Petition for Writ of Certiorari — Simkanin v. United States (No. 05-948)

public official) for services performed by an

employee for his employer ....

*n* *

(d) Employer.

For purposes of this chapter, the term

“employer” means the person for whom an

individual performs or performed any service, of

whatever nature, as the employee of such person,

except that --

(1) if the person for whom the individual

performs or performed the services does

not have control of the payment of the

wages for such services, the term

“employer” (except for purposes of

subsection (a)) means the person having

control of the payment of such wages ....

§ 3402. Income collected at source.

(a) Requirement of withholding.

(1) In general. Except as otherwise

provided in this section, every employer

making payment of wages shall deduct and

withhold upon such wages a tax

determined in accordance with tables or

computational procedures prescribed by

the Secretary.

* 4+ + *

26 U.S.C. §§ 3401-3402.

Chapter 75 of the Internal Revenue Code (“Crimes,

Other Offenses and Forfeitures”) provides, in part:

§ 7202. Willful failure to collect or pay over tax

Any person required under this title to collect,

account for, and pay over any tax imposed by

this title who willfully fails to collect or truthfully

account for and pay over such tax shall, in

be

addition to other penalties provided by law; be

guilty of a felony and, upon conviction thereof,

shall be fined ..., or imprisoned not more than 5

years, or both, together with the costs of

prosecution.

26 U.S.C. § 7202.

As used in § 7202 and related statutes, the term

“person” is defined as follows:

§ 7343. Definition of the term “person”

The term “person” as used in this chapter

includes an officer or employee or a corporation,

or a member or employee of a partnership, who

as such officer, employee, or member is under a

duty to perform the act in respect of which the

violation occurs.

26 U.S.C. § 7343.

STATEMENT OF THE CASE

Following an initial mistrial due to a hung jury, peti-

tioner was convicted at a retrial of willful failure to file

personal income tax returns for four years, of willfully

failing to withhold and pay over employment taxes on

employees of a business he owned and controlled, and of

making false claims against the United States by seeking

refunds of past taxes his business had paid. His efforts at

the retrial to present a defense of good faith belief in the

legality of his actions were severely hampered. The court

of appeals affirmed both the judgments of conviction and

the resulting upward departure sentence, which expressly

doubled the recommended guideline range based on peti-

tioner’s political statements, associations and beliefs.

a. Procedural History

A grand jury sitting in the Northern District of Texas

returned an indictment in June 2003 charging petitioner

Simkanin with 12 counts of willful failure to collect,

account for and pay over employment taxes imposed under

Subtitle C of the Internal Revenue Code, in violation of 26

U.S.C. § 7202, and 14 counts of false claims against the

United States by filing various amended IRS Forms 941 and

940-EZ, in violation of 18 U.S.C. § 287. An initial trial in

November 2003, at which the court instructed on “good

faith” as explained by this Court in Cheek v. United States,

498 U.S. 192 (1991), ended in a hung jury.

On December 17, 2003, a second superseding indict-

ment added four counts of willful failure to file personal

income tax returns for the years 1998 through 2001, in

violation of 26 U.S.C. § 7203. The remaining counts

reiterated the twelve under § 7202 of failure to withhold

taxes from the employees of Arrow Custom Plastics, Inc.,

on a quarterly basis, from March 2000 through December

2002, and 15 counts under 18 U.S.C. § 287 of filing false

claims in January 2000 for refunds of amounts previously

withheld and paid over by Arrow. CAS RE 3.

The second trial was held in early January 2004. In its

instructions for the retrial, the court advised the jury that

Arrow Custom Plastics had a legal duty in 2000-2002 to

collect, by withholding from the wages of its employees,

the employee’s share of social security taxes, Medicare

taxes, and federal income taxes, and to account for those

taxes and pay over the withheld amounts to the United

States. CAS RE 10, at 252. At the same time, it instructed

the jury to determine whether Arrow was an employer that

paid wages. Id. 254. The court did not charge on good

faith. Id. 259-60. During deliberations, the jury requested

clarification with respect to the issue of willfulness, CAS RE

12, at 2-5, and on whether Arrow was an employer. Id. 9-

10. On the latter occasion, Judge McBryde expressly

directed the jury, over objection, that Arrow was an

employer obligated to withhold. Id. 11-14.

The jury eventually hung on counts 1 and 2 (willful

failure to file and pay over employment taxes in March and

June 2000) but found petitioner guilty on counts 3 through

31 of the second superseding indictment.

On April 30, 2004, Judge McBryde sentenced peti-

tioner Simkanin to serve a total of seven years’ imprison-

ment, based on a substantial upward departure from the

U.S. Sentencing Guideline term. CAS RE 14, at 77-80.

The court also ordered petitioner to pay $302,076.33 to

the IRS as restitution. Id. 80-81.

Following the entry of judgment, petitioner appealed

to the Fifth Circuit. The panel held that the trial court had

not improperly answered a question from the deliberating

jury by instructing that the court had found true a fact that

was for the jury to decide. The court of appeals concluded

there was no reasonable likelihood that the jury would

understand the trial judge’s instruction to mean what it said

in that regard. Appx. A19, 420 F.3d at 408. Alternatively,

the court found the instruction, if erroneous, to be

harmless beyond a reasonable doubt. Appx. A20, 420 F.3d

at 408. The court below further concluded that it was

unnecessary for the trial court to instruct on “good faith”

under Cheek, because a correct instruction had been

delivered defining “willfulness.”. Appx. A22-27, 420 F.3d

at 410-12. Finally, the court of appeals found no abuse of

discretion in the imposition of a sentence substantially

above the Guidelines range, even though that sentence was

expressly predicated on petitioner’s political beliefs and

associations. Appx. A38-43, 420 F.3d at 417-19. The

court en banc refused to rehear the case. Appx. B.

This petition follows. Petitioner Simkanin has been

incarcerated since his arrest on June 20, 2003. He is pres-

ently serving his sentence in the Federal Correctional

Institution at Texarkana, Texas.

b. Statement of Facts

Petitioner Richard Simkanin owned Simkanin, Inc.,

d/b/a Arrow Custom Plastics; until 1997, he was also

Arrow’s President. At that time, he made his sister-in-law

president, although he continued to exercise authority over

the company. In December 1999, petitioner decided that

Arrow would not withhold taxes from its employees’

wages. Arrow made quarterly filings concerning with-

holding from employees’ pay through the end of 1999, but

none from March 2000 through September 2003.

In January 2000, petitioner submitted 15 claims on

behalf of Arrow Custom Plastics for refund of employment

taxes paid over from 1997-1999. The IRS concluded that

the claims “had no merit.” A government witness testified

that petitioner had “a library of material” pertaining to

withholding, and that in the witness’s opinion petitioner

thought his position was actually a correct understanding of

the law, and that the defendant was not “just trying to get

vut of paying taxes.”

Petitioner engaged in extensive correspondence with

the IRS regarding the status of his workers. The IRS

witness testified that the workers were, in “our opinion,”

employees. Inquiry into the basis for the witness’s legal

conclusion was precluded by the trial judge as either

beyond the scope of direct or because the definition of an

employee under the IRC was not to be developed.

Arrow’s former accountant testified that he prepared

and filed corporate income tax returns beginning in 1994.

He also prepared and filed individual returns for petitioner

and his wife in 1993, 1994, and 1995. He filed no returns

-10-

for 1996 and 1997 for them, because petitioner said he had

no taxable income in those years. Petitioner said he was

relying on information that supported his position, giving

his accountant copies of those documents.

The accountant’s employer, a CPA, gave a legal

opinion that petitioner, “as the owner of Arrow Custom

Plastics,” was the responsible party to collect taxes on

Arrow’s employees’ taxable income. He said that in March

2000 he discussed Arrow’s failure to withhold and remit

employment taxes with petitioner. Simkanin expressed the

opinion that the Internal Revenue Code did not apply to

him, basing that view on his own studies.

The IRS case agent testified that based upon the

amounts of gross income that petitioner stipulated for

1998 thrugh 2001, he was legally required to file individual

income tax returns for each of those years.

Petitioner took the stand in his own defense. He

attempted to tell the jury about his research into the tax

law, including particular Supreme Court cases on which he

said he relied. He also testified that he relied on advice

from an accountant with whom he talked in 1997 or 1998

after hearing her speak as a guest on a radio talk show.

Explaining his exclusion from evidence of exhibits

upon which petitioner testified he had relied in reaching his

conclusions about tax liability, Judge McBryde stated he

had “made some mistakes” during the first trial that it was

“going to try not to make them again.” Petitioner testified

that the Internal Revenue Code is some 7000 pages in

length; one reason it is so lengthy, he said, is that “it names

a lot of industry and activity that is taxable.” If Arrow

Custom Plastics were engaged in any of those industries,

petitioner testified, he would pay the income and/or

employment taxes required.' Petitioner also testified that

after consulting the applicable Treasury Regulations, he

concluded that “the employees at Arrow Plastics” did not

fit the definition of “employee” for withholding purposes.

The district court prohibited petitioner from “using or

making reference to the text of the Internal Revenue Code”

to back up these statements.

The defense called several witnesses, including a

former IRS agent and a California attorney. Based on

conversations with petitioner during the pertinent time

frame, these witnesses agreed that petitioner had specific

statutory grounds for his opinions about his tax obligations.

Robert Schulz, founder of the We the People Founda- .

tion for Constitutional Education, also testified that he

spoke with petitioner several times between July and

November 1999, directed him to the Foundation’s website,

and advised him that he had a right under the Petition

Clause of the First Amendment to ask questions of the

government and to expect answers. Schulz testified he had

advised petitioner that the Foundation’s research supported

the conclusion that “there is no law that requires most

Americans to file and pay an income tax, or most

companies to withhold an income tax from the paychecks

of the men and women working for them.” Petitioner’s

name and likeness had been used in a full-page USA Today

ad, sponsored by We the People, proclaiming his opinions

and conclusions regarding the income tax.

' Had the prosecutor cross-examined petitioner on his

underlying factual assertions, it would have supported the

Cheek defense by showing that petitioner’s position was

based, at least in part, on mistaken beliefs about both the

length and content of the Code. Allowing this testimony to

stand unchallenged led to jury confusion, as discussed below.

as.

—

c. Statement of Lower Court Jurisdiction Under Rule

14.1(g) (ii) The United States District Court for the

Northern District of Texas had subject matter jurisdiction

of this case under 18 U.S.C. § 3231. The court of appeals

had jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C.

§ 3742(a).

REASONS FOR GRANTING THE WRIT

1. This Court should either overrule its 1999 decision in

Neder v. United States, or else distinguish it and reaffirm

the 1983 plurality decision in Johnson v. Connecticut that

prejudice is presumed from an instruction which takes an

unstipulated factual question away from the jury.

The court below upheld petitioner’s convictions for

failure to withhold income and employment taxes and for

filing “false” refund claims for such taxes, previously paid.

It was “a fact necessary to constitute the crime” in each of

those counts, if not an element of each offense,” that peti-

tioner’s company, Arrow-Plastics, had a duty under the

Internal Revenue Code to withhold such taxes (and that

petitioner was someone who could be held criminally

responsible for any failure of Arrow to do so). Yet the trial

court instructed, in response to a question during delibera-

tions about whether the jury needed to peruse “those 7,000

[pages]” to determine whether Arrow had to withhold:

The Court has made the legal determination that

within the meaning of Title 26, United States

Code, Section 7202, during the years 1997,

* See Apprendi v. New Jersey, 530 U.S. 466, 477 (2000),

quoting In re Winship, 397 U.S. 358, 364 (1970).

-} 3-

1998, 1999, 2000, 2001, and 2002, Arrow

Custom Plastics, through its responsible officials,

had a legal duty to collect by withholding from

the wages of its employees, the employees’ share

of social security taxes, Medicare taxes, and

federal income taxes, and to account for those

taxes and pay the withheld amounts to the

United States of America. You are to follow that

legal instruction without being concerned

whether there are certain employers who are not

required to collect and withhold taxes from the

wages of their employees.

Of course, you will bear in mind in your delib- -

erations all other instructions the Court has given

you concerning the law applicable to this case.

R.E. 12, at 14.7 Defense counsel objected to this response

on the ground, inter alia, that “it amounts to an instructed

verdict of guilty by instructing them on that point[,] since

that is the disputed issue and the basis for his defense.”

The defense objections were overruled. Shortly thereafter,

the jury returned verdicts of guilty on counts 3 through 31,

and reported they were hung as to counts 1 and 2. Several

interrelated questions warranting this Court’s , view are

implicated.

The challenged instruction directed a verdict as to the

first part of an essential element the government had to

prove; f.e., as stated in the court’s charge, “First: That

Arrow Custom Plastics was an employer that paid wages to

its employees.” The instruction unequivocally told the jury

that Arrow Custom Plastics was, as a matter of fact, an

“employer,” for only “employers” have a duty to with ’:old

3 Some of this language had been included in the trial court’s

initial instructions, without objection from the defense.

-14-

from the wages of an employee. See 26 U.S.C. §§ 3111(a),

(b), 3301, 3401(a)(1).4 The jury then had nothing to

decide but whether Arrow’s employees were paid wages.°

The Fifth Circuit opinion pointed out that the trial court’s

instructions also twice required the jury to make a deter-

mination whether Arrow paid wages, and that the jury had

been advised to remember the rest of the instructions.

Thus, the court reasoned, “there was not a reasonable like-

lihood that the jury applied the instruction as if it were a

directed verdict on that element of the offense.” Appx.

A19, 420 F.3d at 408. Yet as the court be.ow conceded,

“This reading of the court’s response” is “plausible in a

literal sense.” Appx. A17; 420 F.3d at 407. That rationale

is not consistent with this Court’s controlling decisions.

Surely, there is at least “‘a reasonable likelihood that

the jury has applied the challenged instruction in a way’

that” is unconstitutional, that is, as they were told to. See

Estelle v. McGuire, 502 U.S. 62, 72 (1991), quoting Boyde

uv. California, 494 U.S. 370, 380 (1990). An appellate

court is therefore bound to assume that the jury so undei-

stood it, rather than the opposite. See also Victor v.

Nebraska, 511 U.S. 1, 6 (1994); Francis v. Franklin, 471

U.S. 307, 322 (1985). After all, a “jury is presumed to

follow its instructions,” Weeks v. Angelone, 528 U.S. 225,

234 (2000), not to set them aside as contrary to some other

principle. “A reviewing court has no way of-knowing

which of the two irreconcilable instructions the jurors

applied in reaching their verdict.” Franklin, id.

* These provisions are reproduced in excerpted form in the

Statutes Involved ante, and in full in Appendix C.

> By statutory definition, one becomes an “employer” only by

having “employees” working for him. See 26 U.S.C.

§§ 3401 (c)-(d).

tS.

Invoking the maxim that the jury instructions must be

considered as a whole, see Appx. A17, 420 F.3d at 407,

does not avoid the error here. “Language that merely

contradicts and does not explain ... will not suffice to

absolve the infirmity.” Franklin, 471 U.S. at 322. This is

particularly so where the erroneous language was repeated

in response to a jury question, and the error was reinforced

with new, mistaken wording. Bollenbach v. United States,

326 U.S. 607, 612-13 (1946). The trial court may have

intended by its supplemental instruction to explain the law

of withholding to the jury, and to remind the jury that

ascertaining the law was for the court not the jury to

resolve, while applying the law to the facts, after finding

those facts, was for the jury. The import of its words, on

_ the other hand, was instead to tell the jury that Arrow’s

relationship to its workers during the years charged in the

indictment was in fact that of “employer” and “employee”

within the meaning of the federal tax laws.

The court below also deviated from this Court’s prece-

dent in ruling that the fundamental error in this case was,

in any event, harmless. In petitioner’s case, the defendant

testified (as best he could, given all the restrictions Judge

McBryde imposed) that after diligent study he did not

believe (or at least had not believed, during the time

periods charged in the indictment) that Arrow Custom

Plastics was a “employer” under § 3402. It was up to a

properly instructed jury, then, to decide, beyond a reason-

able doubt, inter alia, (a) whether Arrow was in fact an

“employer” under the tax law, and, if it was, (b) whether

Simkanin actually knew this during the time in question

and did not sincerely profess otherwise. Yet the trial judge

told the jury he had made this determination himself

“within the meaning of Title 26, United States Code,

Section 7202,” the criminal statute under which the jury

14.

knew petitioner was charged (in other words, not simply

under the tax-imposing statute, id. § 3402), and that

Arrow’s status as “employer” obtained “during the years

1997, 1998, 1999, 2000, 2001, and 2002,” which of

course were the charged years.® It is uncontested that the

trial court has no authority to make any such determina-

tion, regardless of the nature of the element or the state of

the evidence. United States v. Gaudin, 515 U.S. 506

(1995). Even if a rule of harmless error could apply, the

error in this case could not be treated as harmless.

