United States v. Michael Kayser

488 F.3d 1070 UNITED STATES of America, Plaintiff-Appellee, v. Michael KAYSER, Defendant-Appellant. No. 06-50178. United States Court of Appeals, Ninth Circuit. Argued and Submitted: December 5, 2006. Filed: May 31, 2007. David J. Zugman, Burcham & Zugman, APC, San Diego, CA, for the defendant-appellant. Carol C. Lam, United States Attorney; Bruce R. Castetter, George Aguilar, Assistant United States Attorneys, San Diego, CA, for the plaintiff-appellee. Appeal from the United States District Court for the Southern District of California; Jeffrey T. Miller, District Judge, Presiding. D.C. No. 05-CR-0288-JTM. Before: STEPHEN REINHARDT, ALEX KOZINSKI, and SANDRA S. IKUTA, Circuit Judges. Opinion by Judge IKUTA; Dissent by Judge KOZINSKI. IKUTA, Circuit Judge. 1 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 2 From November 1998 to May 2000, A2Z USA, Inc. ("A2Z") employed Kayser first as a…

Opinion by Judge IKUTA; Dissent by Judge KOZINSKI.

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 .

*1072 At trial, the government alleged that Kayser had improperly structured his…

dissenting.

The majority begins its analysis by dutifully reciting a well-established rule: “A defendant may negate the element of tax deficiency in a tax evasion case with evidence of unreported deductions.” Maj. op. at 1073 (citing United States v. Marabelles, 724 F.2d 1374, 1378-79 (9th Cir.1984); Elwert v. United States, 231 F.2d 928, 933 (9th Cir.1956)). But it then jumps *1078 the rails by removing the word “unreported” and allowing a defendant to escape a criminal tax conviction by re-characterizing reported deductions. Id. at 1075 . 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 not present evidence that could support such an instruction. For both these reasons, I respectfully dissent.

1. Kayser was charged with tax evasion for failing to report income on his 2000 individual return. His proposed instruction would have allowed the jury to apply the $49,026 in deductions, which he had reported on his corporate tax return, to his personal income. As the government argued at…