§7201 — Attempt to evade or defeat tax

485, 493 (2017), supplementing and overruling in part 147 T.C.

A conviction for tax evasion under section 7201 requires proof of specific intent to defraud—the same element necessary for section 6651(f).

Petitioner was indicted on two counts of tax evasion pursuant to section 7201 for 2000 and 2001.

Similar charges for tax evasion pursuant to section 7201 were alleged against petitioner Le for 2004 and 2005 in Counts II and III.

And conviction for tax evasion under section 7201 requires proofofspecific intent to defraud--the same element necessary for the civil-fraud penalty under section 6651(f).

Accordingly, we hold that petitioner had taxable income resulting from $207,936 - 22 - [*22] offunds he diverted from the Capital Marketing account to purchase motorcycles and motorcycle-related accessories for the taxable year 2000.

A conviction for tax evasion pursuant to section 7201, either upon a guilty plea or upon ajury verdict, conclusively establishes the existence offraud in a subsequent proceeding through the doctrine ofcollateral estoppel.

A conviction for tax evasion pursuant to section 7201, either upon a guilty plea or upon ajury verdict, conclusively establishes the existence offraud in a subsequent proceeding through the doctrine ofcollateral estoppel.

7201 provides: Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title [the Internal Revenue Code of 1986, as amended, which is title 26 ofthe U.S.

A conviction for tax evasion pursuant to section 7201, either upon a guilty plea or upon ajury verdict, conclusively establishes fraud in a subsequent civil tax fraud proceeding through the doctrine ofcollateral estoppel.

Norris) is collaterally estopped from challenging the deficiency and fr ud penalty for 1998 because of his criminal conviction for tax evasion pursuant to section 7201.1 As a result, the Court further held that the limitations period for Mr.

2002-234, 84 TCM (CCH) 321, 324 ("We hold that the doctrine .

- 10 - Section 7201 provides : SEC .

Petitioner was further ordered to pay the costs of prosecution totaling $62,214.37, pursuant to section 7201.

titioner was underway. On June 28, 1995, Voorhees interviewed petitioner for the first time. Subsequently, petitioner was indicted by the United States for various tax offenses for 1989 through 1993, including for each year income tax evasion under section 7201. During that proceeding (criminal case), petitioner moved the District Court to suppress evidence that he claimed was obtained in violation of his constitutional rights. An evidentiary hearing was held as to the motion, and on January 5,

titioner was underway. On June 28, 1995, Voorhees interviewed petitioner for the first time. Subsequently, petitioner was indicted by the United States for various tax offenses for 1989 through 1993, including for each year income tax evasion under section 7201. During that proceeding (criminal case), petitioner moved the District Court to suppress evidence that he claimed was obtained in violation of his constitutional rights. An evidentiary hearing was held as to the motion, and on January 5,

We continue to apply this approach.6 Respondent has not argued that we should overrule these precedents and has not contended that these precedents do not apply where the earlier ruling was a section 7206(2) conviction rather than a section 7201 conviction.

After stipulations by the parties, the remaining issue for decision is whether additions to tax for fraud under section 6653(b) violate the Double Jeopardy and Excessive Fines Clauses of the Fifth and Eighth Amendments where petitioner has been criminally convicted of tax evasion under section 7201 and has served jail time and paid fines pursuant to those convictions.

at 9-10 (pointing out that the - 26 - [*26] elements ofcriminal.tax evasion under section 7201 are virtually identical to the elements ofthe civil fraud penalty under former section 6653(b)). Similarly, a conviction under section 7201 based upon failure to file a return will constitute collateral estoppel for the fraudulent failure to file penalty under section 6651(f). See Madge v. Commissioner, T.C. Memo. 2000-370, slip op. at 8-9, aff'd, 23 Fed. Appx. 604 (8th Cir. 2001). Petitioner's convic

individual income tax returns in violation of section 7201, and conspiracy to defraud the U.S.

Department of Justice secured an indictment on five counts of tax evasion under section 7201 for the years in issue.3 Collectively, the five counts of the indictment charged, among other things, that 2 The Notice of Deficiency on which this case is based is dated May 4, 2021, and specifies the last day to file a petition with the Tax Court as August 2, 2021.

epartment of Justice (Department of Justice) filed an information against petitioner in the United States District Court for the Western District of Missouri, alleging that he was guilty of one count of an attempt to evade or defeat tax, pursuant to section 7201. The information alleged: That on or about the 15th day of April, 1991, in the Western District of Missouri, DONALD R. COOLEY, a resident of Springfield, Missouri, did willfully attempt to evade and defeat a large part of the income tax

r penalties pursuant to sec. 6663, I.R.C.,. for the 1992, 1993, and 1994 tax years. During those years, P received distributions from a so-called Ponzi scheme. P did not report as income the amount of the distributions. P pleaded guilty to violating sec. 7201, I.R.C., for his failure to declare the amount of the distributions he received from the scheme in 1994. During P's plea hearing, he admitted (1) that he failed to report as income the distributions he received from the scheme in 1992, 1993

In 1995, petitioner was indicted for tax evasion, pursuant to section 7201, relating to 1986 through 1989, and was convicted of tax evasion relating to 1989.