In the court below, the government eventually

conceded that if a harmless error rule applies to such an

instruction, it is the government that bears the burden (as

petitioner had stated from the beginning) to establish the

trial court’s error was “harmless beyond a reasonable

doubt.” Post-Arg. Ltr.Br. 3. If such an instruction can be

harmless constitutional error, the government did not meet

its burden in this case. The evidence on the subject

consisted solely of an unexplained, conclusory “opinion” cf

an IRS employee, stated as such. For example, the govern-

ment offered no evidence to allow a jury determination

under “the usual common law rules applicable in deter-

° In the present case, it must be recalled, although petitioner

was prosecuted under 26 U.S.C. § 7202 for willful failure to

withhold and pay over employment taxes, he was not, on

either side’s theory of the case, the “employer” in question.

The alleged “employer” was Arrow Custom Plastics, the

company which Simkanin owned (a status which would not

make him liable for Arrow’s employment tax obiigations) and

(according to the government’s evidence) controlled (a fact

which could make him liable; id. §§ 3401(d)(1), 7343). Yet

the district court did not instruct the jury on the criteria made

pertinent by the latter two statutes.

mA

mining the employer-empioyee relationship,” 26 U.S.C.

§ 3121(d)(2), nor did the trial court instruct the jury on

those rules. Instead, the court below dismissed the error as

harmless because the defendant “did not, and apparently

could not, bring forth facts contesting” the government’s

position, Appx. A21, 470 F.3d at 409, quoting from Neder

v. United States, 527 U.S. i, 18-19 (1999). The court of

appeals thus shifted the burden impermissibly.”

As this Court’s majority explained in Neder, that

decisic 1 concerns a “narrow class of cases” where the trial

court omits, over objection, to charge the jury on one

element of the offense, which the court has instead decided

for itself. 527 U.S. at 17 n.2 (discussing Rose v. Clark, 478

U.S. 570, 578 (1986)). The Court declared such cases

distinguishable from those in which the court directs a

verdict of guilty. See United Bhd. of Carpenters & Joiners

v. United States, 330 U.S. 395, 408 (1947) (treating as

equivalent to directed verdict the court’s omission, as in

this case, of any explanation for the jury of the statutory

criteria for the defendant to be held vicariously liable).

’ The court of appeals also overlooked a separate manner in

which the trial court’s instructional error was prejudicial. A

minimally sufficient explanation of the legal rules governing

the definition of “employer” and “employee” in this setting --

rules which are not even the same among the five different

taxes involved (income withholding tax, IRC § 3402; Social

Security, IRC § 3101(a); Medicare, IRC § 3101(b); and the

employer’s Social Security and Medicare excise taxes, IRC

§§ 3111(a),(b)) -- would have revealed their complexity, and

thus have supported the plausibility of petitioner’s “good

faith” misunderstanding defense under Cheek. See Appx. C

(to reprint just the text of the statutes involved consumes

some 89 pages).

ie.

In Neder-type cases, the Court permits an appellate

tribunal to find the omission of an element harmless

beyond a reasonable doubt if the element “is supported by

uncontroverted evidence ....” 527 U.S. at 18. Only “where

the defendant did not, and apparently could not, bring

forth facts contesting the omitted element, answering the

question whether the jury verdict would have been the

same absent the error does not fundamentally undermine

the purposes of the jury trial guarantee.” Id. 19. The court

below did not demonstrate that the instant case comes

within that narrow category. Instead, it focused on peti-

tioner’s principal legal defense (lack of willfulness), Appx.

A14-15, 420 F.3d at 406, even though the employer status

issue was never stipulated and was treated as contested.

The starting point must be what evidence the govern-

ment brought forth on the element. The decision of the

court below disregards that at trial the government placed

in evidence exhibits numbered 136 through 147. Its

witness, a “tax compliance officer” with the IRS, testified

that these exhibits constituted correspondence between the

IRS and petitioner regarding the status of workers as either

employees or independent contractors.® On cross-

examination the IRS witness testified that the workers

were, in “our opinion,” employees. No explanation was

allowed.” In addition to petitioner’s own testimony, this is

the totality of the relevant evidence on the subject.

¥ Since the letters from Simkanin were introduced by the

government, they constituted “admissions” under Fed.R.Evid.

801(d)(2)(A) which the jury could take for their truth.

? Had defense counsel not cross-examined on this point,

there would actually have been no evidence in support of this

fact essential to proof of the government’s case.

-19-

A reasonable jury could have found the IRS’s answers

to petitioner’s concerns, as expressed in Exhibits 136-147,

to be unsatisfying. Similarly, the jury could easily have been

unpersuaded by the unexplained expression of a conclusory

“opinion” on the subject. The jury’s doubt on this score

may then have been reinforced by petitioner’s sincere

demeanor while testifying.'° The jury could thus readily

have entertained a reasonable doubt on the “employer”

element, given the weakness of the government’s case on

the issue. The jury’s note shows that at least some jurors

had questions whether the withholding obligation was

inapplicable to some “employers” of some “employees” (as,

indeed, it is; see Appx. C (setting forth pertinent statutes at

length)), and thus whether Arrow had been proven to be

subject to a legal duty under that law. Thus, the instant

case does not come within the “narrow class” in which such

error as Judge McBryde committed at this trial could be

found harmless beyond a reasonable doubt, and the

government’s letter brief does not demonstrate otherwise.

Whether error which deprives a defendant of his Sixth

Amendment right to trial by jury on a fact which is essential

to the punishment (whether or not that fact is labeled an

“element” of the offense) should be presumed to be

prejudicial, or whether the government can be allowed to

establish harmlessness, has often divided this Court by the

narrowest of margins. See Connecticut v. Johnson, 460

10 That the jury used the word “employees” on its note

seeking further instructions (like petitioner’s own use of the

same term in his testimony), Appx. A18, 420 F.3d at 408 n.9,

does not establish that the jury had resolved the issue as a

legal matter, but rather shows only that the word is

commonly used in a non-technical sense to mean “workers.”

U.S. 73, 83-88 (1983) (plurality opinion).!! Neder was

decided by a 5-1-3 vote. The dissenting opinion viewed the

decision as a major constitutional error. Neder, 527 U.S. at

30-40 (Scalia, J., with Souter & Ginsberg, JJ., dissenting);

see also id. 28-29 (Stevens, J., concurring). Arguably, the

Neder dissenters’ view of the Sixth Amendment jury trial

right has since prevailed. See United States v. Booker, 543

U.S. 220, 125 S.Ct. 738, 769 (2005) (shifting majority of

five suggests no more than that in cases “not involving a

Sixth Amendment violation,” whether relief is required on

appeal “may depend upon application of the harmless error

doctrine”); see generally Blakely v. Washington, 542 U.S.

296 (2004); Ring v. Arizona, 536 U.S. 584 (2002);

Apprendi v. New Jersey, 530 U.S. 466, 477 (2000). The

time has come for the Court to confront the issue squarely.

The decision of the court below raises this grave

constitutional question (which “operat[es] upon the spinal

column of American democracy,” Neder, 527 U.S. at 30

(dissent)), by the manner in which it applied the harmless

error doctrine. The Court should grant certiorari to

determine whether that rule was applied too loosely. Alter-

nately, this Court should grant certiorari to consider over-

ruling the decision in Neder and holding that a jury instruc-

tion purporting to determine a question of fact which is

essential to conviction must be presumed prejudicial,

requiring automatic reversal.

'l Jobnson lacked a fifth vote for a structural error approach

to the problem only | ecause Justice Stevens, concurring,

found the harmless error question not properly presented on

certiorari to the supreme court of a state, when that court had

not employed a lower standard.

a. #

2. The Circuits are divided on the question whether a

minimal but correct jury charge on willfulness is sufficient

to protect a tax defendant’s right to an instruction

supporting a “good faith” defense under this Court’s

decision in Cheek.

The petitioner’s principal defense at trial was “good

faith” under this Court’s decision in Cheek v. United States,

498 U.S. 192 (1991). At the first trial, the court delivered a

jury charge explaining good faith; the jury hung. Instead of

charging under Cheek at the retrial, however, the trial court

delivered, over objection, only a two-sentence statement on

willfulness, as defined by this Court in United States v.

Bishop, 412 U.S. 346, 360 (1973), and United States v.

Pomponio, 429 U.S. 10 (1976) (per curiam): “To act will-

fully means to act voluntarily and deliberately and inten-

ding to violate a known legal duty.” See Appx. A21, 420

F.3d at 409 (quoting instruction). The Fifth Circuit found

this charge sufficient to avoid reversal, because “willful-

ness” as defined in tax cases is logically inconsistent with

“good faith.” Id. 410-11. In at least two other Circuits,

the refusal of this instruction would be reversible error. See

United States v. Morris, 20 F.3d 1111, 1114-18 (11th Cir.

1994); United States v. Regan, 937 F.2d 823, 826-27, as

amended, 946 F.2d 188 (2d Cir. 1991). Certiorari should

be granted to resolve this split among the courts of appeals.

In Cheek, the Court held that “willfulness,” as long

defined for purposes of criminal tax cases, depends on the

defendants’ actual beliefs regarding their statutory obliga-

tions, without regard to whether those beliefs are “reason-

able.” Such-beliefswere consistently discussed in terms of

“good faith.” 498 U.S. at 201-02. As this Court has long

noted in similar contexts, “Without the knowledge, the

intent cannot exist.” Direct Sales Co. v. United States, 319

U.S. 703, 711 (1943); accord, Anderson v. United States,

417 U.S. 211, 224 (1974). As the Court pointed out in

Cheek, 498 U.S. at 200, the holding of United States v.

Murdock, 290 U.S. 389, 396 (1933), was that the defen-

dant in a federal tax case, upon request, is entitled to an

instruction on “good faith” belief. Yet, as the Court further

acknowledged, the holding of the per curiam in Pomponio,

429 U.S. at 13, some four decades later, is stated as follows,

“The trial judge in the instant case adequately instructed

the jury on willfulness. An additional instruction on good

faith was unnecessary.” (quoted in Cheek, 498 U.S. at 201).

The latter holding was misconstrued by the court below to

mandate affirmance.

The willfulness charge in this case recited the mini-

mally mandated words of Pomponio, and identified what

the defendant had to “know,” but completely failed to elab-

orate or explain the rule, as required by the decisions in

Murdock and Cheek. A jury would have to listen very care-

fully (and have an outstanding memory, as it was denied a

written copy of the charge) to find in the one sentence

quoted from Pomponio the tripartite requirement of Cheek,

much less the point emphasized there that the defendant’s

belief, if genuine, need not be found to be reasonable.

Indeed, its seems the jury did not understand. After

less than 90 minutes of deliberation, the jury issued a note

asking “what is the definition of “willful?”” The court’s

response again did not include a good faith defense instruc-

tion. It is simply unrealistic to suggest, as does the court

below, that petitioner’s request for a good faith instruction

was “substantially covered.” Appx. A25, 420 F.2d at

411.'* If it were actually obvious that Cheek follows from

!2 On the second day of jury deliberations, the defense filed a

motion for reconsideration and request for (1) the pattern

=

a mere recitation of the Bishop/Pomponio test, then the

split in the Circuits which led this Court to grant certiorari

and decide the Cheek case itself would never have devel-

oped. Rather, the jury charge in this case represents a

wholesale rejection of the entire idea of elaborating on

“willfulness” in the Cheek sense. Where, as here, the

defendant’s requested instruction, see CAS RE 11, was

substantially correct, reversal should have resulted.

The court below misleadingly discusses Pomponio as if

it stood itself for the proposition that a correct “willful-

ness” charge substitutes for an instruction on good faith in

the sense requested by petitioner at trial. Appx. A24-25,

420 F.3d at 411. But if that were so, Pomponio would

have overruled Murdock, while the per curiam opinion

contains no such suggestion. In fact, all that Pomponio

held is that a charge requiring “bad purpose” or “evil

motive” for conviction, as had been sought by the

defendant in that case, was unwarranted. The reference to

“good faith” in Pomponio was simply shorthand for the

erroneous request that the defendant had made there; it is

no authority for what occurred here. To refuse a charge on

“good faith” in petitioner’s case was to refuse to instruct on

the defense theory with respect to the key contested

element of the charged offenses. The court below thus

affirmed the violation of another fundamental of a fair trial,

as guaranteed by this Court. See United States v. Mathews,

485 U.S. 58, 63 (1988) (right to an instruction on theory of

defense, whenever supported by some evidence).

The government did not demonstrate (nor did the

court below find) that the denial of a “good faith” instruc-

(cont'd)

jury instruction regarding mistake, ignorance, negligence or

gross negligence and (2) a good faith instruction under Cheek.

This was again denied.

-24-

tion in this case was or could have been harmless error.

Most of the defendant’s corroborating evidence was

excluded, and his own testimony and that of his witnesses

was substantially limited.!? Worse, the trial court placed

counsel under a strict 15-minute limit for closing argu-

ment.!* In the transcript, the defense closing occupies less

than eight pages. During this period it was hardly possible

even to marshal the main evidence adduced from 14

witnesses and numerous documents, much less to fully ~

argue the inference of good faith or elaborate the meaning

of reasonable doubt concerning willfulness, as applied to

three different types of statutory offenses. Thus, this is not

a case where a generous approach to the defendant’s testi-

mony and witnesses or to counsel’s argument might excuse

the refusal to charge on the defense theory of good faith.

Because seemingly conflicting language in this Court’s

Murdock and Pomponio decisions has ied to a split in the

Circuits over the defendant’s right to a “good faith”

instruction under Cheek, and because the trial court’s jury

charge, read as a whole, denied essential support to peti-

tioner’s legitimate theory of defense, certiorari should be

granted.

!3 As the judge explained, he had “made some mistakes”

during the first trial, which resulted in a hung jury, and was

“going to try not to make them again.”

14 Defense counsel’s request for just three minutes more was

denied with a facetious remark. Judge McBryde then rigidly

policed the 15-minute limit at trial, including interruptions to

announce the elapsed time.

3. The Court should consider whether the First

Amendment permits a sentence to be substantially

increased on the theory that a defenaant’s deepiy held

anti-government political views create a risk of recidivism

equivalent to that of a career criminal.

Over a four-year period, petitioner Simkanin failed to

file federal tax returns. This conduct arose out of his

prominent involvement with groups and individuals

espousing unconventional opinions about the U.S. tax

system. Petitioner had no criminal record. Yet the district

court imposed an upward “departure,” 18 U.S.C.

§ 3553(b), to equate his sentence with that of a defendant

in the least favorable “criminal history category” under the

U.S. Sentencing Guidelines, see USSG § 4A1.3 (p.s.), and

imposed a term of seven years’ imprisonment. The judge

expressly predicated this doubling of the sentence on “the

defendant’s radical beliefs relative to the laws of the United

States.” Petitioner argued on appeal that the severity of the

sentence violated his First Amendment rights. The Fifth

Circuit’s rejection of his claim warrants this Court’s review.

The court below concluded that:

Simkanin’s specific beliefs that the tax laws are

invalid and do not require him to withhold taxes

or file returns (and his association with an organ-

ization that endorses the view that free persons

are not required to pay income taxes on their

wages) are directly related to the crimes in

question and demonstrate a likelihood of recidi-

vism. Thus, the district court did not constitu-

tionally err in considering these factors.

Simkanin, 420 F.3d at 417-18. This Court should

address the important question whether a bare

showing of relevance of a person’s political associations

(as support) and beliefs (as a motive) for the crime of

conviction is sufficient under the Constitution to justify

a doubling of his sentence.

The district court’s inference that petitioner had

“immersed” himself in a “movement” that the court

likened to a “cult” does not make an increased

sentence permissible, much less necessary. See 18

U.S.C. § 3553(a) (any federal sentence must be “no

greater than necessary” to achieve lawful objectives of

criminal justice). The court below does not even

attempt to justify treating petitioner’s “association with

an organization” as a constitutionally allowable senten-

cing factor. The opinion of the Fifth Circuit throws to

the winds the careful analysis in this sensitive area

endorsed by this Court in Wisconsin v. Mitchell, 508

U.S. 476, 485 (1993) and Dawson wu. Delaware, 503

U.S. 159 (1992). Under the First Amendment, an

intent to commit future crimes cannot be inferred from

bare association or membership. See Elfbrandt v.

Russell, 384 U.S. 11, 15-16 (1966); Scales v. United

States, 367 U.S. 203, 229-30 (1961).

Where the defendant’s conduct involves a mixture

of alleged crime and protected First Amendment

activity, a court must review questions of intent

“strictissimi juris” (by the strictest standard known to

the law). Noto v. United States, 367 U.S. 290, 299-

300 (1961). The idea that unprotected conduct, when

interconnected with First Amendment activity, requires

a highly cautious approach is pervasive in this Court’s

cases. See McDonald v. Smith, 472 U.S. 479 (1985)

(malice and absence of good faith necessary to destroy

First Amendment privilege with respect to defamatory

letter sent to public official); Watts v. United States,

394 U.S. 705 (1969) (per curiam) (strict construction

of “threat” required in political context, to avoid First

Amendment issues). Under our Constitution, a

person’s opinions, including “radical beliefs” in oppo-

sition to government authority, simply cannot justify

increased criminal punishment. R.A.V. v. City of St.

