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10275Good Faith Defense in Tax Cases

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  • law_self_help
    Feb 28, 2006
      Good FaithThe defense of good faith is a difficult one in
      part due to the well recognized maxim,
      "ignorance of the law is no defense". Good faith can only be used in
      a specific intent crime and is used primarily in tax and financial
      fraud cases. Some courts hold that an adequate
      specific intent instruction is enough. New England Enterprises, Inc.
      v. U.S. 400 F.2d 58,
      71 (1 Cir 1968); U.S. v. Dockray, 943 F.2d 152, 154-56 (1 Cir. 1991)
      (collecting cases pro and con a specific good faith instruction).
      Other circuits require an instruction that speaks
      directly to good faith, U.S. v. Casperson, 773 F.2d 216, 222-24 (8
      Cir. 1985); U.S. v.thHopkins, 744 F.2d 716, 717-18 (10 Cir. 1984)(en
      banc), U.S. v. Harting 879 F.2d 765 (10ththCir. 1989)(reversing for
      failure to give a good faith instruction in a tax case).Good faith,
      when asserted must be "objectively reasonable," with the exception
      of "willful
      evasion" of tax cases, U..S. v. Cheek, 498 U.S. 192, 111 S. Ct. 604
      (1991)(Cheek construed
      the word "willfully" in the tax evasion statute, 26 U.S.C. ยง 7201,
      7203, and concluded that
      a good faith misunderstanding of the tax law need not be objectively
      reasonable to serve as
      STATUTE IT"S A DEFENSE) 111 S. Ct. at 611). As the first circuit has
      since noted, the willfulness
      requirement in tax evasion serves a function unique in criminal law:
      it makes ignorance of
      the law a defense. Id. at 609; Dockray at 156. When good faith is
      asserted in tax fraud cases,
      Cheek requires the government to disprove the claimed good faith of
      the defendant. Cheek,
      112 S.Ct. at 610-12.Sample instruction - Good faith is inconsistent
      with an intent to defraud. Good faith is also
      inconsistent with an intent to obtain money or property by means of
      false and fraudulent
      pretenses or representations. The term "good faith" has no precise
      definition. However,
      "good faith" means among other things, a belief or opinion honestly
      held, an absence of
      malice or ill will, and an intention to avoid taking unfair
      advantage of another. Evidence of
      good faith can create a reasonable doubt that Defendant violated the
      mail fraud statute. It is
      important to bear in mind that Defendant has no burden to prove good
      faith. It is the
      government's burden to prove
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