Willfulness

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7205- Fraudulent Withholding Exemption Certificate: Willfulness

 

 

[78-2 USTC ¶9534] United States of America , Appellee v. Jack C. Rifen, Appellant

(CA-8), U. S. Court of Appeals, 8th Circuit, No. 77-1991, 577 F2d 1111, 6/7/78 , Affirming unreported District Court decision

[Code Secs. 7203 and 7205--result unchanged under the '76 Tax Reform Act]

Crimes: Fraudulent and false statements: False returns: Filing of: Failure to file returns: Willfulness.--The taxpayer's conviction for filing false claims, failure to file returns and supplying false and fraudulent statements to his employer was upheld by the Court of Appeals. The taxpayer's contention that federal reserve notes were not authorized by the United States Constitution because they were not redeemable in specie was found to be entirely without merit. Willfulness in the context of a prosecution for filing false returns meant simply a voluntary intentional violation of a known legal duty. Finally, the evidence was sufficient to sustain the jury's verdict on the three counts of making a fraudulent claim against an agency of the United States .

Ronald S. Reed, United States Attorney, Kenneth Josephson, Assistant United States Attorney, Kansas City, Missouri 64106, for appellee. Jack C. Rifen, 5420 N. W. Houston Lake Drive , Kansas City , Missouri 64151 , pro se.

Before LAY, BRIGHT and ROSS, Circuit Judges.

PER CURIAM:

Jack C. Rifen appeals his conviction by jury verdict on an indictment charging him with three counts of making fraudulent claims against an agency of the United States, 18 U. S. C. §287, two counts of failing to file federal income tax returns, 26 U. S. C. §7203, and four counts of supplying a false and fraudulent statement to his employer, 26 U. S. C. §7025. We affirm the conviction on all counts.

The charges of supplying a false and fraudulent statement to his employer were based on Rifen's submission of four federal income tax withholding forms, W-4E, which certified that he had not incurred federal income tax liability in the prior year and did not expect to incur liability in the coming year. Two tax returns, which did not contain sufficient income information to determine tax liability, formed the basis of the failure to file charges. The charge of making fraudulent claims against the United States concerned three amended returns which Rifen filed, listing his income as zero and requesting a refund equal to the amount withheld from his wages for federal taxes during each year in question. Written explanations, including legal arguments and indications of protest, were attached to the documents underlying the charges.

The defense was that Rifen acted out of a good faith misinterpretation of the law and therefore lacked the requisite intent to commit any of the criminal offenses charged. Rifen testified as to his belief that federal reserve notes are not authorized by the United States Constitution because they are not redeemable in specie, and are therefore not subject to taxation. Proceeding pro se on appeal, Rifen argues that the evidence was insufficient to support conviction on any of the counts, because no evidence was presented in the definition of the symbol for the dollar (].

No such evidence was necessary. Congress has declared federal reserve notes legal tender, 31 U. S. C. §392, and federal reserve notes are taxable dollars. See United States v. Daly [73-2 USTC ¶9574], 481 F. 2d 28 (8th Cir.), cert. denied, 414 U. S. 1064 (1973); United States v. Schmitz, 542 F. 2d 782 (9th Cir. 1976), cert. denied, 429, 1105 (1977); United States v. Wangrund [76-1 USTC ¶9358], 533 F. 2d 495 (9th Cir.), cert. denied, 429 U. S. 818 (1976). The specific answer to Rifen's argument is that article I, section 10 of the United States Constitution prohibits the states from declaring legal tender anything other than gold or silver, but does not limit Congress' power to declare what shall be legal tender for all debts. The Legal Tender Case, 110 U. S. 421, 446 (1884); Chermack v. Bjornson, 302 Minn. 213, 223 N. W. 2d 659 (1974), cert. denied, 421 U. S. 912 (1975).

