## Facts

- Dorothy Clark Garber had a rare blood antibody that made her blood plasma commercially valuable, and she sold plasma to biomedical companies.
- From 1970–1972, she received substantial payments connected to plasma extraction and sale.
- One company paid her $200 weekly, treated it as salary, withheld taxes, and issued W-2s; it also made additional payments (including a $25,000 bonus in 1972) without withholding and issued a Form 1099 marked “for information only.”
- Another company paid her for plasma without withholding taxes and without issuing W-2s or 1099s.
- Garber reported the W-2 salary amounts but did not report other plasma-related receipts, believing they were non-taxable based on the payors’ treatment and professional advice.
- The government prosecuted her for willful tax evasion under 26 U.S.C. § 7201 for tax years 1970–1972, claiming the unreported plasma payments were taxable income.
- Government witnesses testified the payments were taxable, though one acknowledged the taxability question was novel and uncertain.
- Garber sought to present expert testimony from a certified public accountant that the tax treatment of such receipts was not settled (or at least legally uncertain), bearing on her ability to act “willfully.”
- The trial court excluded expert testimony directly addressing whether the plasma payments were taxable and instructed the jury that the receipts were taxable income as a matter of law.
- The jury acquitted Garber for 1970 and 1971 but convicted her for 1972.

## Issues

1. Whether the tax treatment of payments for a taxpayer’s own blood plasma was sufficiently uncertain that the court should not have treated taxability as conclusively established against the defendant in a criminal tax case.
2. Whether excluding defense expert testimony on the unsettled state of the law, combined with an instruction that the payments were taxable as a matter of law, improperly constrained the jury’s consideration of “willfulness” under 26 U.S.C. § 7201.

## Decision

- The Fifth Circuit reversed Garber’s 1972 conviction and remanded for a new trial.
- The court held that the trial court erred in excluding defense expert testimony relevant to legal uncertainty and willfulness.
- The court held that instructing the jury that the plasma receipts were taxable income as a matter of law, in this novel context, improperly limited the jury’s role in assessing intent.
- The combined rulings deprived Garber of a fair opportunity to contest willfulness, an essential element of the offense.

## Legal Principles

- Tax evasion under 26 U.S.C. § 7201 requires proof of willfulness: a voluntary, intentional violation of a known legal duty.
- When the governing tax duty is genuinely unsettled, evidence of professional disagreement and legal uncertainty may be admissible to negate willfulness.
- In criminal tax cases involving novel tax questions, a court should not resolve taxability in a way that effectively prevents the jury from evaluating whether the defendant could have knowingly violated a clear legal obligation.
- Excluding defense evidence bearing directly on willfulness, while permitting the prosecution to present generalized testimony that income was taxable, can create prejudicial imbalance on a contested mens rea element.

## Conclusion

The Fifth Circuit ordered a new trial because the legal uncertainty surrounding the taxability of blood-plasma payments made evidence of ambiguity central to willfulness, and the trial court’s evidentiary exclusions and conclusive taxability instruction improperly constrained the jury’s assessment of Garber’s intent.


United States v. Garber, 607 F.2d 92 (5th Cir. 1979)