It can be crucial in successfully defending tax evasion and false subscribing charges to obtain a jury charge to the effect that the defendant-taxpayer relied in connection with a particular tax return or return line-item entry on the advice provided by a tax preparer. A recent Eleventh Circuit opinion emphasizes just how minimal a trial record is needed to justify such an instruction.

In United States v. Kottwitz, 2010 WL 3258299 (11th Cir., Aug. 19, 2010), the convictions of the defendants on various tax fraud charges were vacated because the trial court failed to provide the jury with their requested charge that they took certain tax positions in good faith reliance on advice provided to them by an accountant, even though the jury had been given a general instruction that a taxpayer’s good faith is a complete defense to the intent needed to prove tax fraud. The defendants, principals of a carpentry contractor, never testified at trial, but their theory of good faith reliance was developed through the cross-examination of their tax preparer, a government witness, and through their counsel’s opening and summation. The government argued that this was an insufficient basis on which to predicate a good faith reliance charge, and that the general good faith instruction was sufficient. The Eleventh Circuit disagreed.

In order to obtain a good faith reliance on expert instruction a defendant is required to show both that he fully disclosed all relevant facts to his tax preparer and relied in good faith on the resulting advice, although the court added in passing that the expert must be at least be “competent.” But the showing of these elements needed to trigger the instruction is quite minimal, since the defendant can point to any foundation in the record to secure the instruction, even if the evidence is weak, doubtful, unbelievable, or frivolous (court’s emphasis, citing earlier 11th and 5th Circuit decisions). Moreover, while this trial court held that Kottwitz had failed to carry his burden, the appeals court noted that it is for the jury, and not for the trial judge, to determine if the taxpayer fully disclosed all relevant facts or concealed information from the preparer. The reliance instruction is proper where the only support for it comes from the defendant’s own testimony or even where the defendant fails to testify, and is appropriate even where the accountant is a co-defendant. The more general charge regarding a good faith which negates the intent necessary to find a violation was not a sufficient substitute on these tax charges.