We must also reject Rifen's attorney's contention that evidence of willfulness was insufficient for conviction under 26 U. S. C. §§ 7203, 7205. The element of willfulness in offenses under the tax code does not require proof of any motive other than an intentional violation of a known legal duty. United States v. Pomponio [76-2 USTC ¶9695], 429 U. S. 10 (1976); United States v. Bishop [73-1 USTC ¶9459], 412 U. S. 346 (1973); United States v. Olson, No. 77-1725, slip op. at 8 (8th Cir. May 11, 1978 ); United States v. Ojala, 544 F. 2d 940 (8th Cir. 1976). The evidence of Rifen's prior tax paying history and of attempts by Rifen's employer and the Internal Revenue Service to explain legal requirements to Rifen is sufficient to sustain the jury's finding that Rifen was aware of his legal obligations under the tax laws and intentionally chose not to comply.

When viewed in the light most favorable to the government, the evidence is also sufficient to sustain the jury's verdict on the three counts of making a fraudulent claim against an agency of the United States . 26 U. S. C. §287. The jury heard Rifen's testimony and was in position to assess his credibility. They apparently did not believe that he acted out of a genuine misconception of the law, or found his belief in the legality of his conduct to be so unreasonable or impermissible that it did not constitute a justifiable excuse for his conduct. Cf. United States v. Johnson, 410 F. 2d 38 (8th Cir.), cert. denied, 396 U. S. 822 (1969) (18 U. S. C. §1001). The jury was permitted to infer an intent to defraud from a finding that Rifen had submitted a claim with guilty, actual knowledge that it was false. See United States v. Cooperative Grain & Supply Co., 476 F. 2d 47 (8th Cir. 1973) (31 U. S. C. §231); see also Kercher v. United States [69-1 USTC ¶9361], 409 F. 2d 814 (8th Cir. 1969); United States v. Miller [76-2 USTC ¶9809], 545 F. 2d 1204 (9th Cir. 1976), cert. denied, 430 U. S. 930 (1977); United States v. Lopez [70-1 USTC ¶9115], 420 F. 2d 313 (2d Cir. 1969).

The judgment is affirmed.

 

 

[81-1 USTC ¶9294] United States of America , Appellee v. Edgar L. Shields, Appellant

(CA-8), U. S. Court of Appeals, 8th Circuit, No. 80-1944, 642 F2d 230, 2/26/81

[Code Secs. 7203 and 7205]

Willful failure to file return: Furnishing false and fraudulent withholding information: Evidence of willfulness: Prior filing and tax paying history.--The taxpayer's conviction for willful failure to timely file a federal income tax return and for willfully furnishing his employer with false and fraudulent withholding information was affirmed. Through evidence of the taxpayer's prior filing and tax paying history the government sufficiently proved an intentional violation of a known legal duty.

Robert D. Kingsland, United States Attorney, Larry D. Hale, Assistant United States Attorney, St. Louis, Mo. 63101, for appellee. John C. Shapleigh, Lewis, Rice, Tucker, Allen & Chubb, 611 Olive, St. Louis , Mo. 63101 , for appellant.

Before LAY, Chief Judge, STEPHENSON and ARNOLD, Circuit Judges.

PER CURIAM:

Edgar L. Shields appeals his conviction on two counts, for (1) wilfull failure to timely file a 1977 federal income tax return in violation of 26 U. S. C. §7203, and (2) for wilfully furnishing his employer with false and fraudulent federal income tax withholding information in violation of 26 U. S. C. §7205. We affirm.

Shields, an aerospace engineer earned income of $16,416.75 during 1976 which resulted in a federal income tax liability of $2,204. During 1977 he earned $18,164.71 in income, including $1,900 during January and February, resulting in a $2,933 tax liability. He filed no federal income tax return for 1977 and on May 11, 1977 , he filed Form W-4E, Exemption from Federal Income Tax Withholding Certificate, certifying, under penalty of perjury, that he incurred no federal tax liability in 1976 and anticipated none in 1977. Previously, defendant filed amended federal income tax returns for the years 1968-75, inclusive, showing no income for those years. In a letter attached to his 1975 return, Shields stated that after long study he has learned that nowhere in the Internal Revenue Code is the term "dollars" or the symbol "' defined, the only definition in any statute dollars in terms of "lawful money," such dollars in terms of "lawful money," such as 4121/2 grams of silver, paper money since 1968 is not payable on demand in "lawful money," and "new coins" are no longer made of "lawful money." Shields concluded that he had received no "dollars" as wages and, thus, had earned no "dollars" in income. The Internal Revenue Service mailed two letters to Shields, both dated September 17, 1976 , in response to his 1973 and 1974 amended returns informing him that his conclusion was not acceptable. Again, in a letter dated June 15, 1978 , the IRS informed Shields that his position was erroneous.