Paul, 505 U.S. 377 (1992). The court below attempts

to distinguish all these cases on purely factual grounds,

Appx. A40, 420 F.3d at 418 n.23, and does not apply

the governing principles for which they stand.

The First Amendment “strictissimi juris” doctrine,

as announced and applied by this Court in Noto, 367

U.S. at 299-300, has been followed in several circuits as

a tool for evaluating the sufficiency of the evidence,

not limited to cases where membership is itself the

charged offense, as in the Smith Act cases. See United

States v. Dellinger, 472 F.2d 340, 392 (7th Cir. 1972);

accord, United States v. Dodge, 538 F.2d 770, 780

n.16 (8th Cir. 1976); United States v. Spock, 416 F.2d

165, 172 (1st Cir. 1969).!° The courts below impro-

perly gave short shrift to the application of that funda-

mental doctrine at sentencing. eae

As this Court has put it, “a defendant’s abstract

beliefs, however obnoxious to most people, may not be

taken into consideration by a sentencing judge.”

Mitchell, 508 U.S. at 485 (explaining Dawson).'°

15 The doctrine is a pervasive one under the First

Amendment, and can even require strict caution in applying

the ordinary rules in civil cases. See NAACP v. Claiborne

Hardware Co., 458 U.S. 886, 918-19 (1982) (discussing and

applying doctrine to invalidate award of damages against

organization for losses arising out of boycott led by group).

'6 This constitutional rule necessarily operates as an exception

to 18 U.S.C. § 3661, which states, “No limitation shall be

-28-

There is simply no denying that in this case, peti-

tioner’s “abstract beliefs” were “taken into considera-

tion.” Indeed, “beliefs” were explicitly made the

centerpiece of Judge McBryde’s rationale for increasing

petitioner’s sentence.

Petitioner Simkanin is a stable, 60-year-old busi-

nessman and engineer. The offenses for which he was

convicted are nonviolent property offenses against the

government. They were committed openly, even defi-

antly, and were thus easy to detect and relatively easy

to prove. It was unreasonable for the court below to

conclude that petitioner’s risk of recidivism -- on

account of his deeply held political beliefs, as the

district court viewed and interpreted them -- was

equivalent to that of a career criminal, or of a defen-

dant with more than four prior felony sentences of

imprisonment (the typical Category VI offender).!”

The district court’s analysis that the lawful

purposes of sentencing demanded at least seven years’

imprisonment, and that petitioner would not be

deterred or reformed by less had no lawful basis. The

inflation of petitioner’s criminal history category more

(cont'd)

placed on the information concerning the background,

character, and conduct of a person convicted of an offense

which a court of the United States may receive and consider

for the purpose of imposing an appropriate sentence.”

1” The court below also found no “plain error” under United

States v. Booker, 543 U.S. 220 (2005). Appx. A43-44, 420

F.3d at 419-20. While the circuits are split on the proper

application of that doctrine to pre-Booker sentencings,

petitioner does not present this as a separate basis for

certiorari in his case.

99.

than doubled his sentence, adding three years or more

of imprisonment, based expressly upon his disfavored

expression of dissident political opinion.

As Judge Farris wrote, while dissenting from the

Ninth Circuit’s reversal of two tax convictions:

Unfortunately, these defendants have been

labeled by some as “tax protesters.” That label

has no use in a court of law. America was built

by “protesters.” Their input should always be

considered.

United States v. Wadsworth, 830 F.2d 1500, 1511 (9th Cir.

1987) (dissenting opinion). That view is more consonant

with Congressional command’ and the Constitution than

was the district court’s justification for doubling peti-

tioner’s punishment, as endorsed by the court below. To

define and enforce the First Amendment limitations on

sentencing enhancement, the writ of certiorari should be

granted to review the decision of the Fifth Circuit below.

CONCLUSION

For the foregoing reasons, petitioner RICHARD

SIMKANIN prays that this Court grant his petition for a

writ of certiorari.

Respectfully submitted,

By: PETER GOLDBERGER

Attorney for Petitioner

January 25, 2006.

18 Dart of the Internal Revenue Service Restructuring and

Reform Act of 1998 prohibits the “officers and employees of

the Internal Revenue Service” from “designat[ing}] taxpayers

as illegal tax protesters (or any similar designation) ....”

Pub.L. 105-206, § 3707(a), 105th Cong., 2d Sess., 112 Stat.

685 (“Taxpayer Bill of Rights III”).

-30-

APPENDIX A

420 F.3d 397, 96 A.F.T.R.2d 2005-5577,

2005-2 USTC 4 50,507

United States Court of Appeals,

Fifth Circuit.

UNITED STATES of America, Plaintiff-Appellee,

v.

Richard Michael SIMKANIN, Defendant-Appellant.

No. 04-10531.

Aug. 5, 2005.

*399 Alan L. Hechtkopf, Samuel Robert Lyons

(argued), U.S. Dept. of Justice, Washington, DC, for

U.S.

Peter Goldberger (argued), Law Office of Peter

Goldberger, Admore, PA, Robert G. Bernhoft, The

Law Office of Robert G. Bernhoft, Milwaukee, WI, for

Simkanin.

Appeal from the United States District Court for the

Northern District of Texas.

Before KING, Chief Judge, DAVIS, Circuit Judge,

and ROSENTHAL’, District Judge.

KING, Chief Judge:

Defendant-Appellant Richard Michael Simkanin

appeals his conviction for ten counts of willfully

failing to collect and pay over employment taxes in

violation of 18 U.S.C. § 7202, fifteen counts of

* District Judge of the Southern District of Texas,

sitting by designation.

knowingly making and presenting false claims for

refund of employment taxes in violation of 18 U.S.C.

§ § 287 and 2, and four counts of *400 failing to file

federal income tax returns in violation of 26 U.S.C. §

7203. He also appeals his sentence of eighty-four

months imprisonment. For the following reasons,

we AFFIRM Simkanin's conviction and sentence.

I. BACKGROUND

Defendant-Appellant Richard Simkanin owned

Arrow Custom Plastics, Inc. ("Arrow") since its

incorporation in 1982. In 1993, Simkanin met with

an accountant, Jim Kelly, who advised him that he

would need to change Arrow's accounting method

and that this change would result in an increase in

Arrow's corporate income tax. Simkanin thereafter

began to question the federal tax system's

applicability to him and its validity in general. On

his 1994 and 1995 individual income tax returns,

he made notations (i.e., "UCC 1-207") apparently in

an attempt to indicate that the returns were filed

under protest. He did not file individual tax returns

for the years 1996-2001.

With respect to the 1996 and 1997 returns,

Simkanin told Kelly that he was not required to file

returns because he did not receive any income but

rather lived entirely off of his savings. However, this

statement was false--Simkanin did in fact receive a

salary from Arrow during these years, and his salary

was sufficiently high such that Simkanin owed

federal income taxes. On Arrow's books, Simkanin’'s

salary was initially identified as "officer salary” and

then later as "remuneration," without any reference

to Simkanin being the recipient of the funds.

During these years, Simkanin also received payment

from Arrow for his personal expenses, which were

booked as "repair and maintenance."

In 1996, Simkanin surrendered his’ Texas

- Appx. A2 -

driver's license, and when stopped by the police

while driving, he showed a card styled "British West

Indies International Motor Vehicle Qualification

Card," which he had acquired from a mail order

business in Connecticut. He also mailed to the U.S.

Treasury Secretary a statement that he had

expatriated himself from the United States and

repatriated to the Republic of Texas. He posted the

same statement on Arrow's internet website, where

he also vowed to ignore the laws of the United

States.

In 1997, Simkanin removed his name from

Arrow's checking and credit card accounts,

replacing his name with the name of Arrow's

bookkeeper Dianne Clemonds. Simkanin told '

Clemonds that he did not want his name to appear

on documents requiring his social security number.

Simkanin then listed Clemonds as Arrow's president

on various legal documents, although he retained

complete de facto responsibility for the company's

affairs and continued to make all of the decisions

regarding finances and taxes.

By May 1999, Simkanin had become involved

with an organization called We The _ People

Foundation for Constitutional Education ("WTP"),

which promotes the view that, despite common

misconceptions, there is actually no law that

requires most Americans to pay income taxes or

most companies to withhold taxes from employees’

paychecks. WTP also espouses the view that the

Sixteenth Amendment was fraudulently deciared to

have been ratified. In accordance with these views,

Simkanin told accountant Kelly and others that he

was not required to pay taxes and that filing returns

was purely voluntary. Kelly advised Simkanin that

filing returns was not voluntary and that Simkanin

could get into trouble if he did not file. Simkanin

rejected this advice, and he began to pressure

- Appx. A3 -

Arrow's employees to attend seminars sponsored by

WTP.

*401 In November 1999, Simkanin told Kelly

that Arrow would no longer withhold employment

taxes from employees’ paychecks. Kelly counseled

against this course of action. In response to

Simkanin's stated intentions, Clemonds consulted

with an attorney. She was advised that she could

be personally liable if she went along with

Simkanin's plan to stop collecting and paying over

taxes. Clemonds therefore resigned from her

position at Arrow, and Simkanin returned his name

to the Arrow bank accounts as sole signatory. He

then stopped Arrow's withholding of federal taxes

from the wages paid to its employees.

In January 2000, Simkanin filed with the IRS

fifteen claims for tax refunds. He claimed he was

owed refunds for taxes paid by Arrow in 1997-99

and also for the taxes collected from, and paid by,

Arrow's employees. The IRS denied all of these

claims, and Simkanin did not seek further review.

In March 2000, Kelly and Fred Taylor, a named

partner in Kelly's accounting firm, went to

Simkanin's office to discuss his refusal to withhold

and pay federal taxes or file returns. Simkanin

reiterated that he had no intention of paying taxes.

Taylor advised Simkanin that he could be criminally

prosecuted for his actions and, by letter dated

March 28, 2000, terminated Simkanin and Arrow as

clients.

On March 2, 2001, a full page advertisement by

WTP appeared in USA Today. The ad prominently

displayed the photographs of five men, including

Simkanin. The advertisement stated, inter alia, that

Simkanin and the other men pictured had stopped

withholding taxes from their workers’ paychecks

and that they were part of a "growing number of

people” who believe that:

- Appx. A4 -

1. There is no law that requires workers, as

U.S. citizens earning their money from

domestic companies, to pay income or

employment taxes; nor to have those taxes

withheld;

2. The 16th Amendment (the "Income Tax

Amendment") was fraudulently declared to be

ratified by the Secretary of State in 1913.

The ad concluded with a request for "donations" to

WTP.

On March 14, 2001, Simkanin was advised that

he was the target of a criminal investigation

regarding his failure to file individual income taxes

since 1995 and his failure to collect and pay over

employment taxes since January 2000. In July

2001, Simkanin was served with a grand jury

subpoena that sought the corporate records of

“Arrow Custom Plastics, Inc." In response to the

subpoena, Simkanin dissolved the corporation and

operated Arrow as a sole proprietorship. Despite

Simkanin's refusal to produce Arrow’s corporate

records, the government was able to obtain

information about the amount of wages paid to

Arrow’s employees from the Texas state agency that

collected unemployment taxes from Arrow.

On June 19, 2003, an indictment was returned,

charging Simkanin with twelve counts of willfully

failing to collect and pay over federal income taxes

and Federal Insurance Contribution ("FICA") taxes

from the total taxable wages of Arrow employees in

violation of 26 U.S.C. § 7202,' and *402 fifteen

: Section 7202 provides:

Any person required under this ttle to collect, account

for, and pay over any tax imposed by this title who

willfully fails to collect or truthfully account for and

pay over such tax shall, in addition to other penalties

provide’. by law, be guilty of a felony and, upon

- Apps. AS -

counts * of filing false claims for tax refunds in

violation of 18 U.S.C. § 287. On August 13, 2003,

a superceding indictment was returned, charging

Simkanin with the same substantive crimes but

stating the applicable law more fully.

On September 3, 2003, the parties filed a plea

agreement and a factual resume in which Simkanin

pled guilty to four counts of the superceding

indictment. However, the plea agreement misstated

the maximurn penalty to be lower than the actual

maximum of five years imprisonment and three

years supervised release. The government notified

the court that Simkanin had not actually agreed to

plead to a count with the maximum penalty of five

years incarceration. The court ultimately ordered a

deadline for completing a plea agreement, and when

the government and Simkanin had not agreed to a

new plea agreement by that date, the case went to

trial.

Simkanin's first trial began on November 25,

2003. A number of Simkanin's supporters were

present outside the courthouse handing out

pamphlets on jury nullification. The jury was

unable to reach a unanimous verdict, and the

district court declared a mistrial. One of the jurors

subsequently contacted the court's. staff and

expressed concern about the behavior of Simkanin's

supporters and one of the members of the jury. It

was later revealed that some of the jurors had been

contacted by Simkanin's supporters.

On December 17, 2003, a second superceding

indictment was returned, charging Simkanin with

the same offenses in the first superceding

indictment plus four additional counts of failure to

conviction thereof, shall be fined not more than

$10,000, or imprisoned not more than 5 years, or

both, together with the costs of prosecution.

- Appx. A6 -

file individual income tax returns. Counts One

through Twelve charged Simkanin with willfully

failing to collect and pay over federal income taxes

and FICA taxes from the total taxable wages of

Arrow employees in violation of 26 U.S.C. § 7202

(with each count pertaining to a different tax

quarter). Counts Thirteen through Twenty-Seven

charged Simkanin with knowingly making and

presenting fifteen false claims for the payment of

refunds of the employer's share of FICA taxes paid

by Arrow and of the employees’ share of FICA taxes

and income taxes collected from Arrow's employees

in violation of 18 U.S.C. § § 287 and 2. Finally,

Counts Twenty-Eight through Thirty-One charged

Simkanin with failing to file federal income tax

returns in violation of 26 U.S.C. § 7203.

The second trial began on January 5, 2004.2

Simkanin primarily attempted to establish that he

did not willfully violate the tax laws because he held

a good-faith belief that he was not obligated to pay

individual income taxes or to withhold employment

taxes from the wages paid to Arrow's employees.

Simkanin took the stand and testified that, inter

alia, according to his own research: (1) the

Constitution provides for two types of taxes--a direct

tax and an indirect tax; (2) the income tax is an

indirect tax; (3) a man's labor is his own property

and cannot be subject to an indirect tax; and (4) the

wages that a person receives for his labor are not

subject to the income tax. Simkanin further

testified that he stopped paying his income taxes

and stopped withholding employment taxes from the

2 Simkanin's supporters were again outside the

courthouse and inside the courtroom. However,

security measures were taken to prevent the

supporters from contacting members of the jury pool

or the selected jurors.

- Appx. A7 -

wages of Arrow's employees because he "could not

find out what the tax was on."

To support his defense, a number of other

witnesses testified that they had informed Simkanin

that the federal income *403 tax laws, as written,

did not require Simkanin to pay taxes and that the

income tax was constitutionally invalid. Joseph

Banister, a supporter of WTP, testified that he met

Simkanin at a conference entitled "Citizens’ Summit

to End the Unlawful Operations of the Internal

Revenue Service," at which Banister was a speaker.

Robert Schultz, founder and CEO of WTP, testified

that he advised Simkanin that his research showed

that the Sixteenth Amendment had _ been

fraudulently declared to have been ratified and that

the constitutional definition of the word “income” is

different than the common _ understanding of

income. Larken Rose testified that, through phone

conversations with and emails to Simkanin, he

explained that the income of the average American

is not subject to the federal income tax and that the

law merely applies to people engaged in certain

types of international trade. Banister, Schultz, and

Rose all testified that they did not advise Simkanin

to stop withholding taxes or to stop filing tax

returns. Eduardo Rivera, an attorney from

California, testified that he had consulted with

Simkanin in 1999, that Simkanin had paid him over

$10,000, and that he told Simkanin that his

employees had no legal duty to pay a tax and that

Simkanin only had a duty to send money on their

behalf to the government if he contracted with them

to do so.3

3 Rivera admitted on cross-examination that in 2003 a

permanent injunction had been entered against him,

barring him from making such statements.

- Appx. A8 -

A government witness, a district director for

Congressman Joe Barton, testified that Simkanin

had corresponded with Barton's office regarding

taxes and the IRS. Barton's office had received, and

forwarded to the IRS, letters written by Simkanin

expressing his view that he was not required to

withhold taxes from his workers’ paychecks and

that wages are not a source of income subject to

federal taxation. The district director testified that

Barton's office responded with a letter stating that

Simkanin's stated opinions were based on a flawed

interpretation of the Internal Revenue Code (the

"IRC"), that wages are indeed taxable under federal

laws and _ regulations, and that Simkanin's

interpretation had been rejected by the courts. .