7201 provides: Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more t

¹ We previously held that petitioner is collaterally estopped from denying that he is liable for the addition to tax for fraud under sec. 6653(b) for 1985, 1986, and 1987 because he was convicted of attempting to evade or defeat tax in violation of sec. 7201 for those years. Wapnick v. Commissioner, T.C. Memo. 1997-133; see United States v. Wapnick, 60 F.3d 948 (2d Cir. 1995). In its opinion, the U.S. Court of Appeals for the Second Circuit indicated that petitioner and his associates at one tim

Petitioners were charged pursuant to section 7201 with four counts of tax evasion (one count for each of the taxable years 1987, 1988, 1989, and 1990) and pursuant to 18 U.S.C.

The Zamzams were indicted and convicted, pursuant to section 7201, of tax evasion relating to their 1990 through 1994 personal returns.

On June 11, 1994, petitioner husband signed a plea agreement in which he agreed to plead guilty to income tax evasion pursuant to section 7201 for taxable year 1990 and to a May 1993 offense for distribution of cocaine base.

7201 provides: (continued...) - 3 - in relation to his 1989 tax year. As part of his plea agreement, petitioner acknowledged: (1) he had a substantial income tax due and owing to the United States for the year 1989; (2) he made an affirmative attempt to evade that tax by failing to file an income tax return and pay the taxes owing for that ye

On June 11, 1994, petitioner husband signed a plea agreement in which he agreed to plead guilty to income tax evasion pursuant to section 7201 for taxable year 1990 and to a May 1993 offense for distribution of cocaine base.

- 3 - In 1994, Theron pleaded guilty to income tax evasion pursuant to section 7201 for taxable year 1990 and to a 1993 offense for distribution of cocaine base.

tion of property, carrying a concealed weapon, bank robbery, and possession of stolen property. - 4 - that petitioner willfully failed to file his 1987 Federal income tax return and attempted to evade or defeat his 1987 income taxes in violation of section 7201. Petitioner filed a 1984 Federal income tax return, and he was aware of his obligation to file returns for 1986 and 1987. Respondent determined petitioner had unreported income from drug sales in 1986 and 1987 in the amounts of $38,528 an

Drozdowski was charged, pursuant to section 7201, with evading income tax relating to 1989.

In April 1994, petitioners were charged, pursuant to section 7201, with evading income tax.

Petitioner was convicted of violating section 7201 for his 1981 taxable year.

(continued...) SERVED OCT 5 1998 - 2 - that petitioner's plea of guilty to tax evasion under section 7201 collaterally estops him from disputing there is an underpayment of income tax for the 1985 taxable year, and that the underpayment is due to fraud within the meaning of section 6653(b).

rmined deficiencies and fraud additions to tax against H and W for 1988, 1989, and 1990. R's answer asserts in par. 7 affirmative allegations of fraud against both H and W. R's answer also asserts in par. 8 information regarding H's conviction under sec. 7201, I.R.C. 1986, for 1988, 1989, and 1990, and contends that H is collaterally estopped to deny civil tax fraud for these years. Ps' reply responds to par. 8 (collateral estoppel) of R's answer but ignores par. 7. Under Rule 37(c) of the Tax C

MEMORANDUM OPINION PARR, Judge: Respondent moves for partial summary judgment under Rule 121,1 arguing that petitioner's plea of guilty to criminal fraud under section 7201 collaterally estops him from 1 All section references are to the Internal Revenue Code in effect for the taxable year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure, unless otherwise indicated.

MEMORANDUM OPINION LARO, Judge: Respondent moves for partial summary judgment, arguing that petitioner's plea of guilty to criminal fraud under section 7201 collaterally estops him from rebutting her determination that he is liable for civil fraud under section 6653(b) for the same years.

issions for which he received Forms 1099, Miscellaneous Income. P told rental tenants to mislead Internal Revenue Service agents as to the amount of rent they paid to him. P was convicted of willfully attempting to evade or defeat income taxes under sec. 7201, I.R.C., for his 1987 taxable year and of willfully attempting to interfere with the administration of internal revenue laws in violation of sec. 7212(a), I.R.C. Held: The currency deposits to P's bank account for his 1984 and 1985 taxable

In August 1991, an indictment was filed against petitioner for violating section 7201 for the years 1985, 1986, and 1987.7 In 6 The notice of deficiency specifies that petitioner received the Sohio Employees Investment Plan distributions in 1983.

MEMORANDUM OPINION GALE, Judge: This matter is presently before the Court on respondent's motion for partial summary judgment, in which respondent argues that the conviction of Harold Wapnick (petitioner) under section 7201¹ collaterally estops him from disputing that there is an underpayment of income tax, and that some part of the underpayment is due to fraud within the meaning * Section references are to the Internal Revenue Code.

In 1985, 1986, and 1987, P engaged in various tax protester activities, filed false Forms W-4, and did not file tax returns. R determined that P is liable for the addition to tax for fraud for those years. P was convicted of income tax evasion under I.R.C. sec. 7201 for 1986 and willful failure to file under I.R.C. sec. 7203 for 1987. P contends that imposition of the addition to tax for fraud violates his right not to be subject to double jeopardy under the Fifth Amendment of the U.S. Constitut

section 7201 (1982) for each of the years 1985, 1986, and 1987. In each count, the grand jury charged petitioner with willfully attempting to evade income tax liability by underreporting the amount of taxes knowingly owed. On November 17, 1992, petitioner was found guilty on all three counts of the indictment. He was sentenced to 4 months' imprison

section 7201 (1982) for each of the years 1985, 1986, and 1987. In each count, the grand jury charged petitioner with willfully attempting to evade income tax liability by underreporting the amount of taxes knowingly owed. On November 17, 1992, petitioner was found guilty on all three counts of the indictment. He was sentenced to 4 months' imprison

On March 30, 1993, petitioner, pursuant to section 7201, was charged with income tax evasion with respect to his 1986 and 1987 tax returns.

