United States v. Easterday

Jack Easterday (defendant) operated nursing homes through Employee Equity Administration (EEA) and its subsidiaries (collectively, EEA). Easterday caused EEA not to pay to the Internal Revenue Service (IRS) the full amount of payroll taxes that EEA owed. Easterday took full responsibility for the delinquency and cooperated with the IRS, but EEA never paid the overdue taxes. The United States eventually charged Easterday with 109 felony counts of willfully failing to pay taxes in violation of Internal Revenue Code (code) § 7202. At trial, Easterday’s defense was that he did not have the money to pay the IRS and that he used the payroll-tax money to keep EEA running. Easterday sought (1) a jury instruction that his failure to pay EEA’s taxes was willful only if the United States proved that EEA had sufficient funds to pay the taxes or that EEA lacked sufficient funds due to Easterday’s voluntary, intentional, and unjustified act and (2) to present extensive evidence regarding EEA’s financial condition. The district court rejected Easterday’s requests. Instead, the district court instructed the jury that the tax laws did not permit Easterday to use payroll-tax money to pay business expenses. However, the district court also charged the jury that the United States had the burden of proving that Easterday lacked a good-faith belief that he was complying with the tax laws and that Easterday could have a good-faith belief even if his belief was unreasonable. The jury convicted Easterday of 107 charges. Easterday appealed, arguing that under United States v. Poll, his ability to pay the taxes was an element of the § 7202 offense.