The jury began its deliberations on January 6,

2004, and on January 7, it returned a verdict of

guilty as to Counts Three through Thirty-One. The

jury was unable to reach a verdict as to Counts One

and Two, and the government moved to dismiss

those counts, which the district court did.

At sentencing, the district court applied the 2v03

version of the United States Sentencing Guidelines,

and it determined Simkanin's criminal history

category to be | and his offense level to be Twenty-

Two, with a corresponding sentencing range of forty-

one to fifty-five months imprisonment. The court

decided to depart upwardly from that range,

concluding that a range of eighty-four to 105

months more appropriately reflected the likelihood

that Simkanin would re-offend. The court then

imposed a_ sentence of eighty-four months.

Simkanin appeals both his conviction and his

sentence.

Il. DISCUSSION

A. The District Court's Response to the Jury Note

[1)[2} Simkanin argues that the district court,

- Appx. A9 -

when providing a supplemental jury instruction in

response to a note from the jury, directed a verdict

in favor of the prosecution with respect to one or

more essential elements of the offense. We review

de novo whether a jury instruction *404 directed a

verdict on an element of the offense. See United

States v. Bass, 784 F.2d 1282, 1284 (Sth Cir.1986).

In light of the particular circumstances involved in

this case, we conclude that the district court did not

direct a verdict for the government on an element of

the offense.

In Cheek v. United States, 498 U.S. 192, 201-03,

lil S.Ct. 604. 112 LEd2d 617 (1991), the

Supreme Court defined “willfulness" for

prosecutions under the IRC as _ requiring a

"voluntary, intentional violation of a known legal

duty." The Court reasoned that because of the

complexity of the tax laws, willful criminal tax

offenses must be treated as an exception to the

general rule that ignorance of the law or a mistake

of law is no defense to criminal prosecution. Id.

Moreover, the Court found that a defendant's good-

faith belief that he was not violating the law need

not be objectively reasonable to negate willfulness.

Id. However, the Court distinguished a defense

based on the defendant's good-faith belief that he

was acting within the law from a defense based on

the defendant's views that the tax laws are

unconstitutional or otherwise invalid. Jd. at 204-06,

111 S.Ct. 604. The Court held that the latter belief,

regardless of how genuinely held by the defendant,

does not negate the willfulness element. Thus, the

Court concluded that evidence pertaining to a

defendant's beliefs that the tax laws are invalid is

irrelevant to establishing a legitimate good-faith

defense. Jd.; see also FIFTH CIRCUIT PATTERN

JURY INSTRUCTIONS: CRIMINAL §_ 1.38 (West

- Appx. Al0 -

2001).

The availability of the good-faith defense, while

undeniably sound,* creates a number of

complications and challenges for a district court

beyond those arising in the usual criminal trial, in

which the defendant's beliefs about what the law

requires are not at issue. The defendant in a

criminal tax trial, unlike most other defendants,

must be permitted to present evidence to show what

he purportedly believed the law to be at the time of

his allegedly criminal conduct. At the same time,

however, the district court must be permitted to

prevent the defendant's alleged view of the law from

confusing the jury as to the actual state of the law,

especially when the defendant has constructed an

elaborate, but incorrect, view of the law based on a

misinterpretation of numerous IRC provisions taken

out of proper context. See, e.g., United States uv.

Barnett, 945 F.2d 1296, 1300 (5th Cir. 1991) (stating

that "(t]he jury must know the law as it actually is

respecting a taxpayer's duty to file before it can

determine the guilt or innocence of the accused for

failing to file as required”). The district court in this

case, like other courts in similar cases, struggled to

balance these two competing concerns when it

answered the jury's confusion as to the correct

interpretation of the law, which unsurprisingly

resulted from Simkanin's testimony about his own

erroneous beliefs about the law. Thus, it is with

this set of circumstances in mind that we consider

Simkanin's arguments on appeal.

4 See, e.g., United States v. Burton, 737 F.2d 439, 441

(Sth Cir. 1984) (noting “the pervasive intent of Congress

to construct penalties that separate the purposeful tax

violator from the well-meaning, but easily confused,

mass of taxpayers.” (internal quotation marks

omitted)).

- Appx. All -

OT es

In its initial instructions, the district court

instructed the jury that, in order to convict

Simkanin on Counts One through Twelve (willfully

failing to collect and pay over federal taxes from the

total taxable wages of Arrow employees in violation

of 26 U.S.C. § 7202), the jury must find beyond a

reasonable doubt that: (1) Arrow was an employer

that paid wages to its employees; (2) Simkanin was

an official of *405 Arrow who had responsibility for

its decisions regarding the withholding from its

employees’ wages of Medicare, social security, and

federal income taxes, the accounting for such taxes,

and the payment of such taxes over to the IRS; (3)

Simkanin caused Arrow not to withhold and not to

account truthfully for and pay over such taxes; and

(4) Simkanin's conduct in causing Arrow not to

withhold, account for, and pay over such taxes was

willful. The court further instructed the jury that:

Within the meaning of [26 U.S.C. § 7202],

during the years 2000, 2001, and 2002,

[Arrow], through its responsible officials, had

a legal duty to collect, by withholding from

the wages of its employees, the employees’

share of social security taxes, Medicare taxes,

and federal income taxes, and to account for

those taxes and to pay withheld amounts to

the United States of America.

Simkanin did not object to these instructions at

the time they were given.

At trial, Simkanin testified that one reason

behind his decision not to withhold taxes from

Arrow’s employees was his belief that the IRC, which

is over 7,000 pages long, contains an extensive (and

exclusive) list of industries and activities. Simkanin

stated that because Arrow did not operate in any of

the listed industries or perform any of the listed

activities, he concluded that Arrow’s workers were

not employees under the IRC and that he therefore

- Appx. Al2 -

was not required by law to withhold taxes. He

further stated that he believed that the definition of

an "employee" under the IRC was limited only to

persons who worked for a governmental entity

including the state or a political subdivision

thereof.5

During its deliberations, the jury sent a note to

the district judge asking the following question:

Since no proof has been made that the

defendant and his employees are in an

occupation listed in those 7,000 [pages], are

we to conclude that they are, in fact, not in

that 7,000, or do we need to read all 7,000 to

see what the defendant was referring to, and

in fact, wasn't listed in the 7,000[?]

The court responded to the jury's question by

stating:

Now, in answer to your note: You are

instructed that you do not need to concern

yourself with whether defendant's employees

are in an occupation "listed in those 7,000."

The Court has made a legal determination

that within the meaning of Title 26, United

States Code, Section 7202, during the years

5 Simkanin's position, as defense counsel concedes,

was based on an incorrect view of the law. See, e.g.,

26 U.S.C. § § 3121 (a)-(d), 3306(a)-(c), 340 1(a)-(d); 26

C.F.R.§ § 31.3121 (a)-(d), 31.3306(a)-(c), 31.3401 (a)-

(d); Breaux & Daigle, Inc. v. United States, 9OO F.2d

49, 51-53 (5th Cir.1990); see also Otte v. United

States, 419 U.S. 43, 50-51, 95 S.Ct. 247, 42 L.Ed.2d

212 (1974). This fact is undisputed on appeal, and it

is abundantly clear that Simkanin's testimony on his

views regarding the definition of an “employer” and

“employees” was elicited to support his defense of a

good-faith belief, not to show that Arrow was not an

emplover under the IRC.

- Appx. Al3 -

1997, 1998, 1999, 2000, 2001, and 2002,

[Arrow], through its responsible officials, had

a legal duty to collect, by withholding from

the wages of its employees, the employees’

share of the social security taxes, Medicare

taxes, and federal income taxes, and to

account for those taxes and pay the withheld

amounts to the United States of America.

You are to follow that legal instruction

without being concerned whether there are

certain employers who are not required to

collect and withhold taxes from the wages of

their employees.

*406 Of course, you will bear in mind in your

deliberations all other instructions the Court

has given you concerning the law applicable

to this case.

Defense counsel objected to the court's response

on the ground that, inter alia, the response

"amountied] to an instructed verdict of guilty by

instructing [the jury] on that point since that is the

disputed issue and the basis for his defense."®

The trial transcript, as well as Simkanin's initial

brief, make perfectly clear that the disputed issue at

trial was whether Simkanin willfully violated the

federal tax laws. The basis for his defense was that

he did not willfully fail to collect and pay over taxes

in violation of § 7202 (and that he did not

Knowingly present faise claims for refund) because

6 We assume, without deciding, that Simkanin's

objection to the district court's response to the jury

note preserved the alleged error, even though he did

not object to the district court's original instruction

containing the same language. Thus, we do not review

the alleged error under the considerably less

defendant-friendly plain-error standard under Fed.

R.Crim. P. 52(b).

- Appx. Al4-

he bélieved in good faith that he was not required by

law to withhold such taxes.

Simkanin argues on appeal that the district

court's response to the jury note constituted a

directed verdict on an essential element of the

offense, and therefore reversible error, for two

reasons. First, Simkanin argues that the court's

response erroneously instructed the jury to

disregard Simkanin's good-faith defense. Second,

he asserts that the court directed a verdict for the

prosecution on the first element of the § 7202

offense--that Arrow was an employer that paid

wages to its employees. He contends that the

district court's error in this regard warrants the

vacatur of his conviction as to Counts 3-12 (willful

failure to withhold) and Counts 13-27 (false claims

of refund for taxes withheld).

As we stated in United States v. Cantu, 185 F.3d

298, 305-06 (Sth Cir. 1999):

The district court enjoys wide latitude in

deciding how to respond to questions from a

jury .... Overall, we seek to determine

whether the court's answer was reasonably

responsive to the jury's questions and»

whether the original and supplemental

instructions as a whole allowed the jury to

understand the issue presented to it.

(internal citation and quotation marks omitted). "It

is well established that the instruction may not be

judged in artificial isolation, but must be considered

in the context of the instructions as a whole and the

trial record." Estelle _v. McGuire, 502 U.S. 62, 72,

112 S.Ct. 475, 116 L.Ed.2d 385 (1991) (internal

quotation marks omitted).

In arguing that the district court's response

directed the jury to disregard his good-faith defense,

Simkanin relies on United States v. Burton, 737 F.2d

439 (Sth Cir.1984), a case involving a defendant's

- Appx. Al5-

failure to file income tax returns. In Burton, the

district court instructed the jury that "[t]he court

has ruled as a matter of law that a good faith belief

that wages are not income is not a defense to the

charges in this case." 737 F.2d at 440. We

reversed, holding that a defendant's good-faith belief

that the tax laws did not require him to file returns

(as opposed to a belief that the tax laws are invalid

or unconstitutional) would have negated the willful

element of the charged offense and _ therefore

constituted a valid defense.” Id. *407_at_ 441-42.

Burton is easily distinguishable, however, because

unlike the district court in Burton, the district court

in the present case did not explicitly instruct the

jury to disregard the defendant's beliefs about the

applicability of the tax laws. Rather, the court

instructed the jury that the defendant's purported

view of the law--that the fact that the IRC did not

list his business activities alleviated him from a legal

duty to withhold taxes--was incorrect. Thus, the

district court acted properly under _ the

circumstances. See Barnett, 945 F.2d at 1300. We

see nothing in the district court's instruction that

would have led the jury to believe that it must

disregard Simkanin's good-faith defense on the

willfulness element, especially because the court

specifically instructed the jury to keep in mind the

other instructions, which included its instruction on

willfulness.8 Thus, the jury remained free to decide

? Similarly, Simkanin cites Cheek, 498 U.S. at 192,

111 S.Ct. 604, for the proposition that a district court

errs when it instructs a jury to disregard the

defendant's evidence of a good-faith misunderstanding

of the tax laws.

8 As we discuss below, the district court adequately

instructed the jury on the wilifulness element to allow

Simkanin to advance his good-faith defense.

- Appx. Al6-

the contested issue in the ttrial, i.e., whether

Simkanin's violations of the tax laws were willful as

that term was properly defined in the jury

instructions.

Second, in a clever reconstruction of the district

court's response to the jury note, Simkanin argues

that the court's response constituted a directed

verdict on another element of the offense, which was

uncontested at trial-- namely, the requirement that

Arrow was an employer that paid wages to its

employees. Counsel contends that, after the court

informed the jury of its legal determination that

Arrow had a legal duty to withhold, the jury logically

could no longer find that Arrow was not an employer

that paid wages to its employees--for if the jury

found that Arrow was not an employer that paid

wages to its employees, then it would mean that

Arrow, in effect, did not have a legal duty to

withhold taxes. This reading of the court's

response, while plausible in a literal sense, is

entirely divorced from a reading of the instructions

as a whole, as well as from the context in which the

jury asked its question and the court responded.

Simkanin relies heavily on this court's decision

in Bass, 784 F.2d at 1282. In Bass, the defendant

was charged with willfully submitting false or

fraudulent income tax withholding exemption

statements to employers in violation of 26 U.S.C. §

7205. 784 F.2d at 1283. The defendant asserted as

one of his defenses that he could not be held

criminally liable under § 7205 because he was not

an "employee" for the purpose of supplying

withholding information on a W-4 to his employer.

Despite this defense, the district court in Bass

instructed the jury that "as a matter of law the

defendant ... was an employee of" the company in

question. /d. at 1284. We found this instruction to

be constitutionally erroneous’ because, “by

- Appx. Al? -

instructing the jury that Bass was an employee, the

district court relieved the prosecution of its duty of

proving, beyond a reasonable doubt, Bass's guilt of

every element of the offense charged." /d. at 1284-

85.

Unlike in Bass, however, the district court in the

present case did not explicitly direct a verdict on an

essential element of the offense. At most, the

court's response, when viewed in isolation, could be

interpreted as implicitly requiring the jury to find

that Arrow was an employer that paid wages to its

employees, lest the jury's finding on that element

logically conflict with the district court's instruction.

However, the district court also expressly instructed

the jury at least twice that, in order to convict

Simkanin under § 7202, it must determine beyond

a reasonable doubt that Arrow was an employer that

paid wages to its employees. Furthermore, *408

when the court answered the jury's question, it

reminded the jury to consider all the other

instructions that had been given. Thus, when

viewed in the context of the entire jury charge, the

district court's response merely instructed the jury

that Simkanin's belief that he was not required to

withhold taxes because Arrow's activities were not

listed in the 7,000 pages of the IRC was an incorrect

view of the law, and that, if the jury found that

Arrow was an employer that paid wages to its

employees, Simkanin had a legal duty to withhold

despite his professed belief to the contrary.? Hence,

the district court's answer was_ reasonably

responsive to the jury's question and was a correct

Statement of the law--it instructed the jury that

whether or not Arrow’s business activity appears on

9 Moreover, it is of no event that the district court used

the term “employees” in its response because the jury's

own question referred to Arrow's “employees.”

- Appx. Al8 -

a list in the IRC is irrelevant to whether Simkanin

had a legal duty to withhold. See Cantu, 185 F.3d

at 305-06. The original and supplemental

instructions as a whole allowed the jury to

understand the issue presented to it and required

the jury to decide whether the government had

proven each essential element beyond a reasonable

doubt. See id. Accordingly, we conclude that, when

the district court's response is viewed in the context

of the instructions in their entirety, there was not a

reasonable likelihood that the jury applied the

instruction as if it were a directed verdict on that

element of the offense. See United States v. Phipps,

319 F.3d 177, 189-90 (Sth Cir.2003) ("The question

is ... whether this single misstatement makes the

instruction defective as a whole .... [Tjhe proper

inquiry is not whether the instruction could have

been applied in an unconstitutional manner, but

whether there is a reasonable likelihood that the

jury did so apply it." (internal citation and quotation

marks omitted)); United States v. Musgrave, 483

F.2d 327, 335 (Sth Cir.1973). Accordingly, we find

no error in the district court's response to the jury

note.

[3] Moreover, even if we were to conclude that the

district court's response to the jury note was

erroneous, which we do not, we still would not

reverse on this ground. In this case, both parties

agree that we should affirm if the government proves

that the alleged error was harmless beyond a

reasonable doubt.!° See Neder v. United States, 527

10 Although at oral argument Simkanin's defense

counsel argued that the type of error alleged here is

not subject to harmless-error review, defense counsel,

in supplemental briefing submitted after oral

argument, reverted to the position taken in its initial

briefs--i.e., that if the district court’s response directed

- Appx. Al9 -

U.S. 1, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999);

Chapman uv. California, 386 U.S. 18, 23, 87 S.Ct.