On July 31, 1987, petitioner pleaded guilty to one count of income tax evasion pursuant to section 7201 for the taxable year 1967.

ding criminal case in the U.S. District Court for the District of Arizona (District of Arizona). One of the attachments to respondent’s Status Report shows that on November 12, 2019, Dr. Gottesman was indicted for a single count of tax evasion under section 7201. The indictment alleges that from 2009 through 2019 Dr. Gottesman willfully attempted to evade and defeat the payment of income tax due and owing by him to the United States for tax year 2008. Dr. Gottesman remains in Mexico and has not

overstated the business expenses of Mr. Witasick’s law practice, had disguised remodeling and renovation expenses as business-related costs, and had engaged in other conduct the likely effect of which was to mislead and conceal, all in violation of section 7201. In May 2010 petitioner husband was convicted of tax evasion (among other charges) for both years and sentenced to 15 months’ im- prisonment. He appealed his conviction to the U.S. Court of Appeals for the Fourth Circuit, which affirmed

Stegman on five counts of tax evasion in violation of section 7201, covering tax years 2007, 2008, 2009, and 2010, and one count of conspiracy to evade the payment of corporate and personal taxes, defraud the United States of money, and obstruct and impede the lawful functions of the Internal Revenue Service (IRS).

semesters of tuition, a parking ticket assessed by the school, and other miscellaneous fees. In September 2009 Greg was indicted on counts of mail fraud, conspiracy to commit money laundering, and attempting to evade or de- feat tax in violation of section 7201. The tax charges were based on his failure to report roughly $35 million of income, in the form of construc- tive distributions from LNI. Greg pleaded guilty to one count of tax eva- sion (for 2005), as well as one count of conspiracy an

On June 25, 2012, a grand jury returned an indictment with respect to those taxable years, charging petitioner with (1) corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws under section 7212(a), (2) tax evasion under section 7201, and (3) mail fraud under 18 U.S.C.

371, attempting to evade or defeat tax in violation of section 7201, and aiding and abetting the same in violation of 18 U.S.C.

District Court for the District ofColorado charging him with two counts ofincome tax evasion under section 7201, the first count for 2000 and the second count for 2001.

District Court for the Western District ofNorth Carolina, charging petitioner with a single count ofviolating section 7201 by attempting to evade or defeat tax for 1998.

Criminal Judgment and Restitution On November 7, 2008, petitioner pleaded guilty to one count ofincome tax evasion under section 7201 and one count ofmail fraud under 18 U.S.C.

552, 565 (1988)); see also Sher v.

The indictment charged that in violation ofsection 7201 Francel's wife willfully attempted to evade or defeat federal income tax owed by her and Francel for tax year 2003 by preparing and signing a false and fraudulent individualjoint income tax return that stated that thejoint income ofthe couple was $640,700 and that the tax owed was $199,618 even though she knew that thejoint income was

On April 6, 2011, petitioner was indicted for tax evasion under section 7201 and subscribing to a false return under section 7206(1) for tax years 2004 through 2008.

Income Tax Evasion and Withholding Tax Evasion On January 16, 2007, petitioner was indicted under section 7201 on one count ofincome tax evasion for 1999 and four counts ofevasion ofwithholding tax from wages and FICA taxes due and owing by Pinnacle for three quarters of 1998 and the first quarter of 1999.

On April 6, 2011, petitioner was indicted for tax evasion under section 7201 and subscribing to a false return under section 7206(1) for tax years 2004 through 2008.

RS 151 T.C. No. 12 UNITED STATES TAX COURT JASON BONTRAGER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 5998-16L. Filed December 12, 2018. P pleaded guilty in 2012 to violation ofI.R.C. sec. 7201. The basis for his conviction was that he had aided and abetted his father in evading payment ofhis father's Federal income tax liability for 1994. In 2013 P filed a petition under chapter 7 ofthe Bankruptcy Code. At sentencing in 2014 the District Court ordered P to pay restit

new and believed, theirjoint taxable income for the said calendar year was the sum of$514,838, upon which saidjoint taxable income there was owing to the United States ofAmerica an income tax of $169,487, in violation ofTitle 26, United States Code, Section 7201. On January 14, 2008, a redacted plea agreement was filed with the District Court, wherebypetitioner pleaded guilty to all counts in the Information, including tax evasion for 2002. In the redacted plea agreement the Government recommend

2014-12, or for another tax crime, such as tax evasion in violation ofsection 7201, see Livingston v.

2014-12, or for another tax crime, such as tax evasion in violation ofsection 7201, see Livingston v.

Petitioners' Illegal Activities and Guilty Pleas On December 9, 2004, petitioners were indicted by a Federal grandjury on several counts relating to tax evasion in violation ofsection 7201 and 18 U.S.C.

Petitioners' Illegal Activities and Guilty Pleas On December 9, 2004, petitioners were indicted by a Federal grandjury on several counts relating to tax evasion in violation ofsection 7201 and 18 U.S.C.

-3- [*3] return under section 7206(1); attempting to evade taxes under section 7201; and conspiracy to defraud the Government in violation of 18 U.S.C.

Criminal Tax Case In 2010 petitioner was indicted by a grandjury for one count each ofviolat- ing section 7212(a) (obstructing administration ofthe internal revenue laws) and - 3 - [*3] section 7201 (attempting to evade or defeat tax) and four counts ofviolating section 7203 (willful failure to file returns for 2003-2006).

