U.S. v. Harting, 86-2549

Citation879 F.2d 765
Decision Date11 July 1989
Docket NumberNo. 86-2549,86-2549
Parties-5195, 89-2 USTC P 9435 UNITED STATES of America, Plaintiff-Appellee, v. Matthias L. HARTING, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Glen Dawson, Asst. U.S. Atty. (Dee V. Benson, U.S. Atty., William Ryan, Asst. U.S. Atty., on the brief), Salt Lake City, Utah, for plaintiff-appellee.

Frances Smylie Brown, Asst. Federal Public Defender, (Michael G. Katz, Federal Public Defender, with her on the brief), Denver, Colo., for defendant-appellant.

Before McKAY, SETH and BALDOCK, Circuit Judges.

BALDOCK, Circuit Judge.

Defendant-appellant Matthias L. Harting was charged by information with failing to file federal income tax returns for the calendar years 1979 through 1981, in violation of 26 I.R.C. Sec. 7203. 1 Harting was convicted

by a jury on all three misdemeanor counts. Harting challenges the trial court's submission of and failure to submit certain jury instructions, as well as the trial court's manner of instructing the jury. Our jurisdiction to consider this appeal from a judgment of conviction arises under 28 U.S.C. Sec. 1291.

BACKGROUND

Harting had filed timely federal income tax returns, and had paid all income taxes due, for each year beginning in the late 1950s through the calendar year 1978. For each of those years, Harting also had signed W-4 forms permitting his employers to withhold wages for tax purposes. Around 1979, Harting's compliance with the federal income tax laws began to change. Harting testified that after reading certain tax-related articles and attending classes at an unaccredited "law school," the Freeman University in Las Vegas, Nevada, he concluded that compliance with the federal income tax laws was voluntary, rec. vol. IIIA at 27, that he did not believe he had a taxable income, and that he could not determine "what a tax liability was," id. at 40. Based on his study, according to Harting, he did not file income tax returns for the years 1979 through 1981, and during that period, he filed fourteen W-4 forms with employers stating that he was exempt from withholding. Harting stated at trial that he did not consider himself a tax protester, nor did he believe that the federal income tax laws were unconstitutional. Id.

Harting testified further that after reading the Supreme Court's decision in United States v. Sullivan, 274 U.S. 259, 47 S.Ct. 607, 71 L.Ed. 1037 (1927), he decided that he was required to file some kind of return. Rec. vol. IIIA at 28. In approximately June 1982, Harting sent to the Internal Revenue Service (IRS) "returns" for 1979-81, each blank of each Form 1040 inscribed with the words "object, self-incriminating." The IRS subsequently notified Harting by mail that his submissions would not be considered valid returns. The IRS also provided Harting with a blank Form 1040, copies of relevant statutes indicating his duty to file, and information regarding possible prosecution in the event of a failure to comply with that duty. Rec. vol. IIA at 49.

In October 1982, the IRS issued a summons to Harting, requesting that he appear in the IRS offices, bringing with him either completed income tax returns or the documents necessary to generate such returns for the years 1979-81. Rec. vol. IIIA at 76. Harting appeared at the requested time, but the meeting was terminated by the IRS agent when Harting attempted to tape record the meeting. 2 After some correspondence between Harting and the IRS which failed to resolve the situation, the criminal prosecution of Harting for failure to file income taxes ensued in October 1985.

Harting seeks reversal of his conviction on three grounds. First, he claims that the trial court erred by failing to submit to the jury a proposed instruction dealing specifically with Harting's defense that he in good faith misunderstood his duty to file. Second, Harting challenges the trial court's instruction to the jury regarding Harting's assertion of the privilege against self-incrimination in his 1982 submission of tax forms to the IRS. Finally, Harting claims that the trial court committed reversible error by making an extraneous comment favorable to the prosecution during its charge to the jury. We reverse.

I.

To obtain a conviction under 26 U.S.C. Sec. 7203, the government must prove that a defendant was 1) required to file a return 2) failed to do so, and 3) that the failure was willful. United States v. Dawes, 874 F.2d 746, 748 (10th Cir.1989). Only the issue of willfulness was disputed at trial. Harting requested two jury instructions regarding the willfulness element. The first stated that Harting would be entitled to acquittal should the jury find that he entertained a good-faith belief that he was not required to file income tax returns, and the second instruction defined the subjective standard by which to evaluate the term "good faith." 3 The trial court refused to submit either instruction to the jury. Rec. vol. IIB at 4, 7. Because the trial court subsequently modified an instruction, with Harting's approval, to reflect the subjective nature of intent, we review only the denial of the good-faith instruction. 4 Harting contends that this refusal improperly prejudiced his attempt to present his defense to the jury.