Congress has declared federal reserve notes to be legal tender, 31 U. S. C. §392, and federal reserve notes are taxable dollars, United States v. Rifen [78-2 USTC ¶9534], 577 F. 2d 1111, 1112 (8th Cir. 1978); United States v. Daley [73-2 USTC ¶9574], 481 F. 2d 28, 30 (8th Cir. 1973). Shields argues, however, that he acted on a good faith belief as to the definition of "dollars" and that the government failed to prove that he "wilfully" violated Sections 7203 and 7205. Wilfulness under the IRC only requires proof of an intentional violation of a known legal duty. United States v. Pomponio [76-2 USTC ¶9695], 429 U. S. 10, 12-13 (1976); United States v. Francisco [80-1 USTC ¶9196], 614 F. 2d 617 (8th Cir. 1980). Evidence of Shields' prior filing and tax paying history, and IRS attempts to explain the legal requirements to him are sufficient to sustain the jury's finding that Shields was aware of his legal obligations imposed by the tax laws and intentionally chose not to comply with them. See United States v. Francisco [80-1 USTC ¶9196], 614 F. 2d 617, 618 (8th Cir. 1980); United States v. Rifen [78-2 USTC ¶9534], 577 F. 2d 1111, 1113 (8th Cir. 1978).

Shields also challenges the exclusion of evidence by the district court. Upon review of the record, we find no abuse of discretion and no merit to this claim. We also find the other issues presented to this court to be frivolous.

Judgment affirmed.

 

 

 

 

 

[79-2 USTC ¶9688] United States of America , Plaintiff-Appellee v. Russell Charles Hudler, Defendant-Appellant

(CA-10), U. S. Court of Appeals, 10th Circuit, No. 78-1639, 605 F2d 488, 11/5/79 , Affirming an unreported District Court decision

[Code Sec. 7205]

Crimes: Fraud and false statements: Excess withholding exemptions: Jury instructions: Admission of evidence.--The conviction of a taxpayer for willfully filing false withholding exemption certificates was affirmed where the taxpayer supplied W-4 forms to two employers on which he claimed 99 exemptions. Jury instructions given by the trial court properly defined willful as specific intent to violate the law and also properly informed the jury that the taxpayer could be acquitted if he presented a good faith defense. The trial court did not err when it excluded the testimony of the taxpayer's expert witness.

Joseph F. Dolan, United States Attorney, Richard S. Vermeire, Assistant United States Attorney, Denver, Colo. 80209, James A. Bruton, Gilbert E. Andrews, Robert E. Lindsay, Department of Justice, Washington, D. C. 20530, for plaintiff-appellee. Stanley L. Drexler, Michael J. Abramovitz, Chester J. Stern, Drexler & Walt, 950 Steel St., Denver, Colo. 80209, for defendant-appellant.

Before DOYLE, BREITENSTEIN and LOGAN, Circuit Judges.

BREITENSTEIN, Circuit Judge:

After a jury trial, defendant-appellant Hudler was found guilty of violation 26 U. S. C. §7205 by willfully supplying false information to two employers. On Count I he was sentenced to one year imprisonment and on Count II placed on probation for two years. He appeals and claims errors in the instructions and the admission of evidence. We affirm.

Section 7205, 26 U. S. C., imposes criminal penalties on any person who is required to supply information to his employer under 26 U. S. C. §3402, and "willfully" supplies "false or fraudulent" information. Defendant received wages for work as an elevator repair man and was required to furnish the information. The questions are whether he acted willfully and supplied false or fraudulent information.

Count I charged that defendant furnished to his employer, U. S. Elevator Company, an Internal Revenue Form W-4 on which he claimed 99 withholding exemptions. Count II was a similar charge relating to another employer, Dover Elevator Company. Defendant admits that he furnished the forms and did not have 99 exemptions. He said that he claimed them because he understood "99" to be a computer method of symbolizing tax exempt status and would result in zero withholding.