1014; one count ofincome tax evasion in violation ofsection 7201; and multiple counts ofstructuring financial transactions in violation oftitle 31 U.S.C.

Such conduct by * * * [petitioner] was in violation of Title, 26, U.S.C., Section 7201." 3The Information Sheet states: "On or about April 15, 2005, * * * [petitioner] willfully attempt[ed] to evade and defeat his individual income tax imposed by law for the calendar year 2005." We take this to mean that the charge relates to the 2004 tax year.

District Court) in which he pleaded guilty to tax evasion under section 7201 with respect to his taxable year 2004.

h is the object ofthe conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor. The underlying crimes within the conspiracy charge were (1) tax evasion in violation ofsec. 7201 and (2) fraudulent declarations made under penalties of perjury in violation ofsec. 7206(1). - 5 - The parties stipulated that the $74,131,694 collected from the taxpayer consisted ofthe following: tax restitution of$20,000,001; a criminal

h is the object ofthe conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor. The underlying crimes within the conspiracy charge were (1) tax evasion in violation ofsec. 7201 and (2) fraudulent declarations made under penalties of perjury in violation ofsec. 7206(1). - 5 - The parties stipulated that the $74,131,694 collected from the taxpayer consisted ofthe following: tax restitution of$20,000,001; a criminal

The first two counts involved evasion ofDel-Co's corporate income tax liabilities for 2004 and 2005; the third count involved evasion oftax required to be shown on the Form 1040, U.S. Individual Income Tax Return, that Del'Andrae filed jointly with her husband for 2005. On April 18, 2012, Del'Andrae pleaded guilty to count one, involving

d States v. Balice, No. 2:10-CR-00485-02, in the U.S. District Court for the District ofNew Jersey. Count 13 ofthis indictment described petitioner's use of the PTO tax evasion scheme and charged him with criminal tax evasion for 2007 in violation ofsection 7201. On June 20, 2011, ajury found petitioner guilty of (among other things) violating section 7201 for the 2007 taxable year. On January 9, 2013, the District Court entered its amendedjudgment pursuantto the verdict. On May 30, 2012, the IR

oner was the defendant in the criminal case ofUnited States ofAmerica v. Burton F. Tucker, Crim. No. 05-0114 (M.D. Pa.). The indictment filed in that case on March 22, 2005, charged petitioner with three counts ofevading income taxes in violation of I.R.C. § 7201 for the years 1998, 1999, and 2000. * * * Petitioner entered a plea ofguilty to Count II [tax evasion for tax year 1999 under section 7201] ofthe indictment on July 6, 2005. One reason that petitionertransferred his dental practice to t

oner was the defendant in the criminal case ofUnited States ofAmerica v. Burton F. Tucker, Crim. No. 05-0114 (M.D. Pa.). The indictment filed in that case on March 22, 2005, charged petitioner with three counts ofevading income taxes in violation of I.R.C. § 7201 for the years 1998, 1999, and 2000. * * * Petitioner entered a plea ofguilty to Count II [tax evasion for tax year 1999 under section 7201] ofthe indictment on July 6, 2005. One reason that petitionertransferred his dental practice to t

On February 9, 2006, petitionerwas indicted on various Federal counts including income tax evasion in violation ofsection 7201 for 1999 through 2003.

* He sauid that the Commis- sioner says in the 'rendition' * * * instruction booklet not to file the 2We takejudicial notice that the U.S. Court ofAppeals for the Sixth Circuit (Court ofAppeals) affirmed petitioner's conviction for tax evasion under sec. 7201 for each ofhis taxable years 1998 through 2001. 3See supra note 2. - 6 - [*6] form ifit doen't comly with the Paperwork Reduction Act of 1995. He said that he knows I might consider that issue to be frivo- lous. * * * [Reproduced literally.

T.C. Memo. 2013-261 UNITED STATES TAX COURT LARRYF. ANDERSON, Petitionerv. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 2955-11L. Filed November 18, 2013. In 2001 P was convicted oftax crimes, including I.R.C. sec. 7201 tax evasion with respect to his 1991 tax year. R assessed an I.R.C. sec. 6663(a) civil fraud penalty of$23,104 for the 1991 tax year in August 2008. R issued notice and demand for payment ofthe $23,104 penalty plus interest of$53,385. P offered to compromise this liabi

Petitioner was tried and, on January 25, 2007, he was convicted oftwo counts oftax evasion under section 7201 with respect to his 1995 individual return and DCI's 1995 corporate return.

In May 2010 petitioner was charged with one count oftax evasion in violation ofsection 7201 in the U.S.

edibility. . - In Larson v. Commissioner, T.C. Memo. 1994-302, 1994 Tax Ct. Memo LEXIS 305, aff'd withoutpublished opinion, 60 F.3d 830 (8th Cir. 1995), the taxpayer entered into a plea agreement in which he pled guilty to criminal tax evasion under section 7201. Id. at *9. The taxpayer argued that he was under duress when he pled guilty and that the plea agreement should not be used against him. Id. at *35. The Court noted that the "criminaljudgment, transcript, and related documents do not ref

re to the Tax Court Rules ofPractice and Procedure. The applicability, but not the amount, ofthe fraud penalty was determined against petitioner by grant ofrespondent's motion for partial summaryjudgment on the basis ofpetitioner's conviction under section 7201. After concessions, the issues for decision are whether petitioners are entitled to a net operating loss (NOL) carryover, whether they are liable for the section 6651(a)(1) late-filing addition to tax, and whether the fraud penalty applie

Background In 2009 petition:r pleaded guilty to tax evasion under section 7201 for tax years 2000 and 2001 and was sentenced to 12 months in prison.2 On September 18, 2009, before going to prison, petitioner filed his 2005 Federal income tax return and reported on the return that his address was in Mills, Wyoming (Wyoming address).3 Petitioner did not pay his self-reportedtax liability, and, on November 30, 2009,

Petitioner was convicted ofcriminal tax evasion under section 7201 pursuant to a plea agreement in the U.S.

