U.S. v. Farber, 79-1815

• Decision Date: 25 August 1980
• Docket Number: No. 79-1815,79-1815
• Citation: 630 F.2d 569
• Parties: 80-2 USTC P 9580, 6 Fed. R. Evid. Serv. 320 UNITED STATES of America, Appellee, v. Michael O. FARBER, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 569

630 F.2d 569

80-2 USTC P 9580, 6 Fed. R. Evid. Serv. 320

UNITED STATES of America, Appellee, v. Michael O. FARBER, Appellant.

No. 79-1815.

United States Court of Appeals Eighth Circuit.

Submitted May 19, 1980.

Decided July 10, 1980.

Order Denying Petition for Rehearing En Banc Aug. 25, 1980.

Rehearing Denied Aug. 25, 1980.

Mark W. Bennett, Allen, Babich & Bennett, Des Moines, Iowa, for appellant; Michael O. Farber, Spencer, Iowa, on brief pro se.

Amanda M. Dorr, Asst. U. S. Atty., Des Moines, Iowa, for appellee; Roxanne Barton Conlin, U. S. Atty., Des Moines, Iowa, on brief.

Before HENLEY and McMILLIAN, Circuit Judges, and ROY, District Judge. ^*

HENLEY, Circuit Judge.

Michael O. Farber appeals from the judgment and sentence of the district court ¹ convicting him of willful failure to file an income tax return for tax year 1974, in violation of 26 U.S.C. § 7203. Appellant was sentenced to one year imprisonment with provision for release after service of one-third of this term. We affirm.

During 1974 Farber was employed as a salesman for the IMC Mint Corporation (IMC) of Salt Lake City, Utah. His employment with this corporation began in spring of 1973 and terminated when the organization was placed in receivership on June 21, 1974. According to uncontested evidence at trial, Farber received a total of $24,060.07 in commission paychecks from IMC in 1974. However, due to the confused state of the corporation's records, he apparently did not receive a Form 1099 from either IMC or the receiver indicating his total commissions for 1974.

Appellant submitted a Form 1040 return for 1974, but allegedly because he lacked a Form 1099 from which to ascertain his income, he answered key entries with assertion of the fifth amendment. ²

On appeal, both appellant pro se and retained counsel have submitted briefs. Our affirmance is based on careful review of each.

Farber contends first that the district court abused its discretion in admitting into evidence voluminous tax documents which could fairly be characterized as tax protester materials for years subsequent to 1974.

It is settled that evidence of other crimes or acts is admissible under Fed.R.Evid. 404(b) to show intent, plan, or absence of mistake, so long as four additional prerequisites are met, i. e., (1) a material issue has been raised; (2) the proffered evidence is relevant to that issue; (3) the evidence of other crimes is clear and convincing; and (4) the evidence relates to wrongdoing similar in kind and reasonably close in time to the charge at trial. United States v. Frederickson, 601 F.2d 1358, 1365 (8th Cir.), cert. denied, 444 U.S. 934, 100 S.Ct. 281, 62 L.Ed.2d 193 (1979) (and cases cited).

In the present case, the contested evidence was offered to show Farber's intent and willfulness in failing to file for tax year 1974. The evidence was clearly admissible under the first three prerequisites described above, and we cannot agree with appellant's contention that the materials fail to meet the fourth prerequisite in that they were dissimilar in kind and far removed in time from the crime charged. Although one of the documents (Form 1040 for 1975) was accepted as a return by the IRS, it was nevertheless similar to Farber's 1974 return in containing expressions of Farber's studied dissatisfaction with the income tax system. All of the contested documents were prepared and filed within three and one-half years of the return date for 1974. We have held that subsequent tax paying conduct is relevant to the issue of intent or willfulness in a prior year. United States v. Luttrell, 612 F.2d 396 (8th Cir. 1980); United States v. Bowman, 602 F.2d 160 (8th Cir. 1979).

Appellant next alleges that his failure to file was not willful in that he offered to refile for tax year 1974 if the government granted him immunity from prosecution. We know of no relevant authority for the proposition that a taxpayer's failure to file is not willful when he asserts a willingness to refile contingent upon a grant of immunity.

The remaining and closer issues on appeal involve the trial court's jury instructions, which we consider under the plain error rule, Fed.R.Crim.P. 52(b), since appellant failed at trial to comply with the procedural mandates of Fed.R.Crim.P. 30 for objection to the court's instructions.

Appellant contends first that he relied in good faith on the advice of counsel and that the jury should have been instructed on this defense. Farber testified at trial that prior to filing his 1974 return, he consulted attorney William Drexler, whom he had heard speak at a tax protest seminar. Allegedly, it was Mr. Drexler who advised appellant to handle the problem of unascertainable income by filing a 259-page return.