Defendant also asserted belief that he was exempt under 26 U. S. C. §3401(a)(9) which excludes, from wages, remuneration received by an ordained minister in the exercise of his ministry and by a member of a religious order in the performance of duties required by that order.

Defendant testified that he was a minister of a church known as the Universal Sanctuary of the Association of Jesus Christ of the United States of America , the Order of Almighty God. He said that this church was a member of a larger association called Independent American Constitutional Assembly and headed by Paul Streicher who had authority over member churches. Defendant conducted religious services in his home.

Defendant conveyed all of his property to the church and took a vow of poverty. He continued his elevator repair work. His wage checks were deposited in his bank account and checked out by him or his wife. Streicher reviewed and approved all checks. Defendant's superiors told him how to stop the withholding of taxes and furnished him with IRS publications. Defendant told representatives of his employers that "99" was a code used by his group to show that they did not believe in paying taxes, and was a computer symbol for exemption.

Defendant claims no First Amendment violation. On this appeal, he does not argue that he was actually exempt under §3401(a)(9) but emphasizes his belief in such exemption. Defendant chose to supply the W-4 form to his employers. He may not with impunity willfully use the form to furnish false or fraudulent information. See Bryson v. United States , 396 U. S. 64, 72. His claimed belief is important only in considering whether he acted willfully.

In his attach on the instructions, defendant says that they focus improperly on the number of exemptions claimed and do not present adequately his defense of belief in tax exemption. A defendant is entitled to instructions presenting his theory of the case. United States v. Von Roeder, 10 Cir., 435 F. 2d 1004, 1010, cert. denied 403 U. S. 934. The exact language requested by the defendant need not be followed. United States v. Westbo, 10 Cir., 576 F. 2d 285, 289. The instructions taken as a whole must give an accurate statement of the applicable law. United States v. Afflerbach [77-1 USTC ¶9127], 10 Cir., 547 F. 2d 522, 524, cert. denied 429 U. S. 1098.

Section 7205 proscribes the willful furnishing of a false or fraudulent statement. The court defined willfulness in terms approved by United States v. Bishop [73-1 USTC ¶9459], 412 U. S. 346, 360, and United States v. Pomponio [76-2 USTC ¶9695], 429 U. S. 10, 12. The court instructed:

"An act is willfully done if done voluntarily and intentionally and with the specific intent to do something which the actor knows the law forbids. Mere negligence, even gross negligence, is not sufficient to constitute willfulness under the criminal law. An act intended in good faith to conform to the law is not willful." (Emphasis supplied.)

After stating the elements of the crime, including willfulness, the court told the jury that, to establish willfulness, it must be proved:

"that the defendant's conduct in supplying false or fraudulent information to his employer was done willfully with the specific intent to violate what he knew his legal duty to be." (Emphasis supplied.)

The instructions on willfulness were adequate. They require specific intent to violate the law and recognize a good faith defense.

The court defined properly "false" and "fraudulent" and then said:

"* * * the government must prove that the defendant supplied the false or fraudulent information in his Form W-4, Employee Withholding Allowance Certificate, to his employers with the specific intent to interfere with the withholding and collection of his federal taxes in the manner prescribed by law." (Emphasis supplied.)

* * *

"In considering whether the defendant furnished false or fraudulent information to his employer, you should consider the defendant's entire communication both spoken and written, not merely the Form W-4."

Defendant offered, and the court rejected, instructions that the information furnished was false only if it resulted in an incorrect withholding and fraudulent only if the defendant intended to deceive. The instructions were derived from United States v. Snider [74-2 USTC ¶9620], 4 Cir. 502 F. 2d 645, 655. The Eighth Circuit in United States v. Hinderman, 8 Cir., 528 F. 2d 100, 102, disapproved Snider and held that §7205 does not require that a statement be "false in the sense of deceptive." We agree with the Eighth Circuit. The criterion is not whether the employer and the government were, or could have been, deceived. The crime is the willful furnishing of false or fraudulent information.

The instructions required specific intent and permitted consideration of both the W-4 forms and defendant's statements to his employers that "99" was a symbol to indicate tax exemption. Admittedly, defendant was not entitled to 99 exemptions. He used that figure to attain zero withholding.

