Court Opinion

ID: 9495472
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:03:44.081674+00
Date Added: 2024-06-11T17:57:02.448465
License: Public Domain

MOORE, Circuit Judge,
dissenting.
I agree with the majority as to all issues except the jury instructions regarding the burden of proof and the determination at sentencing of the amount of loss attributable to Tarwater. Because the jury instructions erroneously shifted the burden of proof to the defendant and this error cannot be considered harmless, and because the district court did not make sufficient findings of fact with respect to the amount of loss, I respectfully dissent.
I. JURY INSTRUCTIONS
A.
Tarwater argues that the district court’s jury instructions erroneously shifted the government’s burden of proof, requiring Tarwater to prove affirmatively that he did not violate 26 U.S.C. § 7206(1). There are two elements essential to showing a violation of the statute: (1) signing a tax return under penalty of perjury; (2) in the knowledge that, “at the time of signing, the return was materially incorrect or in violation of existing tax laws.” United States v. Morris, 20 F.3d 1111, 1115 (11th Cir.1994); see also United States v. Bishop, 412 U.S. 346, 350, 93 S.Ct. 2008, 36 L.Ed.2d 941 (1973) (noting that the defendant also must willfully make and subscribe a tax return). “The prosecution bears the burden of proving all elements of the offense charged, and must persuade the factfinder beyond a reasonable doubt of the facts necessary to establish each of those elements.” Sullivan v. Louisiana, 508 U.S. 275, 277-78, 113 S.Ct. 2078, 124 L.Ed.2d 182 (1993) (quotation and citations omitted). Jury instructions relieving the prosecution of its obligation to prove each element of an offense violate a defendant’s due process rights. Carella v. California, 491 U.S. 263, 265, 109 S.Ct. 2419, 105 L.Ed.2d 218 (1989); Sandstrom v. Montana, 442 U.S. 510, 521-24, 99 S.Ct. 2450, 61 L.Ed.2d 39 (1979). Therefore, to describe correctly the government’s burden of proof, the instructions in this case would have to convey the prosecution’s obligation to prove beyond a reasonable doubt both that Tarwater signed a tax return under penalty of perjury and that he knew the return was materially incorrect or in violation of existing tax law at the time he signed it.
The district court’s jury instructions stated that the government would have to overcome the presumption of Tarwater’s innocence with proof beyond a reasonable doubt and further emphasized that the “burden stays on the government from the start to the finish.” Joint Appendix (“J.A.”) at 552. However, the instructions also explained that, “[w]hile the government has the burden to prove beyond a reasonable doubt that the defendant understated the amount of gross receipts or total income reported on his 1992 federal income tax return and the amount of his total income reported on his 1993 and 1994 *520federal income tax returns, the government is not required to prove the nonexistence of alleged payments by the defendant to or on behalf of Mr. Davis.” J.A. at 558. This instruction ignores the fact that, as a logical matter, the government could not prove beyond a reasonable doubt that Tarwater filed tax returns knowing they were materially incorrect without showing that Tarwater did not pass the payments in question through to Davis.
The instruction at issue had the effect of negating the government’s burden to prove the second element of § 7206(1). As the district court acknowledged in a jury instruction, income under the Internal Revenue Code includes “all increases in wealth, clearly realized, and over which a person has complete control. A gain constitutes taxable income when its recipient has such control over it that, as a practical matter, he derives readily recognizable economic value from it.” J.A. at 558. Tarwater contends, and the testimony of an IRS agent confirms, that: (1) the payments from Jefferson Memorial Hospital (“JMH”) were income reportable either to Tarwater or Davis, but not both; and (2) if Tarwater passed through to Davis the payments by JMH for Davis, those payments were not income to Tarwater. Thus, if the payments were passed through, Tarwater did not knowingly file materially incorrect or illegal tax returns. In a similar situation, where the characterization of an increase in wealth as income was disputed, we held that, “[i]f the money were truly a loan, [the defendant] would have been under no duty to report it as income, and he would not be guilty of the predicate offense of filing a false tax return.” United States v. Parrott, 148 F.3d 629, 634 (6th Cir.1998). Because the existence of Tar-water’s alleged payments to Davis was a fact necessary to establish whether Tarwa-ter knowingly submitted false returns for 1992, 1993, and 1994, the government was required to prove beyond a reasonable doubt that he did not pass through to Davis payments by JMH for Davis.
