State v. Eyre
| Decision Date | 22 February 2008 |
| Docket Number | No. 20050664.,20050664. |
| Citation | 2008 UT 16,179 P.3d 792 |
| Parties | STATE of Utah, Plaintiff and Appellee, v. Kevan Cliff EYRE, Defendant and Appellant. |
| Court | Utah Supreme Court |
Mark L. Shurtleff, Att'y Gen., Mark W. Baer, Jeffrey S. Gray, Asst. Att'ys Gen., Salt Lake City, for plaintiff.
Lori J. Seppi, Salt Lake City, for defendant.
INTRODUCTION
¶ 1 Defendant Kevan Eyre appeals his convictions on six counts of felony tax evasion. Eyre argues that the State presented insufficient evidence to support a conviction for tax evasion by failing to prove the existence of a tax deficiency, which Eyre asserts is a necessary element of the offense of tax evasion. Eyre also argues that his trial counsel provided ineffective assistance by making several missteps at trial. We hold that the existence of a tax deficiency is an element of Utah's felony tax evasion statute. We also find that Eyre's trial counsel's assistance was deficient and prejudicial to his defense. Because of this ineffective assistance, we reverse Eyre's convictions for felony tax evasion and remand for a new trial.
¶ 2 Eyre failed to file Utah state income tax returns for tax years 1991 through 1995. The Utah State Tax Commission (the "Commission") thereafter prepared and sent to him tax estimates for each of those years, and in 1997 Eyre ultimately filed returns for 1991, 1992, 1993, 1994, and 1995. But Eyre again failed to file tax returns for tax years 1997 through 2002, and the Commission initiated a criminal investigation. Eyre was ultimately charged with six counts of failing to render a proper tax return ("failure to file"), a third degree felony; six counts of intending to defeat the payment of a tax ("tax evasion"), a second degree felony; and one count of failing to obtain a license to act as a dealer or salesperson of motor vehicles, a misdemeanor.
¶ 3 At trial, the State presented evidence of Eyre's gross income for tax years 1997, 1998, 1999, 2000, 2001, and 2002. During this period, Eyre received income from various sources: residential rental properties; the sale of those rental properties; the sale of various vehicles, boats, pianos, and camper trailers; newspaper routes; and services he performed for a law office. For each of these years, the State showed that Eyre's income exceeded the minimum amount of gross income for which taxpayers were required to file a state income tax return. The State also presented evidence that some of Eyre's tenants paid rent in cash, for which they did not receive receipts, and that Eyre engaged in many other cash transactions, suggesting he received more income than the Commission was able to verify in its investigation. The State did not give Eyre credit for any exemptions, deductions, or business losses because, according to its expert witness, he was not entitled to them because he did not file tax returns.
¶ 4 At the close of the State's case in chief, Eyre moved to dismiss for insufficient evidence, arguing that the State offered "no direct evidence with regard to intent to evade the payment of tax" and that he owed no taxes for any of the years in question. The court denied the motion, stating that "there is sufficient evidence in each of the counts to send this matter to the jury."
¶ 5 Eyre's defense consisted primarily of the assertion that he believed his deductions had outweighed his income for each year, which would result in no tax liability, and that he therefore did not fulfill the intent element of tax evasion. Eyre's trial counsel called Eyre to testify and attempted to admit into evidence a document Eyre had prepared that summarized Eyre's finances and purported to show that he had no tax deficiency for each of the years in question. The State objected to the document's admission, arguing that it lacked foundation and was thereby inadmissible. On voir dire, Eyre testified that he had prepared the document from his own records over the previous three days. Calling the document "unreliable," the court sustained the State's objection. Having failed to admit the document into evidence, trial counsel referred Eyre to the summary sheet Eyre used to prepare the inadmissible document and asked him to compare it to the Commission's summary of his income. Eyre testified that he had more income than the Commission had identified but that he also had "lots" more expenses, resulting in a loss for each of the charged years. Eyre's trial counsel failed to produce any of the documents on which Eyre relied for his testimony and did not call an expert witness to analyze or testify concerning Eyre's tax status.