824, 17 L.Ed.2d 705 (1967). Therefore, we would

proceed under that assumption, and we would

conclude that the government has met its burden to

establish that any error here was harmless. In

Bass, 784 F.2d at 1285, we stated that we could not

deem the court's explicit directed verdict on the

"employee" element harmless "[blecause one of

Bass's defenses was that he was not an ‘'employee|

|'...." Here, however, one of Simkanin's defenses was

not that Arrow was not an employer that paid wages

to its employees under the IRC (although one of his

defenses was that he did not willfully violate the law

because he erroneousiy believed that Arrow was not

an employer that paid wages to its employees under

the IRC). During the course of the trial, defense

*409 counsel introduced no evidence that Arrow

was not an employer that paid wages to its

employees, and defense counsel did not argue or

otherwise suggest during the trial that the

prosecution had not established this element

beyond a reasonable doubt. On appeal, Simkanin

does not point to any evidence introduced

supporting the notion (or any conceivable basis

upon which a rational juror could conclude) that

Arrow was not an employer that paid wages to its

employees under a legally accurate interpretation of

the relevant sections of the IRC. Rather, Simkanin

falls back on the argument that it is possible that

the jury could have decided that the government's

evidence, although uncontradicted, did not establish

that element beyond a reasonable doubt. However,

a verdict on an essential element of the offense, the

error is subject to harmless-error analysis and that we

may affirm only if the government establishes that the

error was harmless beyond a reasonable doubt.

- Appx. A20 -

we believe that it would have been irrational for the

jury to do so, and Simkanin's argument does not

suffice to raise a reasonable doubt in our minds that

the jury might have concluded that Arrow was not

an employer that paid wages to its employees. This

is an instance in which the relevant element was

“supported by uncontroverted evidence” and in

which the "defendant did not, and apparently could

not, bring forth facts contesting the omitted

element." Neder, 527 U.S. at 18-19, 119 S.Ct. 1827.

Accordingly, applying the harmless-error standard

agreed upon by the parties, we would find any error

here to be harmless beyond a reasonable doubt.

B. Instruction on Good-Faith

Simkanin next argues that the district court

erred by refusing to include a_ specific jury

instruction on his good-faith defense. As noted

above, the district court's instructions with respect

to Counts 1-12 (failure to withhold) stated that the

jury must find beyond a reasonable doubt that

Simkanin's conduct in causing Arrow not to

withhold and not to account truthfully for and pay

over such taxes was willful. In elaborating on the

meaning of the term “willful,” the court instructed

the jury that:

To act willfully means to act voluntarily and

deliberately and intending to violate a known

legal duty. For the government to establish

willfulness as to Counts 1-12 of the

indictment, it must prove beyond a

reasonable doubt as to the count in

consideration that defendant knew of the

requirements of federal law that [Arrow]

collect, by withholding from its employees

wages, Medicare taxes, social security taxes,

and federal income taxes, and to account for

such taxes and pay them over to the [IRS],

- Appx. A2l -

and that he voluntarily and _ intentionally

caused [Arrow] to fail to comply with these

requirements.

With respect to Counts 13-27 (false or fraudulent

refund claims), the court instructed that the

government must prove beyond a reasonable doubt

that: (1) Simkanin "knowingly presented to an

agency of the United States a false or fraudulent

claim against the United States;" (2) Simkanin

"knew that the claim was false or fraudulent;" and

(3) the false or fraudulent claim was material. The

court instructed that "knowingly, as that term has

been used in these instructions, means that the act

was done voluntarily and intentionally, not because

of a mistake or accident.”

Finally, with respect to Counts 28-31 (failure to

file returns), the court instructed the jury that it

must find beyond a reasonable doubt that: (1)

Simkanin received gross income in the amounts

stated in the indictment for the year in question

(this element was satisfied by a stipulation); (2)

Simkanin failed to file an income tax return, as

required, by the date stated in the indictment; (3)

Simkanin knew he was required to file a return;

and (4) Simkanin's failure to file was willful. The

court then reminded the jury “that to act willfully

means to act voluntarily and deliberately *410 and

intending to violate a known legal duty." The court

further stated that "[flor the government to establish

willfulness as to Counts 28-31 of the indictment, it

must prove beyond a reasonable doubt as to the

count under consideration that the defendant knew

of the requirement of federal law that he file an

income tax return, and that he voluntarily and

intentionally failed to do so."

Defense counsel objected to these instructions on

the ground that thev did not include a specific

instruction on good faith under Cheek, 498 U.S. at

- Appx. A22 -

192, 111 S.Ct. 604. Counsel argued that, for this

reason, the district court failed to instruct the jury

on the defense's theory of the case. Defense counsel

also objected to the use of the phrase "known legal

duty,” rather than "known to the defendant." The

district court overruled these objections.

[4][5][6] This court reviews a district court's

refusal to include a defendant's proposed jury

instruction in the charge under an abuse of

discretion standard. United States v. Rochester, 898

F.2d 971, 978 (5th Cir.1990). The district court

abuses its discretion by refusing to include a

requested instruction only if that instruction: (1) is

substantively correct; (2) is not substantially

covered in the charge given to the jury; and (3)

concerns an important point in the trial so that the

failure to give it seriously impairs the defendant's

ability to present effectively a particular defense.

United States v. St. Gelais, 952 F.2d 90. 93 (5th

Cir.1992). Under this test, this court will not find an

abuse of discretion where the instructions actually

given fairly and adequately cover the issues

presented by the case.!! Rochester, 898 F.2d at

978.

[7] As we discussed above, in Cheek, 498 U.S. at

201-04, 111 S.Ct. 604, the Supreme Court defined

'! Relying on language from Mathews v. United States,

485 U.S. 58, 63, 108 S.Ct. 883. 99 L.Ed.2d 54 (1988),

Simkanin argues that he was entitled to an instruction

on any defense supported by the evidence. However,

Mathews addresses whether a defendant can

simultaneously raise contradictory defenses, and the

broader language from Mathews has no bearing on the

issue presented here because the district court did not

deny Simkanin's requested instruction on the basis

that it was not supported by sufficient evidence. See

Mathews, 485 U.S. at 63, 108 S.Ct. 883.

- Appx. A23 -

“willfulness" for prosecutions under the IRC as

requiring a “voluntary, intentional violation of a

known legal duty.". The Court further found that,

because of the complexity of the federal tax laws,

criminal tax offenses with willfulness as an element

must be treated as an exception to the general rule

that a mistake of law is not a valid defense. Id.

Thus, a defendant's good-faith belief that he is

acting within the law negates the _ willfulness

element. On the other hand, a defendant's good-

faith belief that the tax laws are unconstitutional or

otherwise invalid does not negate the willfulness

requirement, and such evidence is_ therefore

irrelevant to a good-faith defense. Jd.; see also

FIFTH CIRCUIT PATTERN JURY INSTRUCTIONS:

CRIMINAL § 1.38.

The Supreme Court in Cheek derived its

definition of willfulness from United States ov.

Pomponio, 429 U.S. 10, 97 S.Ct. 22, 50 L.Ed.2d 12

(1976) (per curiam). In Pomponio, a case involving

criminal charges of falsifying tax returns, the district

court instructed the jury that a willful act meant

“one done voluntarily and intentionally and with the

specific intent to do something which the law

forbids, that is to say with [the] bad purpose either —

to disobey or to disregard the law.” 429 U.S. at 11,

97_S.Ct. 22 (internal quotation marks omitted)

(alterations in original). The district court also

instructed the jury that " ‘[glood motive alone is

never a defense where the act done or omitted is a

crime, and that consequently *411 motive was

irrelevant except as it bore on intent.” Jd. (alteration

in original). The court of appeals held that the final

instruction was improper because the relevant

statute required a finding of bad purpose or evil

motive. Jd. The Supreme Court reversed, noting

that the court of appeals incorrectly assumed that

- Appx. A24 -

the reference to "evil motive” in an earlier Supreme

Court case meant something more than specific

intent to violate the law. Id. The Court stated that

“willful,” as the term is used in the tax statutes,

means “a voluntary, intentional violation of a known

legal duty." Jd. The Court determined that because

the district court had instructed the jury as to that

definition, the jury had been adequately instructed

on willfulness, and an additional instruction on

good faith was thus unnecessary. Jd.

[8] Accordingly, the district court in the present

case was not required to include a_ specific

instruction on good-faith because it adequately

instructed the jury on the meaning of willfulness

under Cheek and Pomponio. In other words,

Simkanin's requested instruction was "substantially

covered in the charge given to the jury" regarding

willfulness. See St. Gelais, 952 F.2d at 93. In

addition, taken together, the trial, charge, and

closing argument laid the theory of the defense

squarely before the jury, and the lack of the

requested instruction did not seriously impair

Simkanin's ability to present effectively his good-

faith defense.!2 /d.; United States v. Proctor, 118

Se re ne

12 As discussed more fully below, Simkanin argues

that the district court restricted his ability to present

his good-faith defense at trial. However, we address

here Simkanin’s argument’ concerning closing

argument. Simkanin notes that the distnct court

limited defense counsel to only fifteen minutes for

closing argument. However, he concedes that he did

not object below on this basis, and he explicitly states

that he does not challenge on appeal the district

court's limitation of closing argument. At the same

time, however, Simkanin argues that the limitation on

closing argument should shade our analysis of the

issues that he actually raises on appeal. In light of the

- Appx. A25 -

Fed.Appx. 862, 863 (5th Cir.2004) (per curiam)

(unpublished) (quoting United States v. Gray, 751

F.2d 733, 735-36 (Sth Cir. 1985)).

Finally, Simkanin complains that the phrase

"known legal duty" in the instructions did not make

it clear that the legal duty must have been known to

the defendant. This claim ignores the next sentence

of the instructions, which stated: "For the

government to establish willfulness as to Counts 1-

12 of the indictment, it must prove beyond a

reasonabie doubt as to the count in consideration

that defendant knew of the requirements of federal

law ... and that he voluntarily and intentionally

caused [Arrow] to fail to comply with these

requirements.” Similarly, Simkanin ignores the

actual language of the district court's instructions

when, citing FIFTH CIRCUIT PATTERN JURY

INSTRUCTIONS: CRIMINAL § 1.37, he asserts that

the district court did not instruct the jury that a

particular circumstances of this case, we do not agree

that the limitation on closing argument somehow

rendered the instruction on willfulness erroneous.

Defense counsel was entirely free to argue, and did in

fact argue, the good-faith defense to the jury during

the allotted time period, and, as discussed below, the

district court did not unfairly restrict Simkanin's

presentation of evidence to establish that defense. The

restriction on closing was applied evenhandedly to

both the defense and the prosecution. The trial lasted

only two days and involved relatively few witnesses _ It

involved a single theory of the defense, which was

based on Simkanin’'s beliefs about the requirements of

the federal tax laws (not the validity of those laws,

which are irrelevant to willfulness under Cheek).

Thus, we are not persuaded that the limitation on

closing unfairly curtailed defense counsel's ability to

present Simkanin's good-faith defense.

- Appx. A26 -

defendant did not "knowingly" commit a *412 tax

offense if he acted by mistake. In fact, as noted

above, the district court explicitly instructei the

jury that "knowingly, as that term has been used in

these instructions, means that the act was done

voluntarily and intentionally, not because of a

mistake or accident." Thus, Simkanin's argument

fails.

C. Evidentiary Rulings

[9] Simkanin's last argument with respect to his

conviction is that the district court unfairly and

arbitrarily excluded defense evidence and restricted

the scope of cross-examination, thus hampering the

presentation of his good-faith defense. We review a

district court's rulings on the admission or

exclusion of evidence for an abuse of discretion.

United States v. Flitcraft, 803 F.2d 184, 186 (5th

Cir. 1986).

{10} Simkanin argues that the district court erred

because it allowed him only briefly to say what he

knew, believed, and understood, but that it did not

allow him to corroborate his sincerity in these

assertions because it excluded from evidence certain

documents on which Simkanin allegedly relied for

his beliefs about the tax laws.!3 The district court,

however, explained that it did so because the

documents would tend only to confuse the jury

about the relevant issues in the case and were

cumulative of Simkanin's testimony about what the

documents said and how he relied upon them in

forming his beliefs about what the tax laws required

'3 Simkanin does not specifically identify all of the

evidentiary rulings that he claims were erroneous;

rather, he advances a broader contention that the

district court's evidentiary rulings as a whole

prejudiced his ability to assert his defense.

- Appx. A27 -

of him. Rule 403 of the Federal Rules of Evidence

states that “[ajlthough relevant, evidence may be

excluded if its probative value is_ substantially

outweighed by the danger of unfair prejudice,

confusion of the issues, or misleading the jury, or by

considerations of undue delay, waste of time, or

needless presentation of cumulative evidence." In

this instance, the district court did not abuse its

discretion in concluding that the probative value of

this evidence was far outweighed by its tendency to

confuse the jury as to the correct state of the law

and by its cumulative nature.

In Flitcraft, 803 F.2d at 185-86, we addressed the

defendants’ claim that the district court had erred in

excluding the documents upon which they allegedly

relied in forming their beliefs about the tax laws;

the defendants argued that such documents would

increase the likelihood that the jury would credit the

sincerity of the defendants’ purported beliefs. This

court held that the district court did not abuse its

discretion in excluding the evidence under

Fed.R.Evid. 403 because the documents had little

probative value, as they were largely cumulative of

the defendants’ testimony as to their contents and

the defendants’ reliance on them. Flitcraft, 803 F.2d

at 186. Furthermore, we stated that "the documents

presented a danger of confusing the jury by

suggesting that the law is unsettled and that it

sheuld resolve such doubtful questions of law." Id.

in Barnett, 945 F.2d at 1301, we once again

addressed the problem confronting a district court

called upon to engage in "the delicate balancing

required by Rule 403" when determining the

admissibility of evidence to support a defendant's

good-faith beliefs in a tax evasion case. We noted

"the need to allow the defendant to establish his

beliefs through reference to tax law sources and the

- Appx. A2S -

need to avoid unnecessarily confusing the jury as to

the actual state of the law." Jd.. Relying on Flitcraft,

we determined that the district court did not abuse

its discretion in excluding *413 documentary

evidence because the district court had allowed the

defendant to explain his understanding of the

documents’ while excluding the documents

themselves to avoid unnecessarily confusing the

jury. _Id. Thus, as in Flitcraft and Barnett, we

conclude that the district court in the present case

did not abuse its discretion in making the

evidentiary rulings of which Simkanin complains. '*

[11}{12] With respect to the more _ specific

evidentiary errors alleged by Simkanin, we similarly

conclude that the district court did not abuse its

discretion. Simkanin claims that the distnct court

erred by admitting a document entitled

"Proclamation of Warning,” which Simkanin had

posted on his website. In summary, the document

declared that Simkanin is a servant of God and that

public officials should be warned not to harm him or

his household, lest they wish to enter “into a state of

war against Almighty God" and to suffer “the fury of

a fire which will consume [them]." The government

responds that Simkanin opened the door to this

evidence when defense counsel questioned

Simkanin about now his religious beliefs told him

'¢ Simkanin avers that the district court's evidentiary

rulings were not evenhanded because it permitted the

government to introduce § 3402 as proof that

Simkanin had been shown, and therefore actually was

aware of, the correct law concerning withholding.

However, we do not find this disparity dispositive

because the admission of § 3402 did not raise the

possibility of confusing the jury in the same manner as

the defense exhibits.

- Appx. A29 -

not to withhold taxes from the paychecks of his

employees. When defense counsel requested that he

be able to question Simkanin on his religious

beliefs, the government replied that it would open

the door to the admission of the Proclamation. The

district court acknowledged that it probably would,

but it allowed defense counsel the option to proceed

with the testimony on Simkanin's religious views.

Simkanin testified that the Bible told him that God

is entitled to the first fruits of a person's labor and

that if he withheld taxes from his employees, then

he was stealing the first fruits of their labor. It is

not clear why defense counsel introduced

Simkanin's own testimony on this issue because his

statements that the tax laws contradicted his

religious views were irrelevant to his good-faith

defense under Cheek. It is perhaps less clear what

probative value the Proclamation had on the

relevant issues, but defense counsel was warned

that testimony concerning Simkanin's religious

views about the tax laws might open the door to

other evidence concerning his religious views. In

any event, even if the district court did abuse its

discretion in admitting the Proclamation, we are

convinced that it was harmless in the overall

scheme of the trial. At most, the Proclamation

showed that Simkanin held certain beliefs, which

would tend to support his good-faith defense rather

than refute it.

[13] Next, Simkanin complains that the district

court erred by admitting IRS press releases warning

taxpavers about various “scams” and "schemes"

(including employers who claim that they need not

withhold taxes). However, we do not agree that the

potentially prejudicial nature of the documents

outweighed the probative value of these documents,

which showed that Simkanin had been explicitly

warned about the illegality of his activities. Thus,

- Appx. A30 -

the district court did not abuse its discretion.