In other words, the government was required to prove beyond a reasonable doubt that the payments by JMH were income to Tarwater. If the payments by JMH were for Davis and were passed through Tarwa-ter to Davis, however, they were not income to Tarwater. The majority suggests that Tarwater’s payments to Davis are analogous to offsetting expenses, relying on cases stating that the government need not come forward with evidence negating all possible offsetting expenses and nontaxable gains to make a case that a taxpayer failed to report his gross income. In the instant case, however, Tarwater does not argue that the government should have a burden to produce this evidence. Rather, in claiming that the jury instruction shifted the government’s burden of proof, Tarwater rightly asserts that the government had a burden to show that the only alleged source of income in this case— payments from JMH — actually constituted income to Tarwater. By concluding that the government does not have this burden, the majority improperly extends the law of other circuits to suggest that the government is not only excused from producing evidence to negate all possible offsetting expenses or nontaxable gains, but that the government is further excused from proving beyond a reasonable doubt that a defendant received income that he knowingly failed to report. Therefore, the jury instruction at issue impermissibly shifted the burden of proof from the government to the taxpayer.
B.
It is well settled that jury instructions that relieve the prosecution of proving be*521yond a reasonable doubt every fact necessary to each element of the offense charged violate a defendant’s due process rights and therefore constitute constitutional error. See Sandstrom v. Montana, 442 U.S. 510, 520, 99 S.Ct. 2450, 61 L.Ed.2d 39 (1979) (relying on In re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970)). Because the jury instruction at issue negated the government’s burden of proving beyond a reasonable doubt a fact necessary to an element of the charged offense, the determination of whether Tarwater’s conviction should be vacated and the case remanded for a new trial should turn on “whether the error here is subject to harmless-error analysis and, if so, whether the error was harmless.” Neder v. United States, 527 U.S. 1, 8, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999).
Pursuant to Federal Rule of Criminal Procedure 52(a), “[a]ny error, defect, irregularity or variance which does not affect substantial rights shall be disregarded.” According to the Supreme Court, however, “a limited class of fundamental constitutional errors ... ‘defy analysis by “harmless error” standards’ ” because they include “ ‘defect[s] affecting the framework within which the trial proceeds, rather than simply an error in the trial process itself.’ ” Id. at 7, 8, 119 S.Ct. 1827 (quoting Arizona v. Fulminante, 499 U.S. 279, 111 S.Ct. 1246, 113 L.Ed.2d 302 (1991)). These errors are intrinsically harmful because they “ ‘infect the entire trial process,’ and ‘necessarily render a trial fundamentally unfair.’ ” Neder, 527 U.S. at 8, 119 S.Ct. 1827 (internal citations omitted).
The erroneous jury instruction at issue in this case should not be subject to harmless-error analysis. The Supreme Court has held that a jury instruction that mis-describes or omits an element of an offense is subject to harmless error review. See Neder, 527 U.S. at 9-10, 119 S.Ct. 1827. In Sullivan, though, the Court held that a jury instruction that “consists of a misdescription of the burden of proof, which vitiates all the jury’s findings” is a structural error, and, as such, it could not be subject to harmless-error analysis. Sullivan, 508 U.S. at 281, 113 S.Ct. 2078 (emphasis in the original). The instruction in Sullivan generally misdescribed the reasonable doubt standard, as opposed to misdescribing the burden of proof for just one element of the offense. However, inasmuch as the constitutionally erroneous jury instruction in this case involved the only element at issue in Tarwater’s trial— and one of only two elements of the offense itself — the misdescription of the burden of proof in this case has the same effect as the general misdescription of the burden of proof in Sullivan. I recognize that the Court in its subsequent decision in Neder limited Sullivan to jury-instruction errors that “vitiat[e] all the jury’s findings,” thereby exempting those erroneous instructions that just “prevent[ ] the jury from rendering a ‘complete verdict’ on every element of the offense.” Neder, 527 U.S. at 11, 119 S.Ct. 1827 (quoting Sullivan, 508 U.S. at 281, 113 S.Ct. 2078) (emphasis in the original). Nevertheless, because the existence of the pass-through payments to Davis was the essential fact to the only element at issue in this case, the erroneous jury instruction does vitiate all the jury’s findings and, therefore, we should not subject the instruction to harmless-error analysis.
