USA v. KAYSER
The Ninth Circuit Court of Appeals today released an opinion in USA v. KAYSER, No. 06-50178, a criminal appeal. The panel consisted of Stephen Reinhardt, Alex Kozinski, and Sandra S. Ikuta, Circuit Judges.
IKUTA, Circuit Judge: Michael Kayser appeals from his conviction for tax evasion in violation of 26 U.S.C. § 7201 for the year 2000. He alleges, among other things, that the district court erred in failing to instruct the jury in accordance with his theory of defense. We have jurisdiction under 28 U.S.C. § 1291 and we reverse and remand. BACKGROUND From November 1998 to May 2000, A2Z USA, Inc. (”A2Z”) employed Kayser first as a salesperson and later as a vice president for its Internet-based shopping mall. A2Z compensated Kayser as an independent contractor and paid him a commission by checks made out to his name. In July 1999, Kayser incorporated Aspen Ventures Inc. (”Aspen Ventures”) to receive A2Z income and take business deductions related to that income. After failing to file timely tax returns for 1998 through 2000, Kayser ultimately filed his delinquent individual and corporate tax returns for those years in August 2001. Kayser was subsequently indicted on two counts of attempted income tax evasion (for 1999 and 2000) in violation of 26 U.S.C. § 7201. . . .
KOZINSKI, Circuit Judge, dissenting:
The majority begins its analysis by dutifully reciting a wellestablished rule: “A defendant may negate the element of tax deficiency in a tax evasion case with evidence of unreported deductions.” Maj. op. at 6576 (citing United States v. Marabelles, 724 F.2d 1374, 1378-89 (9th Cir. 1984); Elwert v. United States, 231 F.2d 928, 933 (9th Cir. 1956)). But it then jumps the rails by removing the word “unreported” and allowing a defendant to escape a criminal tax conviction by recharacterizing reported deductions. Id. at 12. This new rule finds no support in our caselaw and conflicts with United States v. Miller, 545 F.2d 1204 (9th Cir. 1976), and United States v. Boulware (Boulware II), 470 F.3d 931 (9th Cir. 2006). Even if this new rule were permissible, defendant did have not revisited Escobar De Bright in light of Neder v. United States, 527 U.S. 1 (1999). Nor do we need to, because the district court’s failure to give Kayser’s proposed instruction prevented him from making a significant challenge to the deficiency element of the tax evasion count for the year 2000, and thus cannot be harmless beyond a reasonable doubt. See Chapman v. California, 386 U.S. 18 (1967). Kayser also argues that he was wrongfully prevented from introducing evidence to support his theory of defense and that the district court misapplied the Sentencing Guidelines in determining the total tax loss by refusing to reduce Kayser’s 2000 unreported income by the deductions he reported on Aspen Ventures’ 2000 return and carried back to 1999. Given our reversal and remand for a new trial, we do not reach these issues. Finally, Kayser asserts that his indictment should be dismissed because the grand jury was improperly instructed. However, as Kayser acknowledges, our precedent has squarely rejected his position and we therefore affirm the district court’s denial of Kayser’s motion to dismiss the indictment. See United States v. Navarro-Vargas, 408 F.3d 1184 (9th Cir. 2005) (en banc); United States v. Cortez-Rivera, 454 F.3d 1038 (9th Cir. 2006). . . .