[14] Simkanin also argues that, in an in limine

ruling, the district court unfairly restrained defense

counsel from introducing any documentary evidence

without first approaching the _ bench. The

government responds that the district court's ruling

*414 was justified by the nature of the documents

on the defense exhibit list, which included the

Communist Manifesto,. multiple versions of the

Bible, and various publications translating Greek

and Hebrew. We agree with the government that the

district court did not abuse its discretion given this

exhibit list. Moreover, the documents actually

excluded on the basis of the in limine ruling would

have been properly excluded under Rule 403 for the

reasons stated above (i.e., they were cumulative and

potentially confusing).

[15] Next, Simkanin claims that the district court

unfairly restricted the cross-examination of

government witnesses, such as IRS agents Cooper

and Eastman. The district court prohibited certain

questions by defense counsel because the questions

were beyond the scope of direct and because, in the

court's opinion, the questions attempted to show

that the IRS agent's views of the law were incorrect

and that Simkanin's views were actually correct.

Simkanin argues that defense counsel's questions

merely attempted to demonstrate the

reasonableness of Simkanin's beliefs. Citing Olden

v. Kentucky, 488 U.S. 227, 109 S.Ct. 480, 102

L.Ed.2d 513 (1988) (per curiam), Simkanin claims

that these rulings violated the Confrontation Clause

of the Sixth Amendment. However, the district

court did not abuse its discretion in determining

that the questions were beyond the scope of direct,

see Fed.R.Evid. 611(b), and Simkanin was free to

recall the witnesses during his presentation of

evidence, although he did not attempt to do so.

- Appx. A3l -

Thus, his Confrontation Clause rights were not

implicated. Moreover, the district court did not

abuse its. discretion because Simkanin was

permitted to testify (and present the testimony of

other witnesses) about his beliefs and because this

line of questioning may have served to confuse the

jury unnecessarily.

D. Upward Departure

With respect to his sentence, Simkanin argues

that the district court erred by upwardly departing

from the sentencing range established by the

Guidelines. Prior to the upward departure, the

sentencing range established by the Guidelines was

forty-one to fifty-one months imprisonment (for a

criminal history category of I and an offense level of

Twenty-Two). Simkanin does not contend that the

district court erred in calculating this range.

However, the district court decided to depart

upwardly, and it imposed a sentence of eighty-four

months imprisonment. At the sentencing hearing,

the district court stated that USSG. §

2K2.0(a)(2}(B)'5 justified an upward departure

because: (1) Simkanin "has displayed contempt and

disrespect for the laws of the United States of

America, the State of Texas, and the city of Bedford,"

'SU.S.S.G.§ 5K2.0(a}(2)(B) (2003) provides:

(a) Upward Departures in General and Downward

Departures in Criminal Cases Other Than Child

Crimes and Sexual Offenses....

(2) Departures Based cm Circumstances of a Kind not

Adequately Taken into Consideration....

(B) Unidentified Circumstances.--A departure may be

warranted in the exceptional case in which there is

present a circumstance that the Commission has not

identified in the guidelines but that nevertheless is

relevant to determining the appropriate sentence.

- Appx. A32 -

and he has further confirmed that contempt in his

conduct since his bail was revoked; (2) he and

those who share his views have a cult-iike belief that

the laws of the United States do not apply to them;

(3) Simkanin has entrenched himself in anti-

government groups and is part of a movement

whose members question the power of the federal

government and its instrumentalities, including the

federal *415 courts, to exercise jurisdiction and

authority over them; (4) his beliefs have led him to

act in a manner inconsistent with the laws of the

United States (ranging from giving up his driver's

license, threatening to kill federal judges,'© and

failure to comply with the federal tax laws);- and (5)

the court was satisfied that Simkanin would

continue to act on those beliefs in the future. In

addition, the district court stated that U.S.S.G. §

4A1.3(a}{1)!7 further justified the departure because,

despite Simkanin's lack of a prior criminal record,

"based on defendant's radical beliefs relative to the

laws of the United States, it is likely that he will

commit future tax-related crimes."

The district court explained that in determining

the extent of the departure in accordance with

16 A person present at a meeting at Simkanin’s place of

business reported that Simkanin stated "I think we

need to knock off a couple of federal judges. That will

get their attention."

'7U.S.S.G. § 4A1.3(a)(1) provides:

(a) Upward Departures.--

(1) Standard for Upward Departure.--If reliable

information indicates that the defendant's criminal

history category substantially under-represents the

seriousness of the defendant's criminal history or the

likelihood that the defendant will commit other crimes,

an upward departure may be warranted.

- Appx. A33 -

CO)

U.S.S.G. § 4A1.3(a)(4),'8 the court used “as a

reference, the criminal history category applicable to

defendants whose likelihood to recidivate most

closely resembles that of the defendant's." The

court concluded that, for the reasons already

discussed, Simkanin's likelihood to recidivate most

closely resembles that of defendants whose criminal

history category is VI. This produced a total offense

level of Twenty-Two and a criminal history category

of VI, resulting in a sentencing range of 84-105

months. The district court then sentenced at the

bottom of that range and imposed an eighty-four

month sentence.

Simkanin argues that the district court erred in

imposing an upward departure on the grounds

articulated at the sentencing hearing because: (1) it

did not include a written statement of reasons in the

judgment as required by 18 U.S.C. § 3553(c)(2);!9

(2) the district court impermissibly based its

i8U.S.S.G.§ 4A1.3(a}(4) provides:

(4) Determination of Extent of Upward Departure.--

(A) In General.--Except as provided in subdivision (B),

the court shall determine the extent of a departure

under this subsection by using, as a reference, the

criminal history category applicable to defendants

whose criminal history or likelihood to recidivate most

closely resembles that of the defendant's.

'Y Section 3553(c) provides:

(c) Statement of reasons for imposing a sentence.--The

court, at the time of sentencing, shall state in open

court the reasons for its imposition of the particular

sentence, and, if the ‘sentence--

(2) is not of the kind, or is outside the range, described

in subsection (a)(4), the specific reason for the

imposition of a sentence different from that described,

which reasons must also be stated with specificity in

the written order of judgment and commitment ....

- Appx. A34-

departure on grounds. involving Simkanin's

associations and beliefs, in violation of the First

Amendment; and (3) the district court's belief that

Simkanin posed a danger of recidivism was not

supported by evidence.

[16] We recently discussed the appropriate

standard of review to employ when reviewing a

district court's decision to depart upwardly from the

sentencing range established by the Guidelines. See

United States v. Smith, 417 F.3d 483, 489-92, 2005

WL_ 1663784, *4-6 (Sth Cir. July 18, 2005). *416

There, we explained that the Supreme Court's

decision in United States v. Booker, --- U.S. ----, 125

S.Ct. 738, 160 L.Ed.2d 621 (2005), directed us to

return essentially to the abuse-of-discretion

standard employed prior to 2003:

Prior to 2003, our review of departure

decisions was for abuse of discretion,

pursuant to § 3742(e). In Apml 2003,

Congress amended § 3742(e), altering our

standard of review with respect to the

departure decision to de novo. Under this

scheme, while the decision to depart was

reviewed de novo, the degree of departure was

still reviewed for abuse of discretion. Then, in

January 2005, the Supreme Court in Booker

excised § 3742(e), leaving the appellate

courts to review sentences for

reasonableness. The Court explained that it

was essentially returning to the standard of

review provided by the pre-2003 text, which

directs us to determine whether the sentence

is unreasonable with regard to § 3553(a).

Section 3553(a) remains in effect, ard its

factors guide us in determining whether a

sentence is unreasonable.

Smith, 417 F.3d at 489-90, 2005 WL 1663784 at *4

- Appx. A35 -

(footnotes and internal quotation marks omitted);2°

see also id. at 490 n. 24, 2005 WL 1663784 at *4 n.

24; United States v. Harris, 293 F.3d 863, 871 (Sth

Cir.2002).2!_|[FN21{ Applying this standard, we

20 As the Smith court noted, 18 U.S.C. 3553(a) states:

(a) Factors to be considered in imposing a sentence.--

The court shall impose a sentence sufficient, but not

greater than necessary, to comply with the purposes

set forth in paragraph (2) of this subsection. The

court, in determining the particular sentence to be

imposed, shall consider--

(1) the nature and circumstances of the offense and

the history and characteristics of the defendant;

(2) the need for the sentence imposed--

(A) to reflect the seriousness of the offense, to promote

respect for the law, and to provide just punishment for

the offense;

(B) to afford adequate deterrence to criminal conduct;

(C) to protect the public from further crimes of the

defendant; and

(D) to provide the defendant with needed educational

or vocational training, medical care, or other

correctional treatment in the most effective manner;

(3) the kinds of sentences available;

(4) the kinds of sentence and the sentencing range

established for ... the applicable category of offense

committed by the applicable category of defendant as

set forth in the guidelines ...;

(S) any pertines? {sentencing guidelines] policy

statement ... [;}

(6) the need to avoid unwarranted sentence disparities

among defendants with similar records who have been

found guilty of similar conduct; and

(7) the need to provide restitution to any victims of the

offense.

2! In Harris, 293 F.3d at 871, the court stated:

We review a district court's departure from the range

established by the Guidelines for abuse of discretion.

- Appx. A36 -

conclude that Simkanin is not entitled to

resentencing.

{17] First, Simkanin argues that the district

court did not include its written statement of

reasons in its judgment of conviction and sentence

as required by 18 U.S.C. § 3553(c)(2). We disagree.

The judgment clearly states that the Statement of

Reasons and personal information about *417 the

defendant are set forth in an attachment to the

judgment. Although Simkanin argued in his

principal brief that the district court never drafted a

written statement of reasons, he concedes in his

reply brief that the court did so and that the written

statement is virtually identical to the oral reasons

given by the district court at sentencing. He also

concedes that, after he filed his initial brief, he

received a copy of the written statement, which was

in the sealed part of the appellate record, as is the

common practice in this circuit, and was available

to defense counsel. Thus, Simkanin's argument

that the district court did not author and include in

the record a written statement of reasons is wrong.

Furthermore, we find no merit in Simkanin's

unsupported argument in his supplemental brief

The district court's decision is accorded substantial

deference because it is a fact intensive assessment and

the district court's findings of fact are reviewed for

clear error. However, the district court's interpretation

of the Guidelines is a question of law, reviewed de

novo; a district court abuses its discretion by

definition when it makes an error of law. Determining

whether a factor is permissible to take into account

when considering a departure is one of these questions

of law. A district court abuses its discretion if it

departs on the basis of legally unacceptable reasons or

if the degree of the departure is unreasonable.

(internal citations omitted).

- Appx. A37 -

that he is entitled to resentencing simply because

the written reasons were attached to the judgment

and referenced after the judge's signature, as

opposed to appearing before the judge's signature.

[18] Second, Simkanin argues that the district

court erred because it upwardly departed on an

impermissible basis--namely, because of his

associations and beliefs. Given the particular facts

of this case, however, his argument fails. In

Dawson v. Delaware, 503 U.S. 159, 112 S.Ct. 1093,

117 L.Ed.2d 309 (1992), the Supreme Court held

that it was constitutional error to admit a

stipulation of the defendant's membership in a

racist prison gang, The Aryan Brotherhood, as an

aggravating factor for consideration in sentencing.

Dawson, 503 U.S. at 164-67, 112 S.Ct. 1093. The

Court reasoned that the defendant's membership

had no relevance whatsoever to the crime in

question, which was not racially motivated or

otherwise connected to the beliefs of the gang, and it

noted that the prosecution had ‘ntroduced (via a

Stipulation) evidence’ establisning only that

defendant was a member and that the gang held

white supremacist views, not any evidence showing

the gang's violent and unlawful tendencies. /d. The

Court explicitly recognized, however, _ that

consideration of a defendant's beliefs and

associations might be appropriate in some instances

in making sentencing decisions about the likelihood

that the defendant will engage in future criminal

activity. Jd. at 165-66, 112 S.Ct. 1093. The Court

stated that "the Constitution does not erect a per se

barrier to the admission of evidence cencerning

one's beliefs and associations at sentencing simply

because those beliefs and associations are protected

by the First Amendment." /d. at 165, 112 S.Ct.

1093. Moreover, the Court explained that "[{i]n many

- Appx. A38 -

cases, for example, associational evidence might

serve a legitimate purpose in showing that a

defendant represents a future danger to society|;][a]

defendant's membership in an organization that

endorses the killing of any identifiable group, for

example, might be relevant to a jury's inquiry into

whether the defendant will be dangerous in the

future." Jd. at 166, 112 S.Ct. 1093.

Simkanin's beliefs and associations may be

considered if they were "sufficiently related to the

issues at sentencing.” Boyle v. Johnson, 93 F.3d

180, 183-85 (Sth Cir.1996). Here, Simkanin's

sentence was not increased merely because of his

abstract beliefs or associations. Rather, Simkanin's

specific beliefs that the tax laws are invalid and do

not require him to withhold taxes or file returns

(and his association with an organization that

endorses the view that free persons are not required

to pay income taxes on their wages) are directly

related to the crimes in question and demonstrate a

likelihood of recidivism.22 Thus, *418 the district

court did not constitutionally err in considering

22 This court reached a similar conclusion in an

unpublished opinion, United States v. Tampico, 297

F.3d 396 (5th Cir.2002) (per curiam) (unpublished), a

child pornography case in which the court upheld an

upward departure that was based in part on the

defendant's membership in the North American Man

Boy Love Assvciation, which advocates sexual

relationships between men and underage boys. The

court concluded that the defendant's membership in

the organization was relevant to sentencing because it

may indicate the increased likelihood of recidivism.

Tampico, 297 F.3d at 402-03. As Simkanin correctly

points out, Tampico is not binding precedent.

Nonetheless, its reasoning is persuasive in light of

Dawson and Boyle.

- Appx. A39 -

these factors. See id. at 183-85; see also Fuller _v.

Johnson, 114 F.3d 491, 497-98 (Sth Cir.1997}

(finding that the defendant's membership in a racist

gang was properly considered in sentencing because

it went to future dangerousness in light of the

evidence showing the gang's violent tendencies).?°

Simkanin also briefly argues that the district

court's finding that he held “contempt and

disrespect for the law" was not a proper basis for

upward departure. Relying solely on United States

v. Andrews, 390 F.3d 840, 847- 48 (5th Cir.2004),

he claims that the appropriate action for the district

court to take in response to such contempt is the

23 The other Supreme Court cases cited by Simkanin

on the constitutional question are inapposite. See

Wisconsin v. Mitchell, 508 U.S. 476, 485, 113 S.Ct.

2194, 124 L.Ed.2d 436 (1993) (upholding a statute

thai increases punishment for crimes committed with

a racially motivated intent); McDonald v. Smith, 472

U.S. 479, 105 S.Ct. 2787, 86 L.Ed.2d 384 (1985)

(holding that the First Amendment right to petition is

no shield against liability for libel); Watts v. United

States, 394 U.S. 705, 89 S.Ct. 1399, 22 L.Ed.2d 664

(1969) (per curiam) (holding that a statute prohibiting

threats against the President did not constitutionally

apply to criminalize the defendant's conditional and

hyperbolic political comment); Noto v. United States,

367 U.S. 290, 297-98, 299-300, 81 S.Ct. 1517, 6

L.Ed.2d 836 (1961) (addressing a conviction under the

membership clause of the Smith Act and finding

evidence insufficient to show a present advocacy of

overthrow); R.A.V. v. Minnesota, 505 U.:.. 377, 112

S.Ct. 2538, 120 L.Ed.2d 305 (1992) (holsting

unconstitutional on First Amendment grounds a law

criminalizing conduct such as placing a burning cross

or Nazi swastika, which one knows to arouse anger,

alarm, or resentment on the basis of race, religion,

etc.).

- Appx. A440 -

denial of a downward adjustment for acceptance of

responsibility. However, Andrews involved a district

court's upward departure expressly based in part on

the defendant's failure to take responsibility (i.e., his

lack of paid restitution, attempts to blame others for

his behavior, and insincerity in his proffered words

of remorse). The district court in the present case

did not base its upward departure on the

defendant's lack of acceptance of responsibility, but

rather on the likelihood that he would recidivate.

Andrews, therefore, is inapposite.?4

At oral argument, defense counsel contended

that the district court erred because it departed

upwardly on the basis of Simkanin's firmly held

beliefs and that this reasoning contradicted the

government's position, and the jury's finding, that

Simkanin did not hold good-faith belief that he was

not obligated to file income returns or withhold

taxes from the paychecks of Arrow's employees.

However, as the government correctly responded,

the district *419 court's decision to depart upwardly

did not contradict the jury's finding that Simkanin

did not have a valid good-faith defense under Cheek.

As discussed above, Simkanin's avowed position

was that he would not comply with the tax laws,

24 Simkanin also challenges the district court's ability

to predict the likelihood of recidivism, stating that even

trained scientists cannot accurately make such

predictions. The Guidelines, however, clearly permit a

district court to depart upwardly if it believes that

reliable information suggests that the defendant's

likelihood to recidivate is not adequately represented

by the range established. See U.S.S.G. § 4A1.3/(a)(1).

