COFFIN, Circuit Judge.
In this appeal we deal with the mental state required to be proven before one is convicted of violating certain Internal Revenue Code filing requirements. Specifically, we are asked to determine whether "wilfulness" means a subjective intent to disobey the tax laws or merely the absence of what a jury would consider an objectively reasonable ground for failure to comply.
Appellant, a veteran fireman in the town of Rockland, Massachusetts, was charged with wilfully failing to file tax returns for 1979, 1980, and 1981, in violation of 26 U.S.C. § 7203, and with wilfully filing false withholding exemption certificates for 1981 and 1982, in violation of 26 U.S.C. § 7205. Shortly before trial was scheduled to begin, counsel for appellant, who had yet to try his first case, sought unsuccessfully to withdraw from the case because of differences in defense strategy. A two-day jury trial commenced eight days later, counsel having unsuccessfully renewed his motion to withdraw. The government's case was presented through four witnesses. To prove wilfulness the government showed that appellant had filed income tax returns for twelve years, 1966 to 1977; that he then had failed to file returns for four successive years, notwithstanding the receipt of W-2 wage and tax statements from the town; and that an Internal Revenue Agent had explained that appellant's reasons for not filing had been authoritatively discredited and that he had an obligation to file. Appellant testified that he did not believe that his wages constituted income because they involved an exchange of time for money, with no gain for him; that, although he had read widely, searched the Internal Revenue Code, and found definitions of gross income, net income, taxable income, etc., he had found no definition of income, pure and simple; and that no I.R.S. agent had discussed his understanding with him or told him he was wrong.
From the outset appellant took the position that, if he "innocently in good faith sincerely believed in his actions", then he had a valid defense to the charges against him. Counsel for the government, in colloquy with the court, took issue with the suggestion that subjective sincerity on the part of a defendant was a sufficient basis for finding a lack of wilfulness.
At the end of the trial, defendant requested several instructions on wilfulness of which the following is fairly representative:
No citations of authority accompanied these requests.
The government's requests, in relevant part, were the following:
It will be observed that these two requests are contradictory. The former instructs the jury to decide whether a defendant who acted unreasonably did so in good faith; the latter forbids the jury from finding good faith where a defendant's belief was unreasonable.
At the conclusion of the evidence, at a bench conference before closing arguments, the following colloquy took place:
Subsequently, the court gave an instruction stressing that sincerity and good motive are not enough to constitute lack of wilfulness. "There has to be a mistake concerning the requirements of the law, a mistake that is objectively reasonable in order to say that particular conduct is not willful conduct." The court also said, "A failure to file is not willful if a person acts through negligence." At the bench, after the instructions had been given, counsel for appellant said, "I have no problems with your instructions right now." Not long
We have traced in detail the statements of the parties and the court regarding wilfulness because our task is to determine not only whether the court erred in its instructions but also whether it committed "plain" error. Where, as here, the record reveals what looks like defense counsel's endorsement or ratification of a charge, rather than his objection to it, plain error must be shown on appeal before the jury's verdict can be overturned. Fed.R.Crim.P. 52(b); United States v. Rosa, 705 F.2d 1375, 1380 (1st Cir.1983). We turn, therefore, to the historical development of this tax defense both to determine what is the correct standard and to glean how obvious that standard was, or should have been, to the district court at the time that it gave its instructions to the jury.
The logical starting place is the Supreme Court. Perhaps the fountainhead case, not cited by the government below or here, is United States v. Murdock, 290 U.S. 389, 396, 54 S.Ct. 223, 226, 78 L.Ed. 381 (1933), in which the Court said: "Congress did not intend that a person, by reason of a bona fide misunderstanding as to his liability for the tax, as to his duty to make a return, or as to the adequacy of the records he maintained, should become a criminal by his mere failure to measure up to the prescribed standard of conduct." In Sansone v. United States, 380 U.S. 343, 353, 85 S.Ct. 1004, 1011, 13 L.Ed.2d 882 (1965), the Court stated that criminal liability would attach if the defendant "knew that he should have reported more income than he did...." In United States v. Bishop, 412 U.S. 346, 93 S.Ct. 2008, 36 L.Ed.2d 941 (1973), the Court introduced the now familiar formulation of wilfulness — "a voluntary, intentional violation of a known legal duty", id. at 360, 93 S.Ct. at 2017, and added that, within the tax system "[d]egrees of negligence give rise" to nothing more than "civil penalties", id. at 361, 93 S.Ct. at 2017. Finally, in United States v. Pomponio, 429 U.S. 10, 97 S.Ct. 22, 50 L.Ed.2d 12 (1976), the Court dealt with a situation suggestive of that at bar. The taxpayers' defense was that the returns they had filed were not false because the taxpayers believed that certain payments to them were loans, not dividends, and that certain losses belonged to their partnership instead of to a corporation. The Court restated the Bishop formulation of wilfulness, "intentional violation of a known legal duty", id. at 12, 97 S.Ct. at 23, and held that the jury had been properly instructed that defendants should be found not guilty if they actually believed as they claimed, id. at 13, 97 S.Ct. at 24. We draw from all these cases the rather clear inference that "wilfulness" in criminal tax prosecutions is subjective.