Defendant relies on his belief in exemption on religious grounds, his use of "99" as a symbol, and his understanding of IRS publications. These subjective factors are for jury consideration along with all evidence presented. The number of exemptions claimed is another factor. See United States v. Smith [73-2 USTC ¶9648], 10 Cir., 484 F. 2d 8, 10, cert. denied 415 U. S. 978, a case relating to the falsity of a W-4 form; see also United States v. Wellendorf [78-2 USTC ¶9510], 5 Cir., 574 F. 2d 1289, 1290, United States v. Stephen [78-1 USTC ¶9362], 5 Cir., 569 F. 2d 860, 861, and United States v. Arlt, 5 Cir., 567 F. 2d 1295, 1298, cert. denied 436 U. S. 911, all cases relating to a claim of "99" exemptions in a W-4 form.

The instructions given permitted the jury to consider every defense offered by defendant. They were fair, adequate, clear, and understandable with no undue emphasis on any phase of the case. They permitted acquittal if the jury believed the defendant. Credibility is for the jury, and it determined the issue against the defendant.

Defendant complains of the court's exclusion of testimony of expert witness Sorenson relating to the use of "99" in computer programs to indicate tax exempt status. No showing is made that either the employers or the government knew of, or recognized, such practice. The qualifications of the witness to testify on the subject were doubtful. The court did not abuse its discretion in rejecting the testimony. Mustang Fuel Corp. v. Youngstown Sheet & Tube Co., 10 Cir., 516 F. 2d 33, 37.

After the defendant's wife testified and the evidence closed, defendant offered her testimony on the retention of her separately owned property. He argues that the testimony would support his claim of sincerely held religious beliefs. The offer came too late and, at the most, was cumulative. The offer was properly rejected.

Affirmed.

 

 

[86-2 USTC ¶9778] United States of America , Appellee v. Robert W. Flitcraft and Rebecca A. Flitcraft, Appellants

(CA-5), U.S. Court of Appeals, 5th Circuit, 86-2158, Summary Calendar, 10/24/86 , 803 F2d 184, Reversing and remanding an unreported District Court decision

[Code Secs. 7203 and 7205 ]

Juries, instructions to: Criminal penalties: Withholding exemption certificates, fraudulently made.--The district court committed plain error in instructing the jury that an unreasonable, but good-faith, misunderstanding of the income tax law was no defense to the charge of failing to file tax returns and filing false withholding exemption certificates. Since "willfulness" in the context of a criminal tax case has been defined as the "intentional violation of a known legal duty," there was little doubt that the instructions given in the instant case were erroneous. Although the taxpayers did not object to these instructions in the trial court, the court of appeals reversed the trial court because it found that the instructions constituted plain error "affecting substantial rights." The taxpayers' intent to disobey the law was the crucial issue. The trial court's instruction that the taxpayers could not have acted in good faith if they disobeyed "settled law" deprived the taxpayers of their only defense and amounted to an impermissible directed verdict for the government.

Bob Wortham, United States Attorney, J. Michael Bradford, Paul E. Naman, Assistant United States Attorneys, Beaumont , Tex. 77704 , for appellee. John S. Newberry, 5600 N. Antioch Rd. , Gladstone , Mo. 64118 , for appellants.

Before THOMAS M. REAVLEY, SAM D. JOHNSON, and W. EUGENE DAVIS, Circuit Judges.

OPINION

JOHNSON, Circuit Judge:

Robert W. Flitcraft and his wife Rebecca appeal their convictions for failing to file tax returns and filing false withholding exemption certificates under 26 U.S.C. §§7203 and 7205 . On appeal, they raise two issues: (1) whether the district court abused its discretion by excluding cases and other documents that Flitcraft claimed to have relied on in concluding that he was not required to file an income tax return; and (2) whether the district court committed plain error in instructing the jury that an unreasonable but good-faith misunderstanding of the income tax law was no defense to the charge. We find no error as to issue (1), but do find plain error as to issue (2), and therefore reverse and remand for a new trial.