Obviously, nothing in the Guidelines or our case law

suggests that the district court must be able to predict

recidivism with scientific certainty. e

- Appx. A4l -

and the reason for his position was that the tax laws

were both inapplicable to him and invalid for a

number of reasons beyond the boundaries of a

legitimate good-faith defense under Cheek. At

sentencing, Simkanin made clear to the district

court that he continued to hold these beliefs when

he stated that he still “firmly believed" that the

Bible, the Constitution, and the Declaration of

Independence all agree that "the wages of a laborer

are withheld through fraud." Thus, the district

court was convinced that Simkanin's likelihood to

recidivate was not adequately reflected by the

Guidelines range, and it did not abuse its discretion

in upwardly departing from that range.

[19][20} Finally, Simkanin contends that the

extent of the upward departure was unreasonable.

The district court upwardly departed from a range of

forty-one to fifty-one months imprisonment to

impose a sentence of eighty-four months. Simkanin

argues that the district court failed to articulate the

reasons "why a sentence commensurate with a

bypassed criminal history category was not

selected." United States v. Lambert, 984 F.2d 658,

663 (Sth Cir.1993) (en banc). Simkanin is correct

that the district court did not specifically state why

it rejected each of the preceding criminal history

categories. However, as the government correctly

notes, this court does "not require the district court

to go through a ‘ritualistic exercise’ where ... it is

evident from the stated grounds for departure why

the bypassed criminal history categories were

inadequate.” United States v. Ashburn, 38 F.3d 803,

809 (Sth Cir.1994) (en banc} (quoting Lambert, 984

F.2d at 663). Simkanin correctly notes that it was

clearer in Ashburn why the district court had

decided that defendant's criminal history category

did not adequately reflect his prior history--the

- Appx. A42 -

district court in Ashburn noted that the defendant

had committed a series of robberies for which he

was never convicted. Jd. However, the district court

in the present case explained that it was convinced

that Simkanin's membership in a group with radical

views rejecting the laws of the United States and his

professed beliefs that he is not required to abide by

the tax laws would lead him to commit other tax-

related crimes. Moreover, the mere fact that the

upward departure nearly doubled the Guidelines

range does not render it unreasonable. See United

States v. Daughenbaugh, 49 F.3d_171, 174-75 (Sth

Cir.1995) (upholding departure from Guidelines

range of fifty-seven to seventy-one months to a

sentence of 240 months); Ashburn, 38 F.3d at 809

(upholding departure from range of sixty-three to

seventy-ecight months to sentence of 180 months).

Therefore, we are persuaded, guided by the factors

in § 3553(a), that the sentence imposed was

reasonable for the reasons given by the district

court.

E. Booker Error

[21] Simkanin argues that he is entitled to

resentencing under Booker. He concedes that he

did not object on relevant grounds in the district

court and that our review is therefore for plain error.

See United States v. Mares, 402 F.3d 511, 520 (Sth

Cir.2005). The basis of Simkanin’s Booker

argument is that the district court erred by

enhancing his sentence based on facts not admitted

by the defendant nor found by the jury. He claims

that this court should focus solely on this alleged

enhancement error without considering the effect of

the Guidelines’ mandatory nature at the time that

he was sentenced. *420 This argument fails under

Mares because the proper inquiry for Booker error

- Appx. A43 -

under the plain-error test is whether "the result

would have likely been different had the judge been

sentencing under the Booker advisory regime rather

than the pre-Booker mandatory regime."25 Mares,

402 F.3d at 522. Simkanin clearly has not met his

burden because he has pointed to nothing in the

record suggesting that he would have received a

lower sentence had he been sentenced under the

post-Booker advisory Guidelines. His assertion that

other defendants with similar records who have

committed similar offenses have received shorter

sentences does nothing to show that he was

prejudiced by the district court's assumption that

the Guidelines were mandatory. Furthermore,

Simkanin's suggestion that we should simply

disregard the Supreme Court's remedial majority in

Booker, including its explicit instruction to apply its

remedial interpretation of the Guidelines to all cases

pending on direct appeal, is obviously unconvincing.

See, e.g., Booker, 125 S.Ct. at 769; cf. United States

v. Scroggins, 411 F.3d 572, 576-77 (5th Cir.2005).

Finally, because we conclude that Simkanin is not

entitled to resentencing, we need not address his

argument that the district court's sentencing

options would be limited on remand.

Il. CONCLUSION

For the foregoing reasons, we AFFIRM Simkanin's

conviction and sentence.

25 Indeed, Simkanin explicitly recognizes that his

position is foreclosed by Mares, and it is therefore

unavailing. See Hoque v. Johnson, 131 F.3d 466, 491

(Sth Cir.1997) (noting that one panel of this circuit

may not overturn another panel absent an intervening

decision to the contrary by the Supreme Court or this

court en banc).

- Appx. A44 -

APPENDIX B

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 04-10531

U.S. COURT OF APPEALS

UNITED STATES FILED

OF AMERICA OCT 27 2005

Plaintiff - Appellee CHARLES R. FULBRUGE III

o CLERK

Vv.

RICHARD MICHAEL

SIMKANIN

Defendant — Appellant

ee

Appeal from the United States District Court for the

Northern District of Texas, Fort Worth

~-<—-e ee eee ee em ee OH OH Oe Hee ee eee

ON PETITION FOR REHEARING EN BANC

(Opinion 8/5/05, 5 Cir., ____,

F.3d _ pianist

Before KING, Chief Judge, DAVIS, Circuit Judge,

and ROSENTHAL,* District Judge.

PER CURIAM: .

(x) Treating the Petition for Rehearing En Banc as

a Petition for Panel Rehearing, the Petition for Panel

Rehearing is DENIED. No member of the panel nor

judge in regular active service of the court having

requested that the court be polled on Rehearing En

Banc (FED. R. App. P. and 57 Cir. R. 35), the

Petition for Rehearing En Banc is DENIED.

( ) Treating the Petition for Rehearing En Banc as

a Petition for Panel Rehearing, the Petition for Panel

Rehearing is DENIED. The court having been polled

at the request of one of the members of the court

and a majority of the judges who are in regular

active service having voted in favor (FED. R. App. P.

and 57H Cir. R. 35), the Petition for Rehearing En

Banc is DENIED.

ENTERED FOR THE COURT:

CLERK'S NOTE:

SEE FRAP AND LOCAL

RULES 41 FOR STAY

S/ Carolyn Dineen King OF THE MANDATE

United States Circuit Judge

* District Judge of the Southern District of Texas,

sitting by designation.

REHG-6a

- Appx. B2 -

APPENDIX C

Chapter 21. -- Federal Insurance

Contributions Act

zeke

Subchapter A. -- Tax on Employees

§ 3101. Rate of Tax.

(a) Old-age, survivors, and disability insurance.

In addition to other taxes, there is hereby imposed

on the income of every individual a tax equal to the

following percentages of the wages (as defined in

section 3121(a)) received by him with respect to

employment (as defined in section 3121(b})--

In cases of wages received during: The rate shall be:

1984, 1985, 1986, or 1987 ........... 9.7 percent

Se OE SOS dentiibikordeciietinitekién 6.06 percent

1990 OF CRETCRIRET .....0cccceseccessereses 6.2 percent.

(b) Hospital insurance. In addition to the tax

imposed by the preceding subsection, there is

hereby imposed on the income of every individual a

tax equal to the following percentages of the wages

(as defined in section 3121(a)) received by him with

respect to employment (as defined in_ section

312 1(b))--

(1) with respect to wages received during the

calendar years 1974 through 1977, the rate

shall be 0.90 percent;

(2) with respect to wages received during the

calendar year 1978, the rate shall be 1.00

percent;

(3) with respect to wages received during the

calendar years 1979 and 1980, the rate shall

be 1.05 percent;

(4) with respect to wages received during the

calendar years 1981 through 1984, the rate

shall be 1.30 percent;

(5) with respect to wages received during the

calendar year 1985, the rate shall be 1.35

percent; and

(6) with respect to wages received after

December 31, 1985, the rate shall be 1.45

percent.

(c) Relief from taxes in cases covered by certain

international agreements. During any period in

which there is in effect an agreement entered into

pursuant to section 233 of the Social Security Act

with any foreign country, wages received by or paid

to an individual shall be exempt from the taxes

imposed by this section to the extent that such

wages are subject under such agreement exclusively

to the laws applicable to the social security system

of such foreign country.

§ 3102. Deduction of Tax from Wages.

(a) Requirement. The tax imposed by section 3101

shall be collected by the employer of the taxpayer,

by deducting the amount of the tax from the wages

as and when paid. An employer who in any

calendar year pays to an employee’ cash

remuneration to which paragraph (7}(B) of section

3121(a) is applicable may deduct an amount

equivalent to such tax from any such payment of

remuneration, even though at the time of payment

the total amount of+such remuneration paid to the

employee by the employer in the calendar year is

less than the applicable dollar threshold (as defined

in section 3121(x)) for such year; and an employer

who in any calendar year pays to an employee cash

remuneration to which paragraph (7)(C) or (10) of

section 3121(a) is applicable may deduct an amount

equivalent to such tax from any such payment of

- Appx. C2 -

remuneration, even though at the time of payment

the total amount of such remuneration paid to the

employee by the employer in the calendar year is

less than $100; and an employer who in any

calendar year pays to an employee’ cash

remuneration to which paragraph (8)(B) of section

312i(a) is applicable may deduct an amount

equivalent to such tax from any such payment of

remuneration, even though at the time of payment

the total amount of such remuneration paid to the

employee by the employer in the calendar year is

less than $150; and an employer who is furnished

by an employee a written statement of tips (received

in a calendar month) pursuant to Section 6053(a) to

which paragraph (12)(B) of section 3121(a) is

applicable may deduct an amount equivalent to

such tax with respect to such tips from any wages of

the employee (exclusive of tips) under his control,

even though at the time such statement is furnished

the total amount of the tips included in statements

furnished to the employer as having been received

by the employee in such calendar month in the

course of his employment by such employer is less

than $20.

(b) Indemnification of employer. Every employer

required so to deduct the tax shall be liable for the

payment of such tax, and shall be indemnified

against the claims and demands of any person for

the amount of any such payment made by such

employer.

(c) Special rule for tips.

(1) In the case of tips which constitute wages,

subsection (a) shall be applicable only to such

tips as are included in a written statement

furnished to the employer pursuant to section

6053(a), and only to the extent that collection

can be made by the emplover, at or after the

- Appx. C3 -

time such statement is so furnished and before

the close of the 10th day following the calendar

month (or, if paragraph (3) applies, the 30th

day following the year) in which the tips were

deemed paid, by deducting the amount of the

tax from such wages of the employee (excluding

tips, but including funds turned over by the

employee to the employer pursuant to

paragraph (2)) as are under control of the

employer.

(2) If the tax imposed by section 3101, with

respect to tips which are included in written

statements furnished in any month to the

employer pursuant to section 6053(a), exceeds

the wages of the employee (excluding tips) from

which the employer is required to collect the

tax under paragraph (1), the employee may

furnish to the employer on or before the 10th

day of the following month (or, if paragraph (3)

applies, on or before the 30th day of the

following year) an amount of money equal to

the amount of the excess.

(3) The Secretary may, under regulations

prescribed by him, authorize employers—

(A) to estimate the amount of tips that will be

reported by the employee pursuant to section

6053{a) in any calendar year,

(B) to determine the amount to be deducted

upon each payment of wages (exclusive of

tips) during such year as if the tips so

estimated constituted the actual tips so

reported, and

(C) to deduct upon any payment of wages

(other than tips, but including funds turned

over by the employee to the employer

pursuant to paragraph (2)) to such employee

during such year (and within 30 days

- Appx. C4 -

thereafter) such amount as may be necessary

to adjust the amount actually deducted upon

such wages of the employee during the year to

the amount required to be deducted in

respect of tips included in written statements

furnished to the employer during the year.

(4) If the tax imposed by section 3101 with

respect to tips which constitute wages exceeds

the portion of such tax which can be collected

by the employer from the wages of the employee

pursuant to paragraph (1) or paragraph (3),

such excess shall be paid by the employee.

(d) Special rule for certain taxable group-term

life insurance benefits. (1) In general. In

the case of any payment for group-term life

insurance to which this subsection applies--

(A) subsection (a) shall not apply,

(B) the employer shallwseparately include on

the statement required under section 6051--

(i) the portion of the wages which consists of

payments for group-term life insurance to

which this subsection applies, and

(ii) the amount of the tax imposed by

section 3101 on such payments, and

(C) the tax imposed by section 3101 on such

payments shall be paid by the employee.

(2) Benefits to which subsection applies.

This subsection shall apply to any payment for

group-term life insurance to the extent--

(A) such payment constitutes wages, and

(B) such payment is for coverage for periods

during which an employment relationship no

longer exists between the employee and the

employer.

(e) Special rule for certain transferred Federal

employees. In the case of any payments of wages

for service performed in the employ of an

- Appx. C5 -

international organization pursuant to a transfer to

which the provisions of section 312I1(y) are

applicable--

(1) subsection (a) shall not apply,

(2) the head of the Federal agency from which

the transfer was made shall separately include

on the statement required under section 6051--

{A) the amount determined to be the amount

of the wages for such service, and

(B) the amount of the tax imposed by section

3101 on such payments, and

(3) the tax imposed by section 3101 on such

payments shall be paid by the employee.

kak

Subchapter B. -- Tax on Employers

§ 3111. Rate of Tax.

(a) Old-age, survivors, and disability insurance.

In addition to other taxes, there is hereby imposed

on every employer an excise tax, with respect to

having individuals in his employ, equal to the

following percentages of the wages (as defined in

section 3121(a)) paid by him with respect to

employment (as defined in section 3121{(b))--

In cases of wages received during: The rate shall be:

1984, 1985, 1986, or 1987 ........... 5.7 percent

ST a iia oer cchocacasevisedaceds 6.06 percent

EDO OF CHOTORINE? 5 cececscciccesistcens 6.2 percent.

(b) Hospital insurance. addition to the tax

imposed by the preceding subsection, there is

hereby imposed on every employer an excise tax,

with respect to having individuals in his employ,

equal to the following percentages of the wages (as

defined in section 3121(a)}) paid by him with respect

- Appx. C6 -

to employment (as defined in section 312 1(b))--

(1) with respect to wages paid during the

calendar years 1974 through 1977, the rate

shall be 0.90 percent;

(2) with respect to wages paid during the

calendar year 1978, the rate shall be 1.00

percent;

(3) with respect to wages paid during the

calendar years 1979 and 1980, the rate shall

be 1.05 percent;

(4) with respect to wages paid during the

calendar years 1981 through 1984, the rate

shall be 1.30 percent;

(5) with respect to wages paid during the

calendar year 1985, the rate shall be 1.35

percent; and

(6) with respect to wages paid after December

31, 1985, the rate shall be 1.45 percent.

