Opinion ID: 3066115
Heading Depth: 4
Heading Rank: 1

Heading: Evidence Concerning the Legality of Gold

Text: Clause Contracts Appellants challenge the district court’s exclusion of evidence concerning the legality of gold clause contracts. As discussed, the district court properly determined that gold and silver coins should be assessed at fair market value when used as compensation for services. Based on this correct legal conclusion, the district court held that proffered evidence attempting to otherwise establish the requirements of governing tax law was irrelevant to the issue of willfulness. However, Appellants were permitted to introduce statutes, IRS pamphlets, tax provisions and other sources upon which Appellants relied in good faith during the duration of their wage payment system. The district court’s ruling fully comported with our precedent. In United States v. Powell, 955 F.2d 1206 (9th Cir. 1992), as amended, we observed that, in a criminal tax case, “a district court may exclude evidence of what the law is or should be . . .” Id. at 1214 (citation omitted) (emphasis in the original). In contrast, the district court “ordinarily cannot exclude evidence relevant to the jury’s determination of what a defendant thought the law was . . . because willfulness is an element of the offense.” Id. (emphasis in the original). “[S]tatutes or case law upon which the defendant claims to have actually relied are admissible to disprove that element if the defendant lays a proper foundation which demonstrates such reliance.” Id. (citations and emphasis omitted). “Legal materials upon which the defendant does not claim to have relied, however, can be excluded as UNITED STATES V. KAHRE 43 irrelevant and unnecessarily confusing because only the defendant’s subjective belief is at issue: the court remains the jury’s sole source of the law.” Id. “In addition, the court may instruct the jury that the legal material admitted at trial is relevant only to the defendant’s state of mind and not to the requirements of the law, and may give other proper cautionary and limiting instructions as well.” Id. The district court, therefore, properly excluded evidence, including proffered expert testimony, that conflicted with its correct legal ruling that coins were assessed at fair market value for tax purposes irrespective of their use as legal tender. See id.16 Appellants’ contention that the district court’s evidentiary rulings improperly diluted the burden of proof and precluded a complete defense is unpersuasive. Although the district court excluded evidence that contradicted its correct legal ruling regarding valuation of gold and silver coins for tax purposes, the court properly instructed the jury that: A defendant’s conduct is not willful if that person acts due to a good faith misunderstanding of the law. Because the government has the burden of 16 Appellants’ assertion that the district court erred in excluding evidence that its ruling was the first in the nation is unavailing. The district court’s exclusion of the proffered evidence did not impact the presentation of evidence of Appellants’ good faith beliefs, as the court’s ruling on valuation of the coins occurred subsequent to the charged conduct and could not have been relied upon by Appellants in implementing their wage payment system. See Powell, 955 F.2d at 1214 (instructing that evidence is admissible only if relied upon by defendants). In any event, as a factual matter, the district court’s ruling was not the first in the nation. Rather, it was premised on prior legal precedent. 44 UNITED STATES V. KAHRE proving a defendant acted willfully, the government also has the burden of negating a defendant’s claim that because of a misunderstanding of the law, the defendant had a good faith belief that he was not violating the relevant provisions of the tax code. The district court’s ruling and corresponding instructions encompassed Appellants’ good faith defense. See Powell, 955 F.2d at 1214 (“In addition, the court may instruct the jury that the legal material admitted at trial is relevant only to the defendant’s state of mind and not to the requirements of the law, and may give other proper cautionary and limiting instructions as well.”).