I. FACTS AND PROCEDURAL HISTORY

The Flitcrafts' present troubles began when Rebecca Flitcraft served on a federal jury in a criminal case and provided the lone acquittal vote that caused a mistrial. Federal investigators looking into charges of juror tampering discovered that the Flitcrafts had not filed income tax returns for 1981 and 1982, and that they had filed withholding forms in 1982 claiming exemption from tax. Indictments followed under 26 U.S.C. §7203 (willful failure to file returns) and §7205 (willful filing of a false withholding exemption certificate).

At trial, the Flitcrafts admitted that their income was high enough to make them liable for tax and that they had in fact signed the false withholding forms and failed to file returns. They contested only the Government's contention that these acts were done willfully. Mrs. Flitcraft stated that she had trusted her husband when he told her that he had researched the question and that they owed no tax. Mr. Flitcraft testifed that he had read cases and articles that convinced him that his wages were not income, merely an even exchange of money for time. The trial judge, a United States magistrate, refused to allow Flitcraft to introduce the legal materials on which he claimed to have relied, but did allow him to testify about them orally. The Government also introduced evidence that Mr. Flitcraft had belonged to a tax protest group.

The jury found the Flitcrafts guilty on all counts. Robert Flitcraft was sentenced to four years in prison and five years of probation; Rebecca was sentenced to one year's imprisonment and five years' probation. Both were ordered to pay restitution and file annual tax returns. The district court affirmed the judgment. 18 U.S.C. §3402 .

II. EXCLUSION OF DOCUMENTS

The Flitcrafts first contend that the district court erred by excluding from evidence documents relied on by the Flitcrafts in their belief that they were not subject to federal income tax. Robert Flitcraft testified that he believed that filing a federal income tax return was voluntary. He sought to introduce case law and documents, which he claimed were the basis for his beliefs. The Government's objection to this evidence was sustained but Robert Flitcraft was allowed to testify about the existence and contents of the documents. The Flitcrafts now argue that the jury would have been more likely to credit the sincerity of the Flitcrafts' belief that they were not subject to filing a return if it had seen the documents.

The Federal Rules of Evidence provide that evidence, though relevant, "may be excluded if its probative value is substantially outweighed by the danger of . . . confusion of the issues, or misleading the jury, or by consideration of undue delay, waste of time, or needless presentation of cumulative evidence." Fed. R. Evid. 403. A district court's ruling under Rule 403 will not be disturbed except for an abuse of discretion. United States v. Burton , 737 F.2d 439, 443 (5th Cir. 1984).

In the present case the introduction of the cases and documents relied on by Flitcraft would have been cumulative because Flitcraft testified to the documents he relied on and their contents. The introduction of the documents themselves would have had little further probative value. In addition, the documents presented a danger of confusing the jury by suggesting that the law is unsettled and that it should resolve such doubtful questions of law. See, e.g., Cooley v. United States [74-2 USTC ¶9718 ], 501 F.2d 1249, 1253, (9th Cir. 1974), cert. denied, 419 U.S. 1123, 95 S.Ct. 809, 42 L.Ed.2d 824 (1975).

III. JURY INSTRUCTIONS ON INTENT

The Flitcrafts were found guilty of violations of sections 7203 and 7205 . Both statutes define specific intent offenses and require a showing of "willfulness" on the part of the offender.

In a preliminary instruction to the jury, the magistrate stated:

The defendants are entitled to raise the defense that they were acting in good faith and that their actions were proper, but their beliefs must be objectively reasonable and if they act contrary to settled law, the beliefs are not considered to be objectively reasonable.

Record Vol. 5 at 293. In his closing charge to the jury the magistrate gave a customary definition of "willfulness," i.e., "means, 'voluntarily, purposefully, deliberately, and intentional,' " but then stated:

The belief that wages are not income, even if earnestly held, does not constitute a misunderstanding of the requirements of the law and is not a defense.

Rec. Vol. 5 at 447. The defense failed to object to either of these instructions.