On June 23, 2005, petitioner was convicted of violation of section 7201 on an indictment charging that from on or about the 15th day of April, 1991, and continuing through in or about September, 2003, * * * [petitioner] * * *, did willfully attempt to evade and defeat the payment of a substantial amount of federal income tax due and owing by him to the United States of America for the calendar years 1990 a

partnership item" or a penalty that related to an adjustment to a "(...continued) evasion under section 7201, he is collaterally estopped from denying the existence of fraud with regards to any civil penalties the Commissioner asserts under section 6663.

Williams's conviction for tax evasion under section 7201 for 1993 through 2000 collaterally estops him for each of those years from denying that for each of these years there was an underpayment of his income tax attributable to civil fraud for purposes of the statute of limitations and the section 6663(a) fraud penalty, Williams v.

On June 23, 2005, petitioner was convicted of violation of section 7201 on an indictment charging that from on or about the 15th day of April, 1991, and continuing through in or about September, 2003, * * * [petitioner] * * *, did willfully attempt to evade and defeat the payment of a substantial amount of federal income tax due and owing by him to the United States of America for the calendar years 1990 a

Counts 13, 15, and 17 of the redacted indictment all felated to charges of' violation -of section 7201, the evasion of personal income tax for 1991 through 1993,, the same years as'are here in-issue.

Counts 13, 15, and 17 of the redacted indictment all felated to charges of' violation -of section 7201, the evasion of personal income tax for 1991 through 1993,, the same years as'are here in-issue.

By way of analogy: Where a taxpayer has previously been convicted of a crime involving tax fraud, such as criminal tax evasion under section 7201, he is collaterally estopped from denying the existence of fraud with regard to any civil penalties the Commissioner asserts under section 6663.

le -4- counts of income tax evasion under section 7201 for 1994 through 1996 .

Title 26, Internal Revenue Code, Section 7-206(1) ; and Title 26, Internal Revenue Code, Section 7201 - 136 - On June 26, 1996, Martin Gelfand spoke with, Carol Muranaka, an attorney in the Office of District Counsel, Western Region, and requested a conference with the office of District Counsel to discuss the matter ..

7201 for all 8 years .' By agreement P pleaded guilty to one count of tax evasion in a superseding criminal information .as to all 8 years . By a notice of deficiency issued in October 2007, R determined deficienciesand fraud penalties for all 8 years . P filed a petition in this Court in which he asserted that he merely pleaded guilty totax .

ome and claimed false deductions on his 1996, 1997, 1998, 2001, 2002, and 2003 income tax returns as part of a 10-year pattern of intentionally evading tax . On March 29, .2000, petitioner was indicted on three counts of tax evasion in violation of section 7201 . He"was charged with. filing fraudulent joint income tax returns for the 1993, 1994., and 1995 taxable years, in that they overstated itemized deductions, reported negative taxable income, and reported a tax liability of zero . He pleade

It should not be inferred by the determination of the Accuracy-Related Penalty in this notice that fraud penalties will not be sought on any portion of an underpayment subsequently determined to be attributable to fraud or that prosecution for criminal offenses will not be sought under §§ 7201 or 7206 of the Internal Revenue Code or other provisions of Federal law if determined to be appropriate .

Petitioner omitted income and claimed false deductions o n his 1999 and 2000 income tax returns as part of a 10-year pattern of intentionally evading tax . On March 29 , 2000 , petitioner was indicted on three counts of tax .evasion in violation of section 7201 . Petitioner was . charged with filing fraudulent joint income tax returns for the 1993 , 1994, and 1995 taxable years , . in that they overstated itemized deductions , reported negative taxable income, and reported a tax liability of zer

section 7201 and three; counts of willful failure to make returns or pay taxes under section 7203 for 1992, 1993, and 1994 in the U .S . District Court for the 3The figure for 1992 includes additional income respondent determined petitioner received through petitioner's distributive share of Harbor Light. q - 10 - District of New Jersey. On May 17

I would note that the Commissioner's disallowance of deductions under section 404(k)(1), based on the discretion given to him in section 404(k)(5) (A), need not involve an analysis and findings of "badges of fraud" typically associated with prosecutions under section 7201 of affirmative attempts by taxpayers to engage in willful tax evasion and with determinations of willful civil tax fraud penalties under section 6663.

rs of investigation and a referral from the civil to the criminal side of the IRS, a grand jury indicted Barrow in October 1993 on one count of bank fraud, one count of making false statements on a loan application, five counts of tax evasion under section 7201 for tax years 1984 through 1988, and five counts under section 7206(1) of willfully submitting.false tax returns for tax years 1984 through 1988.' Barrow was also indicted on three counts of willfully submitting false corporate tax return

y a Federal grand jury for Max evasion. . Petitioner 'and Janet were charged with knowingly and willful%ly attempting to evade Federal' income taxes for 1986 and-1987 by fi=ling false and fraudulent joint Federal income-tax returns' in vi.olation-of section 7201. The indictment charged that petitiorier .and :Janett reported taxable income of zero on their-"1986 and 1987 joint Federal income tax, returns, knowing that their .taxable income for 1986 and 1987 was, substantially greater 'than zero .