¶ 6 On cross-examination, the State questioned Eyre about a prior felony conviction for making a false statement on an application for an Idaho state fish and game license. Although Eyre had previously filed a motion in limine to exclude his prior conviction, which the court granted with respect to the State's case in chief, the trial court permitted the State to question Eyre regarding his previous conviction for purposes of impeachment. Eyre's counsel mentioned the circumstances surrounding the conviction in his opening statement and did not object to the State's cross-examination.
¶ 7 At the close of trial, the trial court instructed the jury as to the elements of failure to file and tax evasion. For tax evasion, the jury instructions read, in relevant part, as follows:
Before you can convict the defendant, Kevan Cliff Eyre, of the crime of Intent to Defeat the Payment of a Tax, . . . you must find from the evidence and beyond a reasonable doubt, each and every one of the following elements of that offense:
1. That the defendant intentionally did, or willfully attempted to;
2. Evade or defeat the Utah State income tax for year 1997 [and subsequent years charged]; or
3. The payment of the Utah State income tax for year 1997 [and subsequent years charged].
The trial court further instructed the jury that "[a] defendant engages in conduct intentionally, or with intent or willfully, with respect to the nature of the defendant's conduct, or to a result of the defendant's conduct, when it is his conscious objective or desire to engage in the conduct or cause the result." The trial court also instructed the jury that the State And the court instructed,
In order to show that the defendant "attempts to evade or defeat any tax," the State must prove beyond a reasonable doubt that the defendant intended to evade or defeat a tax due, and that the defendant also willfully did some affirmative act or willfully failed to do some act required of him by law in order to accomplish this intent to evade or defeat a tax.
¶ 8 Eyre's counsel did not object to any of the jury instructions. The jury subsequently convicted Eyre on all counts for failure to file and tax evasion and found him not guilty of failure to obtain a license.
¶ 9 Eyre retained new counsel for the sentencing phase of his trial and employed an expert to prepare his tax returns for tax years 1997 through 2002. The expert used a "conservative approach" in preparing Eyre's returns, which showed no deficiency for some of the charged years and a small deficiency for the other years. The trial court imposed a fine of $2500 on Eyre and sentenced him to concurrent prison terms of zero to five years on each conviction for failure to file and consecutive prison terms of one to fifteen years on each conviction for tax evasion. The court then suspended the prison terms and placed Eyre on probation. The State thereafter filed a motion to correct the sentence, which the court granted. The court imposed the correct fine of $15,000 on Eyre and suspended all but $2500 of it contingent upon Eyre's successful completion of probation. Eyre now challenges his convictions on appeal.
¶ 10 Eyre urges us to reverse his convictions for tax evasion on two general grounds. First, he argues that the State failed to present sufficient evidence to prove that he had a tax deficiency, which Eyre claims is a necessary element of tax evasion, for each of the tax years in question. Second, he argues that his counsel rendered ineffective assistance. In the analysis that follows, we first address whether a tax deficiency is an element of tax evasion; this is a question of law that we review for correctness.1 Because we agree with Eyre that a tax deficiency is an element of tax evasion, we then consider Eyre's claim that his counsel was ineffective in failing to object to the absence of a jury instruction identifying a tax deficiency as an element of tax evasion.2
¶ 11 Utah's felony tax evasion statute reads as follows: "Any person who intentionally or willfully attempts to evade or defeat any tax or the payment of a tax is, in addition to other penalties provided by law, guilty of a second degree felony."3 Although this statute does not use the words "tax deficiency," it is logical to conclude that, if no tax is owing, there is no tax to evade. Utah's tax laws "assess[ ] income tax only on adjusted gross income, which is defined as all nonexempt income less allowable deductions."4 Thus, a person does not owe income tax simply because he earned income. Rather, he owes income tax only if a tax deficiency exists after his exempt income and allowable deductions are subtracted from his gross income. To prevail on a felony tax evasion claim, the State must therefore show that a tax was, in fact, due and owing; merely establishing income does not suffice.
¶ 12 We have required the Commission to prove the existence of a deficiency when imposing a civil penalty on a taxpayer for "intent to evade a...
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