9th Circuit Narrows "Willfulness" Standard in Tax Evasion Cases — What It Means for Your Defense

In a 2-1 decision handed down May 28, 2026, the Ninth Circuit Court of Appeals issued what may be the most significant tax-evasion appellate ruling in the circuit since United States v. Bishop. The panel in United States v. Morrison held that the "willfulness" element in 26 U.S.C. § 7201 requires the government to prove that the defendant knew of the specific legal duty imposed by the tax code — not merely a general awareness that the conduct was wrong. The ruling creates a split with the Sixth and Eleventh Circuits and opens new defense opportunities for tax-evasion defendants in the Ninth Circuit.

The Facts of Morrison

James Morrison, a San Diego-based business owner, was convicted of tax evasion after failing to report approximately $2.3 million in income over four years. Morrison did not dispute the unreported income. His defense was that he relied in good faith on the advice of his long-time accountant, who had structured certain transactions as non-taxable events under provisions of the Internal Revenue Code that Morrison — a non-lawyer, non-accountant — did not independently understand.

The district court instructed the jury that "willfulness" meant "a voluntary, intentional violation of a known legal duty." Morrison argued on appeal that the instruction was incomplete: the jury should have been told that the government must prove Morrison knew the specific legal duty imposed by the particular Code provision at issue, not merely that he knew the tax system required him to report income generally.

The Majority Opinion

Writing for the majority, Judge Berzon agreed with Morrison in part. The court held that while § 7201 does not require the government to prove the defendant read and understood the specific statutory text, it does require proof that the defendant was aware of the legal duty that the government claims was violated — and that a good-faith belief that the conduct was lawful, even if objectively unreasonable, negates willfulness.

"The Supreme Court has consistently construed criminal tax provisions to require a heightened mens rea," Judge Berzon wrote. "A taxpayer who believes in good faith that a transaction is not taxable — because, for example, he relied on professional advice or a plausible reading of the Code — has not acted willfully, even if that belief was mistaken."

The court vacated Morrison's conviction and remanded for a new trial with a revised jury instruction. The government has not yet announced whether it will seek en banc review.

The Dissent and the Circuit Split

Judge VanDyke dissented, arguing that the majority had effectively overruled circuit precedent and that the new standard "invites tax evaders to manufacture post-hoc justifications from professional advisors who were never asked the right questions." The dissent noted that the Sixth Circuit and Eleventh Circuit require only that the defendant knew of the general duty to report income — not the specific Code provision at issue.

This circuit split makes Morrison a strong candidate for Supreme Court review. In the meantime, tax-evasion defendants in the Ninth Circuit — which includes California, Arizona, Nevada, Oregon, Washington, Alaska, Hawaii, Idaho, and Montana — can invoke the heightened willfulness standard in their defense.

What This Means for Tax Evasion Defendants

If you are under investigation or charged with tax evasion in the Ninth Circuit, Morrison provides several immediate defense strategies:

First, the advice-of-counsel/accountant defense is now explicitly recognized as a complete defense to willfulness, even if the advice turned out to be wrong. Documenting the advice you received, what you told the advisor, and your good-faith reliance is critical.

Second, the government can no longer secure a willfulness instruction that permits the jury to convict based solely on the defendant's failure to report income. The instruction must specify that the defendant knew of the particular legal duty at issue.

Third, the ruling may affect plea negotiations. If the government cannot prove willfulness under the heightened standard, its trial leverage is reduced. This should be factored into every plea evaluation.