantially outweighed by its prejudicial effects. Appellant contends that Agent Vitz's testimony was prejudicial. Testimony presented by the government will invariably be prejudicial to a criminal defendant. But Rule 403 only excludes evidence that would be unfairly prejudicial to the defendant. Here, the probative value of the evidence was not substantially outweighed by its prejudicial effects. Agent Vitz testified as to the existence of a tax deficiency, an element required for a successful prosecution under I.R.C. Sec. 7201. He also opined that Townsend was personally liable on the excise tax. This arguably has probative value. Someone would be more likely to evade their own tax rather than another's. Because this testimony was probative and not unfairly prejudicial, we find no error. 4. Jury Instructions 36 Appellant requested the district judge to instruct the jury that it could find him liable for a violation of I.R.C. Sec. 7201 only if he personally owed the taxes. The district court refused, instructing the jury that it could convict the defendant for attempting to evade taxes owed by another. Appellant cries foul. 37 The standard of review is abuse of discretion. United States v. Chaney, 964 F.2d 437, 444 (5th Cir.1992). A conviction will not be reversed unless the instructions failed to correctly state the law. United States v. Coleman, 997 F.2d 1101, 1105 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 893, 127 L.Ed.2d 86 (1994). The issue this Court must decide is whether the district court abused its discretion by refusing the proposed instruction. A refusal to deliver a requested jury instruction is reversible error only if the proposed instruction was (1) substantively correct, (2) not substantively covered in the jury charge, and (3) concerned an important issue in the trial, such that failure to give the requested instruction seriously impaired the defendant from presenting a defense. United States v. Mollier, 853 F.2d 1169, 1174 (5th Cir.1988). 38 The actual jury charge correctly stated the law. The instruction traced I.R.C. Sec. 7201 and informed the jury that they could convict Townsend for evading Petrolife's tax liability. See United States v. Troy, 293 U.S. 58, 55 S.Ct. 23, 79 L.Ed. 197 (1934); United States v. Wisenbaker, 14 F.3d 1022, 1026-27 (5th Cir.1994). Appellant's proposed instruction was not substantively correct. Appellant contends that the jury should have been instructed to find Townsend guilty only if he personally owed the tax. Because I.R.C. Sec. 7201 proscribes evasion of any tax, this instruction fails the first prong of the test. Accordingly, we affirm the district court's ruling. 39 For the above stated reasons the defendant's conviction is AFFIRMED.