The Supreme Court has defined willfulness, in the context of a criminal tax case, as the "intentional violation of a known legal duty." United States v. Pomponio [76-2 USTC ¶9695 ], 429 U.S. 10, 12, 97 S.Ct. 22, 23, 50 L.Ed.2d 12 (1976), quoting United States v. Bishop [73-1 USTC ¶9459 ], 412 U.S. 346, 360, 93 S.Ct. 2008, 2017, 36 L.Ed.2d 941 (1973). Where the statute, as in the instant case, criminalizes only "willful" violations, a bona fide misunderstanding is a valid defense. United States v. Murdock [3 USTC ¶1194 ], 290 U.S. 389, 396, 54 S.Ct. 223, 226, 78 L.Ed. 381 (1933). This Court has followed the Supreme Court in allowing a good faith defense under these and related statutes. United States v. Burton [84-2 USTC ¶9689 ], 737 F.2d 439, 441-42 (5th Cir. 1984); United States v. Reed [82-1 USTC ¶9312 ], 670 F.2d 622, 624-25 (5th Cir.), cert. denied, 457 U.S. 1125, 102 S.Ct. 2945, 73 L.Ed.2d 1344 (1982); United States v. Pry [80-2 USTC ¶9680 ], 625 F.2d 689, 691-92 (5th Cir. 1980), cert. denied, 450 U.S. 925, 101 S.Ct. 1379, 67 L.Ed.2d 355 (1981); Mann v. United States [63-2 USTC ¶9563 ], 319 F.2d 404, 409-10 (5th Cir. 1963), cert. denied, 375 U.S. 986, 84 S.Ct. 520, 11 L.Ed.2d 474 (1964). All of the other circuits to consider the question have reached the same conclusion. See, e.g., United States v. Aitken [85-1 USTC ¶9209 ], 755 F.2d 188, 192-93 (1st Cir. 1985); United States v. Kraeger [83-2 USTC ¶9453 ], 711 F.2d 6, 7 (2d Cir. 1983); Yarborough v. United States [56-1 USTC ¶9295 ], 230 F.2d 56, 61 (4th Cir.), cert. denied, 351 U.S. 969, 76 S.Ct. 1034, 100 L.Ed. 1487 (1956); Battjes v. United States [49-1 USTC ¶9149 ], 172 F.2d 1 (6th Cir. 1949); Cooley, 501 F.2d at 1254 (9th Cir. 1974); United States v. Phillips, 775 F.2d 262, 263-64 (10th Cir. 1985). In sum, there is little doubt that the instructions given in the instant case were erroneous.

However, since the Flitcrafts did not object to these instructions in the trial court, we cannot reverse unless we find that the instructions constituted plain error "affecting substantial rights." Fed. R. Crim. P. 52(b); United States v. Atkinson, 297 U.S. 157, 160, 56 S.Ct. 391, 392, 80 L.Ed. 555 (1936); United States v. Gammage, 790 F.2d 431, 434 (5th Cir. 1986). In Mann, this Court found, in a case presenting similar facts, that an instruction holding out an objective rather than a subjective standard did constitute plain error. 319 F.2d at 409-10. The Mann Court noted that intent was central to the case, and declared that the defective instruction was not cured by the trial court's other, correct instructions. Id. at 410. The First Circuit, in another tax case, found a jury instruction setting an "objectively reasonable" standard to be plain error. Aitken, 755 F.2d at 194.

In the instant case, the Flitcrafts' intent to disobey the law was the crucial issue. The magistrate's instruction that the defendants could not have acted in good faith if they disobeyed "settled law" deprived the Flitcrafts of their only defense and amounted to an impermissible directed verdict for the Government. Burton , 737 F.2d at 441.

The Government contends that the Flitcrafts waived this point of error by failing to raise it on appeal to the district judge. The district court did not address this particular point of error, but, since the record does not include the briefs reviewed by the district judge, it cannot be determined whether the error was raised in that forum. In any event, this Court on direct review may notice plain error on its own motion. See Williams v. United States , 208 F.2d 447, 450 (5th Cir.), cert. denied, 347 U.S. 928 (1954); United States v. Powe, 591 F.2d 833, 847 n.49 (D.C. Cir. 1978).

IV. CONCLUSION

Because the trial court's instructions deprived the Flitcrafts of their good-faith mistake of law defense, their conviction must be REVERSED and the case REMANDED for a new trial.

REVERSED AND REMANDED