9.08 GOOD FAITH (Income Tax and Fraud Cases)

One of the issues in this case is whether defendant acted in good faith. Good faith is a complete defense to the charge of (insert charge) if it is inconsistent with (insert mental state required by statute, e.g., intent to defraud or willfully)¹ which is an essential element of the charge.

[(Insert further instruction defining good faith in terms of the particular statute and requisite mental state, incorporating the specific factors on which defendant relies, if appropriate.)]²

Evidence that defendant acted in good faith may be considered by you, together with all the other evidence, in determining whether or not [he] [she] acted (insert mental state required by statute, e.g., with intent to defraud or willfully).

Committee Comments

See Eleventh Circuit Special Instructions 13 and 14; United States v. Ammons, 464 F.2d 414, 417 (8th Cir.), cert. denied, 409 U.S. 988 (1972); United States v. Kouba, 822 F.2d 768, 771 (8th Cir. 1987); 2 Edward J. Devitt, et al., FEDERAL JURY PRACTICE AND INSTRUCTIONS: Criminal §§ 40.16, 56.26 (4th ed. 1990).

See also Introductory Comment, Section 9, and Committee Comments, Instruction 9.05, supra.

The same principles apply to the giving of a good faith instruction as apply to theory of defense instructions in general. United States v. Brake, 596 F.2d 337, 339 (8th Cir. 1979), holding:

There is no question that a defendant in a criminal case is entitled to have the jury know what he contends, and that ordinarily he is entitled to a "theory of defense" or a "position" instruction if he makes a timely request for such an instruction, if the request is supported by evidence, and if it sets out a correct declaration of law. United States v. Hill, 589 F.2d 1344 (8th Cir. 1979); United States v. Rabbitt, 583 F.2d 1014 (8th Cir. 1978); United States v. Nance, 502 F.2d 615 (8th Cir. 1974), cert. denied, 420 U.S. 926, 95 S. Ct. 1123, 43 L. Ed. 2d 396 (1975).

However, a defendant is not entitled to a particularly worded instruction setting out his position where the instructions actually given by the trial judge adequately and correctly cover the substance of the requested instruction. United States v. Brown, 540 F.2d 364, 380 (8th Cir. 1976). And, of course, the instructions of the trial court must be considered as a whole.

See also United States v. Cegelka, 853 F.2d 627, 628-29 (8th Cir. 1988); United States v. Jerde, 841 F.2d 818, 823 (8th Cir. 1988); United States v. Casperson, 773 F.2d 216, 223 (8th Cir. 1985).

Since a good faith instruction is essentially a converse of the intent to defraud instruction, adequate instructions on intent to defraud have been held sufficient to present the issue to the jury, especially where no good faith instruction was requested. See, e.g., United States v. Scherer, 653 F.2d 334, 338 (8th Cir.), cert. denied, 454 U.S. 1034 (1981). But see United States v. Goss, 650 F.2d 1336, 1344-45 (5th Cir. 1981) [reversible error to refuse a requested good faith instruction in mail fraud case; instruction requiring specific intent insufficient to direct jury's attention to good faith defense.]

The general good faith instruction for mail fraud cases approved in this circuit is found in United States v. Ammons, 464 F.2d at 417 and reads as follows:

Fraudulent intent is not presumed or assumed; it is personal and not imputed. One is chargeable with his own personal intent, not the intent of some other person. Bad faith is an essential element of fraudulent intent. Good faith constitutes a complete defense to one charged with an offense of which fraudulent intent is an essential element. One who acts with honest intention is not chargeable with fraudulent intent. Evidence which establishes only that a person made a mistake in judgement or an error in management, or was careless, does not establish fraudulent intent. In order to establish fraudulent intent on the part of a person, it must be established that such person knowingly and intentionally attempted to deceive another. One who knowingly and intentionally deceives another is chargeable with fraudulent intent notwithstanding the manner and form in which the deception was attempted.

See also Casperson, 773 F.2d at 223, holding: "The Ammons instruction they proffered has previously been approved by this court and is an acceptable statement of the applicable law." Casperson went on to hold that the failure to give any good faith instruction was reversible error.

A good faith instruction must make it clear to the jury that good faith would be an absolute defense to the crime. United States v. Nance, 502 F.2d 615, 620 (8th Cir. 1974), cert. denied, 420 U.S. 926 (1975). Both Ammons and Nance suggest but do not require that a good faith instruction incorporate the specific factors on which the appellant relied to show he acted in good faith. 464 F.2d at 417; 502 F.2d at 620. An example of such an instruction was approved in United States v. Kimmel, 777 F.2d 290, 292-93 n.l (5th Cir. 1985). However, Ammons makes clear that "[t]he jury need not be instructed on every inference that it might draw bearing on the issue of good faith." 464 F.2d at 417. Nance found a proposed instruction which was long and verbose and contained a detailed description of the purported evidence and inferences drawn therefrom by defense counsel did not meet a standard of adequacy. 502 F.2d at 619. A good faith instruction is not required where it is not supported by the evidence. United States v. Sherer, 653 F.2d at 337, [defendant doctor claimed to have actually treated patient, not that bills were the result of mistake or inadvertence.]