Even if harmless error analysis were appropriate in this case, the erroneous instruction at issue clearly would not be harmless. The Supreme Court in Neder explained that, for a constitutional error to be harmless, it must appear “beyond a reasonable doubt that the error complained of did not contribute to the verdict obtained.” Neder, 527 U.S. at 15, 119 S.Ct. 1827 (quoting Chapman v. Califor*522nia, 386 U.S. 18, 24, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967)). Under harmless error review, “the government bears the burden of showing that the error had no effect on a defendants] substantial rights.” United States v. Stewart, 306 F.3d 295, 322 (6th Cir.2002) (citing United States v. Vonn, 535 U.S. 55, 122 S.Ct. 1043, 1048, 152 L.Ed.2d 90 (2002)). Had the jury found that Tarwater passed through to Davis the payments by JMH for Davis, the jury would have had to conclude that Tarwater did not knowingly under-report his income. Therefore, it seems impossible that a jury instruction stating that the government did not have to prove the nonexistence of such payments did not contribute to the verdict. See United States v. Alt, 996 F.2d 827, 829 (6th Cir.1993), cert. denied, 519 U.S. 872, 117 S.Ct. 188, 136 L.Ed.2d 126 (1996) (holding in a tax evasion case that a jury instruction shifting the burden of proof regarding a taxpayer’s knowledge of the tax code was not harmless error).
Because the jury instruction shifted the government’s burden of proof to Tarwater as to a fact going to the only element at issue in the case, the error is structural and therefore mandates that we vacate the conviction and remand to the district court.
II. SUFFICIENCY OF FACTUAL FINDINGS IN ASSESSING ATTRIBUTABLE LOSS
The district court failed to make sufficiently independent findings of fact in assessing the total amount of tax loss attributable to Tarwater at his sentencing hearing, as required by Federal Rule of Criminal Procedure 32(c)(1). Pursuant to Rule 32(c)(1), for each matter controverted at a sentencing hearing, “the court must make either a finding on the allegation or a determination that no finding is necessary because the controverted matter will not be taken into account in, or will not affect, sentencing.” Fed. R.Crim.P. 32(c)(1). This court has recognized that “[t]he primary purpose for this rule is to ensure that sentencing is based on reliable facts found by the court itself after deliberation, not on the delegation of the fact-finding process to the probation officer or the prosecution.” United States v. Parrott, 148 F.3d 629, 633 (6th Cir.1998); see United States v. Bennett, 291 F.3d 888, 899 (6th Cir.2002). This court requires “literal compliance” with Rule 32(c). See Bennett, 291 F.3d at 899 (citing United States v. Tackett, 113 F.3d 603, 613-14 (6th Cir.1997), cert. denied, 522 U.S. 1089, 118 S.Ct. 879, 139 L.Ed.2d 868 (1998)). Contrary to the majority’s conclusion that the district court satisfied the requirements of Rule 32(c)(1) with respect to the amount of loss, I believe that the district court did not make specific findings as to controverted facts.
At the sentencing hearing, the district court heard Tarwater’s specific factual objections to the amount of loss, but only announced its finding as to the total amount of loss. The sentencing judge did not resolve specific controverted facts in determining the amount of loss. The court announced only the following finding with respect to the amount of loss: “I’m prepared to rule on the issues that are before the court at this time; that is, concerning the amount, I have calculated the amount, which is now $218,936, multiplied by 28 %, will give a tax loss of $61,302.02.” J.A. at 680. Because the court neither discussed nor resolved any specific factual disputes, it did not comply with Rule 32(c)(1). See United States v. Monus, 128 F.3d 376, 396 (6th Cir.1997), cert. denied, 525 U.S. 823, 119 S.Ct. 67, 142 L.Ed.2d 53 (1998) (holding that a court failed to comply with Rule 32(c)(1) where it only “made an oral finding regarding the contested calculation of enhancement levels based on the value of loss resulting from defendant’s offense”).
*523We vacate a defendant’s sentence and remand for resentencing where a district court does not “explain how it calculated the amount of loss or respond to the defendant’s specific factual objections to the methods of calculation included in the PSI.” Id. at 397; see United States v. Osborne, 291 F.3d 908, 912 (6th Cir.2002); United States v. Orlando, 281 F.3d 586, 601 (6th Cir.2002); United States v. Conrado, 227 F.3d 528, 541 (6th Cir.2000). Even where resentencing may not change a defendant’s sentence, we have required a district court to “issue written findings of fact that respond to the defendant’s objections to the PSI” and “publish the resolution of contested factual matters that formed the basis of its calculation” upon remand. Monus, 128 F.3d at 397. Therefore, I would vacate Tarwater’s sentence and remand for resentencing so that the district court can resolve contested facts and explain its calculation of the amount of loss attributable to Tarwater under the Sentencing Guidelines.