Unpublished Disposition, 855 F.2d 863 (9th Cir. 1988)

MEMORANDUM^** 

Dennis Gauld was indicted under 26 U.S.C. § 7201 on two counts of attempting to evade income taxes for the years 1983 and 1984. Gauld's sole defense at trial was that he had come to believe that he was not legally obligated to file a tax return until the IRS assessed his tax liability. He maintained that this was a good faith belief, derived in part from a book by Earl Schiff entitled, "How Americans Can Stop Paying Income Taxes." After a bench trial, Gauld was convicted on both counts. He was sentenced to one year and one day in prison on the first count, received a suspended sentence on the second count and was placed on five years probation. He timely appealed his conviction. We have jurisdiction under 28 U.S.C. § 1291, and affirm.

DISCUSSION

Gauld argues that there was insufficient evidence to convict him of willfully attempting to evade taxation. In assessing the sufficiency of evidence underlying a conviction, we review the evidence in the light most favorable to the Government. If any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt, we will affirm. Jackson v. Virginia, 443 U.S. 307, 319 (1979); United States v. Arriaga-Segura, 743 F.2d 1434, 1435 (9th Cir. 1984).

To establish a violation of section 7201, the Government must prove: (1) willfulness; (2) existence of a tax deficiency; and (3) an affirmative act constituting an evasion or attempted evasion of the tax. United States v. Voorhies, 658 F.2d 710, 713 (9th Cir. 1981). Willfulness is evidenced by "any conduct, the likely effect of which would be to mislead or conceal." Id. at 715. A mere failure to file a return or pay taxes, however, is not enough.

We have no difficulty concluding that the evidence supported the verdict in this case. Gauld consistently had filed returns from 1973 through 1982, from which the court could infer that he was aware of his legal obligation to file a return and that his later failure to file was willful. United States v. Callery, 774 F.2d 1456, 1458 (9th Cir. 1986). On his W-4 form, he claimed exemption from withholding even though he had incurred a tax liability the prior year, an act probative of an evasion scheme. United States v. Bergman, 813 F.2d 1027, 1029 (9th Cir.), cert. denied, 108 S. Ct. 154 (1987). The IRS wrote to Gauld's employer and instructed it no longer to honor Gauld's request for exemption. When Gauld was informed that he would have to fill out a new W-4 he threatened to sue the employer if it withheld any taxes from his check.

Gauld also took steps in connection with his assets that suggest tax evasion motives. He attempted to liquidate his assets by selling his condominium and giving his truck to his girlfriend. See Voorhies, 658 F.2d at 715 (liquidation of assets probative of willfulness in violating tax law). He went to his bank and attempted to close his three accounts, which totaled more than $10,000. When the bank told Gauld that a cash withdrawal larger than $10,000 would trigger a report to the IRS, however, Gauld structured the transaction so that he received $9,990 in cash and a cashier's check for the balance. The IRS sent an agent to meet with Gauld several times from 1984-85. Gauld never produced the books or records the agent requested, and at one point told the agent that the tax system was voluntary and that he no longer chose to volunteer. He made similar remarks to his employer, to whom he opined that the tax system was "illegal" or "unconstitutional."

Gauld contends that as a result of his good faith misunderstanding, he is guilty at most of the misdemeanors of improperly asserting an exemption under 26 U.S.C. § 7203 and failure to file a return under 26 U.S.C. § 7205. Good faith, however, is a quintessential credibility determination, uniquely suited to the trier of fact. Voorhies, 658 F.2d at 715. We find nothing to indicate that the district court's conclusion was in error.

AFFIRMED.