It should not be inferred by the determination of the Accuracy Related Penalty in this notice that fraud penalties will not be sought on any portion of an underpayment subsequently determined to be attributable to fraud or that prosecution for criminal offenses will not be sought under IRC § 7201, 7206 or other provisions of federal law if determined to be appropriate .

It should not be inferred by the determination of the Accuracy Related Penalty in this notice that fraud penalties will not be sought on any portion of an underpayment subsequently determined to be attributable to fraud or that prosecution for criminal offenses will not be sought under IRC §§ 7201, 7206 or other provisions of federal law if determined to be appropriate .

It should not be inferred by the determination of the Accuracy Related Penalty in this notice that fraud penalties will not be sought on any portion of an underpayment subsequently determined to be attributable to fraud or that prosecution for criminal offenses will not be sought under IRC §§ 7201, 7206 or other provisions of federal law if determined to be appropriate.

I would note that the Commissioner’s disallowance of deductions under section 404(k)(l), based on the discretion given to him in section 404(k)(5)(A), need not involve an analysis and findings of “badges of fraud” typically associated with prosecutions under section 7201 of affirmative attempts by taxpayers to engage in willful tax evasion and with determinations of willful civil tax fraud penalties under section 6663.

It should not be inferred by the determination of the Accuracy Related Penalty in this notice that fraud penalties will not be sought on any portion of an underpayment subsequently determined to be attributable to fraud or that prosecution for criminal offenses will not be sought under IRC § 7201, 7206 or other provisions of federal law if determined to be appropriate.

§7201; and making false federal income tax returns, in violation of 26 U.S.C. §7206(1). Prior to trial, Million and Flannery pleaded guilty and agreed to testify for the prosecution. Gricco and McCardell proceeded to trial. The jury found Gricco and McCardell guilty on all counts. The government submitted a sentencing memorandum asserting that the

District of New Jersey returned a two- count indictment against petitioner . The first count of the indictment charged that petitioner had knowingly and willfully attempted to evade and defeat income tax due and owing by him for 1994 in violation of section 7201 . The second count charged petitioner with filing a false Federal income tax return for 1995 in violation of 18 U .S .C. section 2 (1994) . By plea agreement dated July 13, 2000, petitioner agreed to plead guilty to the count for tax eva

§§ 7201, 7203, and 7206, and for no other reason. Petitioner goes on to cite numerous statutes, regulations, and cases and, in essence, argues that (1) he is not a person or individual “as defined within the scope and purview of [sections 1 and 3]”, (2) as a “private independent contractor” he is either entitled to a “reduced or compensatory” tax ra

§§ 7201, 7203, and 7206, and for no other reason. Petitioner goes on to cite numerous statutes, regulations, and cases and, in essence, argues that (1) he is not a person or individual “as defined within the scope and purview of [sections 1 and 3]”, (2) as a “private independent contractor” he is either entitled to a “reduced or compensatory” tax ra

§§ 7201, 7203, and 7206, and for no other reason. Petitioner goes on to cite numerous statutes, regulations, and cases and, in essence, argues that (1) he is not a person or individual “as defined within the scope and purview of [sections 1 and 3]”, (2) as a “private independent contractor” he is either entitled to a “reduced or compensatory” tax ra

501(c)(1) today. Revenue Act of 1934, ch. 277, sec. 276(a), 48 Stat. 745; S. Rept. 558, 73d Cong., 2d Sess. 43-44 (1934), 1939-1 C.B. (Part 2) 586, 619. Accountants who prepare fraudulent returns have occasionally been convicted of tax evasion under sec. 7201 and similar predecessor provisions. See United States v. Gordon, 242 F.2d 122, 125 (3d Cir. 1957) (accountants held liable for tax evasion though tax intended to be evaded was not their own); Tinkoff v. United States, 86 F.2d 868, 875-876 (

The FBI's investigation of petitioner continued until October 24, 1994, when petitioner pled guilty to one count of tax evasion under section 7201 with respect to his 1988 taxable year and one count of mail fraud.

District Court for the Northern District of Florida, Gainesville Division (the District Court), a one-count information charging petitioner with violating section 7201 by willfully attempting to evade his 1996 income taxes and by filing a fraudulent 1996 Federal income tax return .' The information charged that petitioner knowingly understated his 1996 taxable income by $1,551,863 .

On July 14, 2000, petitioner pled guilty to one count of tax evasion in violation of section 7201 for 1995 and one count of wire fraud.

152(2) of making a false oath and account in relation to a case under title 11; (4) one count under section 7201 and 18 U.S.C.

inal information was filed in the U.S. District Court for the District of Minnesota (the criminal tax proceeding) naming petitioners codefendants. Counts I, II, and III charged Mr. Del Bosque with tax evasion for 1987, 1988, and 1989 in violation of section 7201. Counts IV and V charged Mr. Jacobsen with tax evasion for 1987 and 1988 in violation of section 7201. Petitioners entered into plea agreements by which they agreed to plead guilty to tax evasion in 1987 as set forth in counts I and IV,

At some point before April 15, 1998, petitioners were referred by respondent’s Examination Division to respondent’s Criminal Investigation Division for a potential criminal fraud action with respect to their use of the petitioner trusts in 1994, 1995, and 1996.3 While a recommendation was made in 2000 to prosecute petitioners for violations of section 7201 for 1995, 1996, and 1997, no criminal action was initiated, for reasons not disclosed in the record.