When we turn to precedents in this circuit, we find several cases similarly suggesting that it is one's subjective state of mind that should be judged. In Gaunt v. United States, 184 F.2d 284, 291 & n. 4 (1st Cir.1950), cert. denied, 340 U.S. 917, 71 S.Ct. 350, 95 L.Ed. 662 (1951), we approved a jury instruction that wilfulness was not proven where defendant was negligent or even grossly negligent. In United States v. Couming, 445 F.2d 555, 557 (1st Cir.), cert. denied, 404 U.S. 949, 92 S.Ct. 291, 30 L.Ed.2d 266 (1971), a prosecution for knowing failure to possess a draft registration certificate, we described wilfulness as not necessarily requiring an "evil" motive but as applying to one who "deliberately refrained from complying" with the requirements of the law. And in United States v. Lachmann, 469 F.2d 1043, 1046 (1st Cir.1972), cert. denied, 411 U.S. 931, 93 S.Ct. 1897, 36 L.Ed.2d 390 (1973), we described the mental state of wilfulness as involving a "deliberate intent to disobey the filing requirement", id. at 1046, after noting that "we would reject the concept that in this criminal statute negligence or oversight is to be equated with willfulness", id. at 1045.
As for the state of the law in other circuits at the time of the trial below, our partial review indicates that, apart from the case principally invoked by the government to support its "objectively reasonable" request, United States v. Moore, 627
This survey leads us to conclude that the overwhelming weight of authority in the field of criminal prosecutions for failure to file tax returns and for tax evasion insists on a subjective standard for assessing wilfulness.
We acknowledge that the court in Moore relied upon a well-recognized principle when it stated that "mistake of law" is an "extremely limited" defense, 627 F.2d at 833 (citing principally a case involving the
This conclusion is implicit in the series of Supreme Court cases beginning with Murdock. That internal revenue reporting and filing requirements are an enclave apart is recognized. See, e.g., Morissette v. United States, 342 U.S. 246, 260 n. 16, 265 & n. 26, 72 S.Ct. 240, 248 n. 16, 250-51 & n. 26, 96 L.Ed. 288 (1952); United States v. Freed, 401 U.S. 601, 615 n. 6, 91 S.Ct. 1112, 1121 n. 6, 28 L.Ed.2d 356 (1971) (Brennan, J., concurring). Within this enclave the mistake of law defense has particular vitality, and the key is whether the defendant honestly held a mistaken belief as to what the law requires.
A recent student comment makes this point precisely in discussing a taxpayer's failure to report certain receipts:
More generally, Section 2.04(1) of the 1962 Proposed Official Draft of the Model Penal Code clearly sets forth the critical elements of the mistake of law defense.
The comment to this provision in Tentative Draft 4 explains why in prosecutions of the sort involved in this case the reasonableness of a mistake of law should not be a factor.
In accordance with this reasoning, we find that the mistake of law defense is available in this genre of criminal tax prosecutions and that the mistake of law analysis comports with the Murdock linking of wilfulness to a lack of "bona fide misunderstanding as to ... liability for the tax". We therefore conclude that the court's "objectively reasonable" instructions were erroneous.
The more difficult question is whether the instructions constituted "plain error". As we said in McMillen v. United States, 386 F.2d 29, 35 (1st Cir.1967), cert. denied, 390 U.S. 1031, 88 S.Ct. 1424, 20 L.Ed.2d 288 (1968):
We have concluded that we ought to award defendant a new trial under the "plain error" doctrine.
We begin by noting the error was critical in the context of this case. The whole trial focused upon the defendant's claim that he actually believed he was not legally obliged to pay taxes. The government, in summarizing the case for the jury, underscored the importance of the "reasonableness" instruction, stating,
As a result, the jury likely focused upon the question of whether they — as typical citizens — could have reasonably believed that wages did not constitute income rather than on the question of whether appellant actually believed that notion.
Notwithstanding this, we acknowledge that it could be argued that the district judge should not have been expected to recognize the error sua sponte. The government, after all, cited to the court the Seventh Circuit's case, United States v. Moore, which supports the "reasonableness" instruction, even though it did not begin to reflect the overall state of the law on wilfulness. See 2 E. Devitt and C. Blackmar, Federal Jury Practice and Instructions § 35.31 (3d ed. 1977). Nor was the court helped by the defense, which furnished no cases and seemed to concede the issue.
Whether or not, however, the court should have recognized the error, Fed.R.Crim.P. 52(b) provides that "defects affecting substantial rights may be noticed although they were not brought to the attention of the court." Cf. United States v. Atkinson, 297 U.S. 157, 160, 56 S.Ct. 391, 392, 80 L.Ed. 555 (1936) ("In exceptional circumstances, especially in criminal cases, appellate courts, in the public interest, may, of their own motion, notice errors to which no exception has been taken, if the errors are obvious, or if they otherwise seriously affect the fairness, integrity or public reputation of judicial proceedings.") (emphasis supplied). Since the erroneous instruction determined the jury's standard of judgment on the basic issue in the case, we are compelled to conclude that it affected defendant's substantial rights.
Even though the evidence against appellant was strong — twelve years of prior filings, receipt of W-2 forms during the years at issue, and alleged advice from an I.R.S. agent that appellant's views of the requirements were wrong — we cannot say that no properly instructed jury could have reasonably acquitted him. Any doubt that we may have as to whether he was prejudiced by this error, which, as we have noted, almost certainly induced the jury to consider their personal beliefs rather than to weigh the credibility of appellant's testimony with respect to his beliefs, must be resolved in his favor. Cf. United States v. Alston, 551 F.2d 315, 320-21 (D.C.Cir.1976) (minor ambiguity in burden of proof instruction held to be plain error where defendant's case rested solely upon his credibility). In short, we agree with the Fifth Circuit's holding in Mann v. United States, 319 F.2d at 409-10, that an incorrect instruction with respect to intent or wilfulness in a tax evasion prosecution constitutes a fundamental error going to the essence of the case and that an appellate court must take notice of such an error.
Accordingly, the judgment is vacated and the case remanded to the district
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