Delmar Hardy v. United States

Willfulness—the intent to violate the law—is an element of certain federal criminal tax offenses, including IRC § 7206(1). Courts have long recognized that good-faith reliance on the advice of a tax professional negates willfulness, where there has been full disclosure of the material facts to the advisor. In Cheek v. United States, 498 U.S. 192 (1991), this Court held that a jury must consider a defendant’s subjective belief in determining whether the defendant held a good-faith belief that he was complying with the tax laws. However, the district court in this case refused to give Mr. Hardy’s requested reliance-on-accountant instruction based on the court’s objective determination that Mr. Hardy’s accountant had not actually received all documents necessary to accurately prepare Mr. Hardy’s tax returns, disregarding Mr. Hardy’s subjective belief that his accountant had all necessary records. In a decision that conflicts with other circuits and relies on a case that preceded Cheek, the Ninth Circuit affirmed the district court’s refusal to provide the defendant’s requested reliance-on-accountant instruction, holding that it is not an abuse of discretion to refuse to give such an instruction where the court has given an adequate instruction on specific intent. The questions presented are: 1. Does this Court’s decision in Cheek v. United States, 498 U.S. 192 (1991), require a court to apply a subjective standard in determining whether there was evidence of full disclosure to support a reliance on a tax professional jury instruction in a criminal tax case?