inal information was filed in the U.S. District Court for the District of Minnesota (the criminal tax proceeding) naming petitioners codefendants. Counts I, II, and III charged Mr. Del Bosque with tax evasion for 1987, 1988, and 1989 in violation of section 7201. Counts IV and V charged Mr. Jacobsen with tax evasion for 1987 and 1988 in violation of section 7201. Petitioners entered into plea agreements by which they agreed to plead guilty to tax evasion in 1987 as set forth in counts I and IV,

At some point before April 15, 1998, petitioners were referred by respondent’s Examination Division to respondent’s Criminal Investigation Division for a potential criminal fraud action with respect to their use of the petitioner trusts in 1994, 1995, and 1996.3 While a recommendation was made in 2000 to prosecute petitioners for violations of section 7201 for 1995, 1996, and 1997, no criminal action was initiated, for reasons not disclosed in the record.

inal information was filed in the U.S. District Court for the District of Minnesota (the criminal tax proceeding) naming petitioners codefendants. Counts I, II, and III charged Mr. Del Bosque with tax evasion for 1987, 1988, and 1989 in violation of section 7201. Counts IV and V charged Mr. Jacobsen with tax evasion for 1987 and 1988 in violation of section 7201. Petitioners entered into plea agreements by which they agreed to plead guilty to tax evasion in 1987 as set forth in counts I and IV,

At some point before April 15, 1998, petitioners were referred by respondent’s Examination Division to respondent’s Criminal Investigation Division for a potential criminal fraud action with respect to their use of the petitioner trusts in 1994, 1995, and 1996.3 While a recommendation was made in 2000 to prosecute petitioners for violations of section 7201 for 1995, 1996, and 1997, no criminal action was initiated, for reasons not disclosed in the record.

At some point before April 15, 1998, petitioners were referred by respondent’s Examination Division to respondent’s Criminal Investigation Division for a potential criminal fraud action with respect to their use of the petitioner trusts in 1994, 1995, and 1996.3 While a recommendation was made in 2000 to prosecute petitioners for violations of section 7201 for 1995, 1996, and 1997, no criminal action was initiated, for reasons not disclosed in the record.

7201 (income tax evasion). The U.S. Attorney further charged petitioner in the superseding 2Petitioner concedes all the determinations in the notice of deficiency. - 3 - information as follows: 1. From on or about April 8, 1991 through April 11, 1991, at Chicago * * * defendant JAMES E. WELLS knowingly and intentionally, for the purpose of ev

R determined a deficiency of $14,611, additions to tax for fraud pursuant to sec. 6653(b), I.R.C., and an addition to tax for substantial understatement pursuant to sec. 6661, I.R.C. On Feb. 10, 2003, R moved for summary judgment. Held: R’s motion for summary judgment is granted in full. Held, further, P is liable for a deficiency

ical Cardiology-Internal Medicine, P.C. Petitioner and Dr. Alt earned the following amounts from Dr. Alt’s medical practice and petitioner’s receptionist work: 6 In 1990, Karen and Dr. Alt were indicted on five counts of Federal tax violations under sec. 7201, including attempted evasion, and aiding and abetting in the attempted evasion, of personal and corporate income taxes of Dr. Alt for the taxable years of 1983 and 1984. Karen and Dr. Alt were both convicted and sentenced to imprisonment an

Wilson guilty, inter alia, of income tax evasion under section 7201 for the taxable years 1993 and 1994 for underreporting taxable income of approximately $50,969 and approximately $49,253 and underpaying tax of approximately $9,476 - 5 - and approximately $8,358 for those respective years.4 (We shall refer to the proceeding in the U.S.

In 1997, Miller pled guilty to violating section 7201 for failing to report cash received from Butler (i.e., presenting a false or fraudulent return).

etitioners regarding their joint Federal income tax returns for 1990 through 1993. 2 With regard to 1993, petitioner Howard Levine's liability for the fraud penalty is established as a result of petitioner's guilty plea to criminal.tax evasion under sec. 7201 for the same year. In the alternative to the fraud penalties determined by respondent, respondent for each year also determined against petitioners late filing additions to tax and negligence penalties. - 3 - petitioner sold insurance and a

In 1997, Miller pled guilty to violating section 7201 for failing to report cash received from Butler (i.e., presenting a false or fraudulent return).

the stipulation of settlement, Dr. Alt also agreed that he was liable for a $479,404 deficiency and a $359,553 penalty under sec. 6663 for the 1989 taxable year. In 1990, Karen and Dr. Alt were indicted on five counts of Federal tax violations under sec. 7201, including attempted evasion, and aiding and abetting in the attempted evasion, of personal and corporate income taxes of Dr. Alt for the taxable years 1983 and 1984. Karen and Dr. Alt were both convicted and sentenced to imprisonment and f

eturns for 1993 and 1994. The amended returns reported distributions received from CNC in the tax years for which they were filed. On September 22, 1997, petitioner pleaded guilty to one count of attempted income tax evasion for 1993 in violation of section 7201. On January 5, 1998, she was ordered imprisoned and fined as her sentence for the guilty plea to attempted evasion of income tax. On August 10, 1999, petitioner signed Forms 870, Waiver of Restrictions on Assessment and Collection of Def

The Information further described Count Three as Section 7201--Income tax evasion.

CID worked on the case from April or May of 1994 until it recommended that petitioner be prosecuted for attempted income tax evasion under section 7201 for both 1990 and 1991.

In violation of Title 26, United States Code, Section 7201, and Title 18, United States Code, Section 2.