At least one court has recognized in a tax evasion context that reliance on counsel is a defense to prosecution and that a defendant is entitled to an instruction on this defense. Bursten v. United States, 395 F.2d 976, 981-82 (5th Cir. 1968); accord, United States v. Mitchell, 495 F.2d 285, 288 (4th Cir. 1974) (prosecution under 26 U.S.C. § 7206 for false tax return). On the other hand, the Fifth Circuit has explained the limited scope of its ruling in Bursten by noting that a reliance defense is available where the defendant relied on "competent tax counsel " (emphasis in Fifth Circuit opinion) and that the defense may not be available in every case. United States v. Anderson, 577 F.2d 258, 260 (5th Cir. 1978), citing Bursten v. United States, supra.

Here, we are not convinced that appellant attempted to obtain competent legal advice. We note that Farber first became acquainted with Drexler at a tax protest seminar. According to his testimony, an unidentified person sitting next to him in the audience referred to Drexler as an attorney, and Farber thereafter assumed without further inquiry that Drexler was in fact licensed to practice law. Counsel at oral argument informed us that Drexler was disbarred prior to 1974. Nevertheless, when appellant encountered difficulty with his 1974 return, he decided to telephone Drexler in California rather than seek local legal counsel. It is apparent that appellant sought out Drexler because he agreed with Drexler's antitax sentiments, not because he sought competent legal advice. In these circumstances, we decline to find plain error in the trial court's failure to instruct the jury on a reliance defense.

Farber's final and somewhat troublesome contention is that the trial court failed in its instructions to recognize his strongest defense, i. e., that he was unable to ascertain his income, that he consequently feared perjuring ³ himself, and that he claimed the fifth amendment on his Form 1040 in good faith. As appellant reminds us, a defendant cannot properly be convicted for an erroneous claim of fifth amendment privilege asserted in good faith, Garner v. United States, 424 U.S. 648, 663 and 663 n.18, 96 S.Ct. 1178, 1187, 47 L.Ed.2d 370 (1976); United States v. Schiff, 612 F.2d 73, 78 n.6 (2d Cir. 1979); United States v. Edelson 604 F.2d 232, 234-36 (3d Cir. 1979); United States v. Johnson, 577 F.2d 1304, 1310-11 (5th Cir. 1978); Cooley v. United States, 501 F.2d 1249, 1253 n.4 (9th Cir. 1974), cert. denied, 419 U.S. 1123, 95 S.Ct. 809, 42 L.Ed.2d 824 (1975), insofar as an assertion of this constitutional privilege may negate the element of willfulness required for conviction under 26 U.S.C. § 7203. ⁴ United States v. Edelson, supra, 604 F.2d at 235-36.

In addressing Farber's contention, we note at the outset that the allegedly objectionable jury instructions set out correct statements of the law. The court instructed that disagreement with the law is not a defense to prosecution under 26 U.S.C. § 7203, United States v. Pohlman, 522 F.2d 974, 976 (8th Cir. 1975) (en banc ), cert. denied, 423 U.S. 1049, 96 S.Ct. 776, 46 L.Ed.2d 638 (1976), and that a good faith belief in the unconstitutionality of the tax laws is not a defense. ⁵ Hayward v. Day, 619 F.2d 716, 717 (8th Cir. 1980); United States v. Ware, 608 F.2d 400, 405 (10th Cir. 1979).

The court further instructed that a finding of willful failure to file was required for conviction, defining "willful" in language identical to that suggested in this court's en banc opinion in United States v. Pohlman, as a "voluntary, intentional violation of a known legal duty" (emphasis added). United States v. Pohlman, supra, 522 F.2d at 977, cited with approval in United States v. Pomponio, 429 U.S. 10, 12-13, 97 S.Ct. 22, 23-24, 50 L.Ed.2d 12 (1976). Implicitly, this instruction permitted conviction only if the jury believed that Farber knew of his duty to report income despite the difficulty he had encountered in ascertaining income figures. The jury apparently and with reason did not credit Farber's purported fear of perjury after hearing his cross-examination testimony that he did not attempt to straighten out his checkbook, he did not attempt to obtain records of his bank deposits, he did not attach an affidavit to his Form 1040 explaining his problem, and he did not comply with the IRS's suggestion that he pay half the estimated tax due.

We note also that the court's instructions expressly recognized appellant's fifth amendment argument. The jury was correctly informed that "under the fifth amendment . . . a person has a right to refuse to answer a question if his truthful answer to the question would tend to expose him to criminal prosecution." United States v. Johnson, supra, 577 F.2d at 1310-1311 (5th Cir. 1978); United States v. Karsky, supra, 610 F.2d at 550 and 550 n.5 (8th Cir. 1979).

Appellant nevertheless contends that the benefit of this instruction was diluted by the further instruction that the fifth amendment privilege "does not permit a person to completely refuse to disclose on his income tax return any information relating to his income, and filing a 1040 form with a fifth amendment objection to income questions...