"As a general proposition a defendant is entitled to an instruction as to any recognized defense for which there exists evidence sufficient for a reasonable jury to find in his favor." Mathews v. United States, 485 U.S. 58, 108 S.Ct. 883, 887, 99 L.Ed.2d 54 (1988); see United States v. Hopkins, 744 F.2d 716, 718 (10th Cir.1984) (en banc). In addition, we have held that the trial court must instruct separately on the defense of good faith: "[I]nstructions on wilfulness, on aspects of intent, on untruth of representations or fraudulent statements are not sufficient for this purpose. 5 There must be a full and clear submission of the good faith defense as such." Hopkins, 744 F.2d at 718 (emphasis in original). As noted earlier, Harting's only defense was his asserted good-faith misunderstanding of his duty to file.

We have held that "[a] good faith misunderstanding of the duty to file a return can negate the willfulness element of a failure-to-file charge," and "[t]he misunderstanding need not have a reasonable basis to provide a defense." 6 United States v Hairston, 819 F.2d 971, 972 (10th Cir.1987). Nevertheless, the trial court refused Harting's tendered instructions to that effect, apparently confusing Harting's valid defense of good-faith misunderstanding of his duty to file with the invalid assertion of a good motive behind a failure to fulfill an understood duty. 7 See Hairston, 819 F.2d at 973 (neither disagreement with the tax laws or belief that they are unconstitutional, even if held in good faith, provides defense). 8 Given the refusal of a good-faith instruction supported by the law, we must reverse if the evidence is sufficient such that a reasonable jury could believe Harting's asserted defense that he misunderstood in good faith the tax laws and his duty to file an income tax return.

We hold that the evidence in this case is sufficient to allow a reasonable jury to conclude that Harting acted in good faith. The evidence at trial consisted basically of Harting's testimony that he did not believe he had a duty to file, that he was not a tax protester, and did not believe the tax laws to be unconstitutional; poised against the government's proof that he had filed tax returns for approximately the twenty previous years and that he did not file for the years in question despite earning sufficient gross income to trigger the duty to file. When a defendant posits the good faith defense in a willful failure to file prosecution, "[t]he critical inquiry for the jury [is] whether [the defendant] subjectively believed that he did not need to file under the law's requirements," and we have acknowledged the probative value of the defendant's testimony regarding that belief. Hairston, 819 F.2d at 973. Although both prongs of the government's proof provided evidence of willfulness, United States v. Bohrer, 807 F.2d 159, 161-62 (10th Cir.1986), such would not, as a matter of law, prevent a reasonable jury from believing Harting's testimony.

The instant situation is distinguishable from that found in United States v. Harrold, 796 F.2d 1275 (10th Cir.1986), cert. denied, 479 U.S. 1037, 107 S.Ct. 892, 93 L.Ed.2d 844 (1987). In Harrold, the defendant challenged the trial court's denial of his request to instruct the jury that a good-faith belief that he had paid all taxes owed would entitle him to acquittal on the charge of income tax evasion. While noting the Hopkins standard for evaluating the necessity of so instructing the jury, we did not apply it, but instead affirmed the trial court's denial as constituting harmless error:

The only evidence at trial of defendant's good-faith misunderstanding of the law consisted of his own statements. On the other hand, there was unchallenged evidence that defendant paid income taxes on his wages for twenty-seven years, that he was a sophisticated investor, and that he attended tax protester conventions at which he expressly discussed how to fabricate, for the purposes of a trial, evidence that he misunderstood the tax laws. Therefore this is not a case in which a defendant has simply presented minimal evidence supporting his theory.... Here the evidence at trial demonstrated that defendant acted in bad faith. Thus, even if a good-faith instruction had been given, we are confident the result of the trial would have been the same.

Id. at 1275.

Similar to the facts of Harrold, the evidence here of Harting's good-faith misunderstanding consisted basically of his own testimony, and he admitted that he had filed tax returns for approximately the twenty previous years. The government introduced no evidence, however, that Harting disagreed with the tax...

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