(c) Relief from taxes in cases covered by certain

international agreements. During any period in

which there is in effect an agreement entered into

pursuant to section 233 of the Social Security Act

with any foreign country, wages received by or paid

to an individual shall be exempt from the taxes

imposed by this section to the extent that such

wages are subject under such agreement exclusively

to the laws applicable to the social security system

of such foreign country.

x*xeenr

Subchapter C--General Provisions

§ 3121 Definitions

(a) Wages. For purposes of this chapter, the term

“wages” means all remuneration for employment,

including the cash value of all remuneration

(including benefits) paid in any medium other than

- Appx. C7 -

cash; except that such term shall not include--

(1) in the case of the taxes imposed by sections

3101l(a) and 3l1ll({a) that part of the

remuneration which, after remuneration (other

than remuneration referred to in_ the

succeeding paragraphs of this subsection)

equal to the contribution and benefit base (as

determined under section 230 of the Social

Security Act) with respect to employment has

been paid to an individual by an employer

during the calendar year with respect to which

such contribution and benefit base is effective,

is paid to such individual by such employer

during such calendar year. If an employer

(hereinafter referred to as successor employer)

during any calendar vear acquires substantially

all the property used in a trade or business of

another employer (hereinafter referred to as a

predecessor), or used in a separate unit of a

trade or business of a predecessor, and

immediately after the acquisition employs in

his trade or business an individual who

immediately prior to the acquisition was

employed in the trade or business of such

predecessor, then, for the purpose of

determining whether the successor employer

has___ paid remuneration (other than

remuneration referred to in the succeeding

paragraphs of this subsection) with respect to

employment equal to the contribution and

benefit base (as determined under section 230

of the Social Security Act) to such individual

during such calendar year, any remuneration

(other than remuneration referred to in the

succeeding paragraphs of this subsection) with

respect to employment paid (or considered

under this paragraph as having been paid) to

- Appx. C8 -

such individual by such predecessor during

such calendar year and prior to such

acquisition shall be considered as having been

paid by such successor employer;

(2) the amount of any payment (including any

amount paid by an employer for insurance or

annuities, or int. a fund, to provide for any

such payment) made to, or on behalf of, an

employee or ary of his dependents under a

plan or system established by an employer

which makes provision for his employees

generally (or for his employees generally and

their dependents) or for a class or classes of his

employees (or for a class or classes of his

employees and their dependents), on account

of--

(A) sickness or accident disability (but, in the

case of payments made to an employee or any

of his dependents, this subparagraph shall

exclude from the term "wages" only payments

which are received under a workmen's

compensation law), or

(B) medical or hospitalization expenses in

connection with. sickness or _ accident

disability, or

(C) death, except that this paragraph does not

apply to a payment for group-term life

insurance to the extent that such payment is

includible in the gross income of the

employee,

[((3) Repealed. Pub.L. 98-21, Title III,

§ 324(a)(3)(B), Apr. 20, 1983, 97 Stat. 123]

(4) any payment on account of sickness or

accident disability, or medical or hospitalization

expenses in connection with sickness or

accident disability, made by an employer to, or

on behalf of, an employee after the expiration of

- Appx. C9 -

6 calendar months following the last calendar

month in which the employee worked for such

employer;

(5) any payment made to, or on behalf of, an

employee or his beneficiary--

(A) from or to a trust described in section

40l(a) which is exempt from tax under

section 50l(a) at the time of such payment

unless such payment is made to an employee

of the trust as remuneration for services

rendered as such employee and not as a

beneficiary of the trust,

(B) under or to an annuity plan which, at the

time of such payment, is a plan described in

section 403(a)},

(C) under a simplified employee pension (as

defined in section 408(k)(1)), other than any

contributions described in section 408(k)(6),

(D) under or to an annuity contract described

in section 403(b), other than a payment for

the purchase of such contract which is made

by reason of a salary reduction agreement

(whether evidenced by a written instrument or

otherwise},

(E) under or to an exempt governmental

deferred compensation plan (as defined in

subsection (v)(3)),

(F) to supplement pension benefits under a

plan or trust described in any of the foregoing

provisions of this paragraph to take into

account some portion or all of the increase in

the cost of living (as determined by the

Secretary of Labor) since retirement but only

if such supplemental payments are under a

plan which is treated as a welfare plan under

section 3(2)(B)(ii) of the Employee Retirement

Irscome Security Act of 1974,

- Appx. C10 -

(G) under a cafeteria plan (within the meaning

of section 125) if such payment would not be

treated as wages without regard to such plan

and it is reasonable to believe that (if section

125 applied for purposes of this section)

section 125 would not treat any wages as

constructively received,

(H) under an arrangement to which section

408(p) applies, other than any elective

contributions under paragraph (2)(A)(i)

thereof, or

(I} under a plan described in _ section

457(e)(1 1){A}{ii) and maintained by an eligible

employer (as defined in section 457(e}({1));

(6) the payment by an employer (without

deduction from the remuneration of the

employee)--

(A) of the tax imposed upon an employee

under section 3101, or

(B) of any payment required from an employee

under a State unemployment compensation

law,

with respect to remuneration paid to an

employee for domestic service in a private home

of the employer or for agricultural labor;

(7)(A) remuneration paid in any medium other

than cash to an employee for service not in

the course of the employer's trade or business

or for domestic service in a private home of

the employer;

(B) cash remuneration paid by an employer in

any calendar year to an employee for

domestic service in a private home of the

employer (including domestic service on a

farm operated for profit), if the cash

remuneration paid in such year by the

employer to the employee for such service is

- Appx. Cll -

less than the applicable dollar threshold (as

defined in subsection (x)) for such year;

(C) cash remuneration paid by an employer in

any calendar year to an employee for service

not in the course of the employer's trade or

business, if the cash remuneration paid in

such year by the employer to the employee for

such service is less than $100. As used in

this subparagraph, the term "service not in

the course of the employer's trade or

business" does not include domestic service

in a private home of the employer and does

not include service described in subsection

(g)(S);

(8)(A) remuneration paid in any medium other

than cash for agricultural labor;

(B) cash remuneration paid by an employer in

any calendar year to an employee for

agricultural labor unless--

(i) the cash remuneration paid in such year

by the employer to the employee for such

labor is $150 or more, or

(ii) the employer's expenditures for

agricultural labor in such year equal or

exceed $2,500,

except that clause (ii) shall not apply in

determining whether remuneration paid to an

employee constitutes “wages” under this

section if such employee (I) is employed as a

hand harvest laborer and is paid on a piece

rate basis in an operation which has been,

and is customarily and generally recognized

as having been, paid on a piece rate basis in

the region of employment, (II) commutes daily

from his permanent residence io the farm on

which he is so employed, and (III) has been

employed in agriculture less than 13 weeks

- Appx. C12 -

during the preceding calendar year;

(9) Repealed. Pub.L. 98-21, Title II,

§ 324(a)(3)(B), Apr. 20, 1983, 97 Stat. 123]

(10) remuneration paid by an employer in any

calendar year to an employee for service

described in subsection (d)(3)(C) (relating to

home workers), if the cash remuneration paid

in such year by the employer to the employee

for such service is less than $100;

(11) remuneration paid to or on behalf of an

employee if (and to the extent that) at the time

of the payment of such remuneration it is

reasonable to believe that a corresponding

deduction is allowable under section 217

(determined without regard to section 274(n));

(12)(A) tips paid in any medium other than

cash;

(B) cash tips received by an employee in any

calendar month in the course of his

employment by an employer unless the

amount of such cash tips is $20 or more;

(13) any payment or series of payments by an

employer to an employee or any of his

dependents which is paid--

(A) upon or after the termination of an

employee's employment relationship because

of (i) death, or (ii) retirement for disability,

and

(B) under a plan established by the employer

which makes provision for his employees

generally or a class or classes of his

employees (or for such employees or class or

classes of employees and their dependents),

other than ™, such payment or series of

payments wt <. would have been paid if the

employee's ¢..ployment relationship had not

been so terminated. |;]

- Appx. C13 -

(14) any payment made by an employer to a

survivor or the estate of a former employee after

the calendar year in which such employee died;

(15) any payment made by an employer to an

employee, if at the time such payment is made

such employee is entitled to disability

insurance benefits under section 223(a) of the

Social Security Act and such entitlement

commenced prior to the calendar year in which

such payment is made, and if such employee

did not perform any services for such emplover

during the period for which such paymer.: is

made;

(16) remuneration paid by an organization

exempt from income tax under section 501(a)

(other than an organization described in section

40l(a}) or under section 521 in any calendar

year to an employee for service rendered in the

employ of such_ organization, if the

remuneration paid in such year by the

organization to the employee for such service is

less than $100;

(17) any contribution, payment, or service

provided by an employer which may be

excluded from the gross income of an employee,

his spouse, or his dependents, under the

provisions of section 120 (relating to amounts

received under qualified group legal services

plans);

(18) any payment made, or benefit furnished,

to or for the benefit of an employee, if at the

time of such payment or such furnishing it is

reasonable to believe that the employee will be

able to exclude such payment or benefit from

income under section 127, 129, 134(b)}(4), or

134(b)(5);

(19) the value of any meals or lodging furnished

- Appx. C14 -

by or on behalf of the employer if at the time of

such furnishing it is reasonable to believe that

the employee will be able to exclude such items

from income under section 119;

(20) any benefit provided to or on behalf of an

employee if at the time such benefit-is provided

it is reasonable to believe that the employee will

be able to exclude such benefit from income

under section 74(c), 108(f)(4), 117, or 132;

(21) in the case of a member of an Indian tribe,

any remuneration on which no tax is imposed

by this chapter by reason of section 7873

(relating to income derived by Indians from

exercise of fishing rights); or

(22) remuneration on account of--

(A) a transfer of a share of stock to any

individual pursuant to an exercise of an

incentive stock option (as defined in section

422(b)) or un“er an employee stock purchase

plan (as defined in section 423(b)), or

(B) any disposition by the individual of such

stock.

Nothing in the regulations prescribed for

purposes of chapter 24 (relating to income tax

withholding; which provides an exclusion from

"wages" as used in such chapter shall be

construed to require a similar exclusion from

"wages" in the regulations prescribed for

purposes of this chapter. Except as otherwise

provided in regulations prescribed by the

Secretary, any third party which makes a

payment included in wages solely by reason of

the parenthetical matter contained in

subparagraph (A) of paragraph (2) shall be

treated for purposes of this chapter and

chapter 22 as the employer with respect to

such wages.

- Appx. C15 -

(b) Employment. For purposes of this chapter, the

term "employment" means any service, of whatever

nature, performed (A) by an employee for the person

employing him, irrespective of the citizenship or

residence of either, (i) within the United States, or

(ii) on or in connection with an American vessel or

American aircraft under a contract of service which

is entered into within the United States or during

the performance of which and while the employee is

employed on the vessel or aircraft it touches at a

port in the United States, if the employee is

employed on and in connection with such vessel or

aircraft when outside the United States, or (B)

outside the United States by a citizen or resident of

the United States as an employee for an American

employer (as defined in subsection (h)), or (C) if it is

service, regardless of where or by whom performed,

which is designated as employment or recognized as

_ equivalent to employment under an agreement

entered into under section 233 of the Social Security

Act; except that such term shall not include--

(1) service performed by foreign agricultural

workers lawfully admitted to the United States

from the Bahamas, Jamaica, and the other

Sritish West Indies, or from any other foreign

country or possession ther-of, on a temporary

basis to perform agriculturai labor;

~—~(2j domestic service performed in a local college

club, or local chapter of a college fraternity or

sorority, by a student who is enrolled and is

regularly attending classes at a school, college,

or university;

(3)(A) service performed by a child under the

age of 18 in the employ of his father or

mother;

(B) service not in the course of the employer's

trade or business, or domestic service in a

- Appx. C16 -

private home of the employer, performed by

an individual under the age of 21 in the

employ of his father or mother, or performed

by an individual in the employ of his spouse

or son or daughter; except that the

provisions of this subparagraph shall not be

applicable to such domestic service performed

by an individual in the employ of his son or

daughter if--

(i) the employer is a surviving spouse or a

divorced individual and has not remarried,

or has a spouse living in the home who has

a mental or physical condition which results

in such spouse's being incapable of caring

for a son, daughter, stepson, or

¢tepdaughter (referred to in clause (ii)) for at

least 4 continuous weeks in the calendar

quarter in which the service is rendered,

and

(ii) a son, daughter, stepson, or

stepdaughter of such employer is living in

the home, and

(iii) the son, daughter, stepson, or

stepdaughter (referred to in clause (ii)) has

not attained age 18 or has a mental or

physical condition which requires. the

perscnal care and supervision of an adult

for at least 4 continuous weeks in the

calendar quarter in which the service is

rendered;

(4) service performed by an individual on or in

connection with a vessel not an American

vessel, or on or in connection with an aircraft

not an American aircraft, if (A) the individual is

employed on and in connection with such

vessel or aircraft, when outside the United

States and (B)(i) such individual is not a citizen

- Appx. C17 -

of the United States or (ii) the employer is not

an American employer;

(5) service performed in the employ of the

United States or any instrumentality of the

United States, if such service--

(A) would be excluded from the term

"employment" for purposes of this title if the

provisions of paragraphs (5) and (6) of this

subsection as in effect in January 1983 had

remained in effect, and

(B) is performed by an individual who--

(i) has been continuously performing service

described in subparagraph (A) _ since

December 31, 1983, and for purposes of this

clause--

(I) if an individual performing service

described in subparagraph (A) returns to

the performance of such service after being

separated therefrom for a period of less

than 366 consecutive days, regardless of

whether the period began before, on, or

after December 31, 1983, then such

service shall be considered continuous,

(II) if an individual performing service

described in subparagraph (A) returns to

the performance of such service after being

detailed or transferred to an international

organization as descrived under section

3343 of subchapter III of chapter 33 of title

5, United States Code, or under section

3581 of chapter 35 of such title, then the

service performed for that organization

shall be considered service described in

subparagraph (A),

(III) if an individual performing service

described in subparagraph (A) is

reemployed or reinstated after being

- Appx. C18 -

separated from such service for the

purpose of accepting employment with the

American Institute in Taiwan as provided

under section 3310 of chapter 48 of title

22, United States Code, then the service

performed for that Institute shall be

considered service described in

subparagraph (A},

(IV) if an individual performing service

described in subparagraph (A) returns to

the performance of such service after

performing service as a member of a

uniformed service (including, for purposes

of this clause, service in the National

Guard and temporary service in the Coast

Guard Reserve) and after exercising

restoration or reemployment rights as

provided under chapter 43 of title 38,

United States Code, then the service so

performed as a member of a uniformed

service shall be considered _ service

described in subparagraph (A), and

(V) if an individual performing service

described in subparagraph (A) returns to

the performance of such service after

employment (by a tribal organization) to

which section 105(e)(2) of the Indian Self-

Determination Act applies, then the

service performed for that _ tribal

organization shall be considered service

described in subparagraph (A); or

(ii) is receiving an annuity from the Civil

Service Retirement and Disability Fund, or

benefits (for service as an employee) under

another retirement system established by a

law of the United States for employees of the

Federal Government (other than for

- Appx. C19 -

members of the uniformed service);

except that this paragraph shall not apply with

respect to any such service performed on or

after any date on which such _ individual

performs--

(C) service performed as the President or Vice

President of the United States,

(D) service performed--

(i) in a position placed in the Executive

Schedule under sections 5312 through 5317

of title 5, United States Code,

(ii) as a noncareer appointee in the Senior

Executive Service or a noncareer member of

the Senior Foreign Service, or

{iii) in a position to which the individual is

appointed by the President (or his designee)

or the Vice President under section

105(a)(1), 1O6(a)(1), or 107(a)(1) or (b)(1) of

title 3, United States Code, if the maximum

rate of basic pay for such position is at or

above the rate for level V of the Executive

Schedule,

(E) service performed as the Chief Justice of

the United States, an Associate Justice of the

Supreme Court, a judge of a United States

court of appeals, a judge of a United States

district court (including the district court of a

territory), a judge of the United States Court

of Federal Claims, a judge of the United

States Court of International Trade, a judge of

the United States Tax Court, a United States

magistrate, or a referee in bankruptcy or

United States bankruptcy judge,

(F) service performed as a Member, Delegate,

or Resident Commissioner of or to the

Congress, |

(G) any other service in the legislative branch

- Appx. C20 -

of the Federal Government if such service--

(i) is performed by an individual who was

not subject to subchapter III of chapter 83

of title 5, United States Code, or to another

retirement system established by a law of

the United States for employees of the

Federal Government (other than for

members of the uniformed services), on

December 31, 1983, or

(ii) is performed by an individual who has,

at any time after December 31, 1983,

received a lump-sum payment under section

8342(a) of title 5, United States Code, or

under the corresponding provision of the

law establishing the other retirement system

described in clause (i), or

(iii) is performed by an individual after such

individual has otherwise ceased to be

subject to subchapter III of chapter 83 of

title 5, United States Code (without having

an application pending for coverage under

such subchapter), while performing service

in the legislative branch (determined

without regard to the provisions of

subparagraph (B) relating to continuity of

employment), for any period of time after

December 31, 1983,

and for purposes of this subparagraph (G) an

individual is subject to such subchapter III or

to any such other retirement system at any

time only if fa) such individual's pay is subject

to deductions, contributions, or similar

payments (concurrent with the service being

performed at that time) under section 8334(a)

of such title 5 or the corresponding provision

of the law establishing such other syStem, or

(in a case to which section 8332(k)(1) of such

- Appx. C21 -

title applies) such individual is making

payments of amounts equivalent to such

deductions, contributions, or similar

payments while on leave without pay, or (b)

such individual is receiving an annuity from

the Civil Service Retirement and Disability

Fund, or is receiving benefits (for service as

an employee) under another retirement

system established by a law of the United

States for employees of the _ Federal

Government (other than for members of the

uniformed services), or

(H) service performed by an individual--

(i) on or after the effective date of an election

by such individual, under section 301 of

the Federal Employees' Retirement System

Act of 1986, section 307 of the Central

Intelligence Agency Retirement Act (50

U.S.C. 2157), or the Federal Employees'

Retirement System Open Enrollment Act of

1997 to become subject to the Federal

Employees’ Retirement System provided in

chapter 84 of title 5, United States Code, or

(ii) on or after the effective date of an

election by such _ individual, under

regulations issued under section 860 of the

Foreign Service Act of 1980, to become

subject to the Foreign Service Pension

System provided in subchapter II of chapter

8 of title I of such Act;

(6) service performed in the employ of the

United States or any instrumentality of the

United States if such service is performed--

. (A) in a penal institution of the United States

by an inmate thereof;

(B) by any individual as an employee included

under section 5351(2) of title 5. United States

- Appx. C22 -

Code (relating to certain interns, student

nrses, and other student employees of

h \ -itals of the Federal Government), oth

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