Good faith instructions in tax cases which have been found proper include United States v. Kouba, 822 F.2d at 771 and United States v. Jerde, 841 F.2d at 822. In both of those cases the court also defined "good faith" for the jury using or paraphrasing the definition from Black's Law Dictionary 623 (5th ed. 1979). Kouba, 822 F.2d at 771; Jerde, 841 F.2d at 822. See also 2 Edward J. Devitt, et al., FEDERAL JURY PRACTICE AND INSTRUCTIONS: Criminal § 56.26 (4th ed. 1990). The jury may also be instructed as to what is not included in a good faith defense. United States v. Miller, 634 F.2d 1134 (8th Cir. 1980), cert. denied, 451 U.S. 942 (1981). For an example of a good faith defense based on reliance on the Fifth Amendment in a tax case, see United States v. Reed, 670 F.2d 622, 624 (5th Cir.), cert. denied, 457 U.S. 1125 (1982).

It should be noted that "good faith" is only a defense where defendant's mental state is one of the essential elements of the offense.

Notes on Use

¹ See Committee Comments, Instructions 7.01, 702, supra, and appropriate essential elements instruction from Section 6, infra. "Mental state" as used in this instruction refers to the intent required by the statute.

² See United States v. Ammons, 464 F.2d 414, 417 (8th Cir.), cert. denied, 409 U.S. 988 (1972). Some examples of further definitions are as follows:

a. Willfulness - preparing a false return:

If a person in good faith believes that an income tax return as prepared by [him] [her], truthfully reports the taxable income and allowable deductions of the taxpayer under the internal revenue laws, that person cannot be guilty of willfully preparing or presenting, or causing to be prepared or presented, a false or fraudulent return.

See United States v. Kouba, 822 F.2d 768, 771 (8th Cir. 1987).

b. Willfulness - failure to file a return:

If a person in good faith believes that he is not required to file an income tax return, then that person cannot be guilty of willfully failing to file a return.

See United States v. Jerde, 841 F.2d 818, 822 (8th Cir. 1988). This may be followed with a further explanation:

In this connection, it is for you to decide whether the defendant acted in good faith -- that is, whether he sincerely misunderstood the requirements of the law -- or whether the defendant knew that he was required to file a return and did not do so. Mere disagreement with the law in and of itself does not constitute good faith misunderstanding of the requirements of the law, because it is the duty of all persons to obey the law whether or not they agree with it. Also, a person's belief that the tax laws violate his constitutional rights does not constitute a good faith misunderstanding of the requirements of the law. Furthermore, a person's disagreement with the Government's monetary system and policies does not constitute a good faith misunderstanding of the requirements of the law.

See United States v. Miller, 634 F.2d 1134, 1135 (8th Cir. 1980), cert. denied, 451 U.S. 942 (1981).

c. Intent to defraud:

One who expresses an opinion honestly held by him, or a belief honestly entertained by him, is not chargeable with fraudulent intent even though his opinion is erroneous or his belief is mistaken; and, similarly, evidence which establishes only that a person made a mistake in judgment or an error in management, or was careless, does not establish fraudulent intent.

On the other hand, an honest belief on the part of the Defendant that a particular business venture was sound and would ultimately succeed would not, in and of itself, constitute "good faith" as used in these instructions if, in carrying out that venture, the Defendant knowingly made false or fraudulent representations to others with the specific intent to deceive them.

See Eleventh Circuit Special Instruction 13; 2 Edward J. Devitt, et al., FEDERAL JURY PRACTICE AND INSTRUCTIONS: Criminal § 47.13 (4th ed. 1990). See also United States v. Ammons, 464 F.2d 414, 417 (8th Cir.), cert. denied, 409 U.S. 988 (1972); United States v. Casperson, 773 F.2d 216, 222-24 (8th Cir. 1985).

d. Reliance on advise of counsel:

Advice of counsel is not a defense to the crime. It is only a circumstance that may be considered in determining whether the defendant acted in good faith and lacked (insert mental state required by statute, e.g., intent to defraud or willfulness).

Defendant would not be acting (insert mental state required by statute, e.g., with intent to defraud or willfully) if, before taking any action with regard to the alleged offense, [he] [she] consulted in good faith an attorney whom [he] [she] considered competent, [and for the purpose of securing advice on the lawfulness of [his] [her] possible future conduct] made a full and accurate report to that attorney of all material facts of which [he] [she] had the means of knowledge, and then acted strictly in accordance with the advice given to [him] [her] by that attorney.

Whether the Defendant acted in good faith for the purpose of seeking advice concerning questions about which [he] [she] was in doubt, and whether [he] [she] made a full and complete report to that attorney, and whether [he] [she] acted strictly in accordance with the advice [he] [she] received, are all questions for you to determine.

Advice of counsel does not under all circumstances confer complete immunity on a defendant. No one can intentionally and knowingly violate the law and excuse [himself] [herself] from the consequences by claiming that [he] [she] followed advice of counsel.

See United States v. Poludniak, 657 F.2d 948, 958-59 (8th Cir. 1981), cert. denied, 455 U.S. 940 (1982). Eleventh Circuit Special Instruction 14. See also 2 Edward J. Devitt, et al., FEDERAL JURY PRACTICE AND INSTRUCTIONS: Criminal § 56.26 (4th ed. 1990).

To be entitled to the advice of counsel theory of defense, the defendant must have disclosed all relevant facts. United States v. Hecht, 705 F.2d 976 (8th Cir. 1983).