7201 (1994) and two related counts of criminal false declaration under 26 U.S.C. sec. 7206(1) (1994). The allegations in the indictment related solely to the operation of, and Schedule C reporting of income from, the sole proprietorship for calendar years 1983 and 1984. Neither HIF nor Mrs. Hood was charged in the indictment. After a jury tria

Karcho was ultimately charged with one count of attempted income tax evasion for the 1987 taxable year, in violation of section 7201, and one count of structuring transactions with intent to evade currency reporting requirements, in violation of 31 U.S.C.

Petitioner was indicted under section 7201, Attempt to Evade or.

m those in the above mentioned case, the U.S. District Court for the District of New Jersey, in United States v. Bivolcic, Case No. Cr. 91-380(01), in 1992 convicted petitioner for failure to file tax returns under section 7203 and tax evasion under section 7201. Petitioner did not pay the tax liabilities as he was ordered to do by the District Court. After the Internal Revenue Service (IRS) issued a levy against his property, petitioner filed an action seeking to enjoin the IRS from filing noti

The Criminal Proceeding On April 14, 1995, a Federal grand jury indicted petitioner with three counts of violating section 7201, attempting to evade or defeat tax, for taxable years 1988, 1989, and 1990, and three counts of violating section 7203, willful failure to file a Federal income tax return, supply information or pay tax, for taxable years 1988, 1989, and 1990.

Petitioner has maintained these positions despite having been convicted of tax evasion under section 7201 for 1990, 1991, 1992, and 1993 and of conspiracy to obstruct and impede the Internal Revenue Service (IRS) under 18 U.S.C.

ATES TAX COURT MARTIN AND BARBARA SCHACHTER, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent* Docket No. 2939-96. Filed September 14, 1999. Held: No credit is allowed against civil fraud additions to tax for a criminal fine imposed under sec. 7201, I.R.C., and 18 U.S.C. secs. 371, 3622, and 3623 (Supp. II, 1984). Martin A. Schainbaum and David B. Porter, for petitioners. Paul J. Krug, for respondent. * This Opinion supplements our Memorandum Opinion in Schachter v. Commissioner, T.C.

On September 12, 1991, a Federal grand jury charged Atkinson with violating section 7201 with regard to Atkinson’s 1985 and 1986 individual tax returns and section 7206(1) with regard to petitioner’s corporate tax returns for the taxable periods at issue.

On September 23, 1993, petitioner pleaded guilty under section 7201 to one count of income tax evasion and to one count of conspiracy under 18 U.S.C.

Cole were indicted under section 7201 for attempting to evade and defeat income tax due and owing by the corporation for fiscal years 1987 and 1988 by signing and filing false U.S.

corporation in obtaining certain contracts. In addition, the indictment charged that petitioner knowingly and willfully attempted to evade Federal income tax for 1990, 1991, 1992, and 1993 by filing false and fraudulent joint returns in violation of section 7201. Petitioner was charged with underreporting income, on behalf of himself and his spouse, in the amounts of $44,000, $48,000, $44,000, and $52,989 for tax years 1990, 1991, 1992, and 1993, respectively. It was petitioner's position that t

On September 21, 1983, Harris was convicted of tax evasion under section 7201 and willful failure to file under section 7203.

nd currency of $105,376 found in a safe in the enclosed area. Mr. London was present when Federal agents searched Heller's Cafe. On April 11, 1990, Mr. London was indicted by a Federal grand jury for two counts of income tax evasion in violation of section 7201. The grand jury returned superseding indictments on May 10, 1990, and on September 5, 1991. The second superseding indictment charged Mr. London with the following violations of the law: Count No. Title and Sec. Nature of Offense 1 18 U.S

States of America v. Ronald L. Berkshire (Western District of Virginia, Case Number 92-00050-01). The Judgment entered in that case became final on May 24, 1993. * * * * * * * (d) The petitioner subsequently entered a plea of guilty to violation of I.R.C. sec. 7201 for the taxable year 1987, as set forth against him in Count Three of the indictment. (e) On May 24, 1993, the United States District Court for the Western District of Virginia entered Judgment against the petitioner pursuant to said

- 4 - In June 1989, petitioner was indicted on one count of tax evasion for the 1985 tax year, in violation of section 7201,1 and four counts of filing false, fictitious or fraudulent claims for the years 1981 through 1984, in violation of 18 U.S.C.

Previous Litigation Petitioners were convicted on December 14, 1990, of attempting to evade their 1984 through 1986 income tax liabilities in violation of section 7201 and of conspiracy beginning in 1983 and continuing thereafter to defraud the United States in violation of 18 U.S.C.

Petitioners' Criminal Trial and Conviction On April 14, 1993, a grand jury indicted petitioners on three counts of violating section 7201 by willfully attempting to evade and defeat a large part of the income tax due and owing by them to the United States for 1986, 1987, and 1988.

P was a loan officer at Bank of New York. P accepted money from the Bank's clients in order to approve or modify loans. In Fitzpatrick v. Commissioner, T.C. Memo. 1995-548, the Court decided that P, because he had been convicted of tax evasion under sec. 7201, I.R.C., for the years 1981 and 1982, was collaterally estopped from denying his participation in a bribery scheme and from denying that some part of the underpayment of his income tax was due to fraud for purposes of sec. 6653(b), I.R.C.,

District Court, Southern District of Ohio, for tax evasion under section 7201 for the years 1983, 1984, and 1985 and bankruptcy fraud under section 152 of title 18 of the United States Code.

On November 20, 1990, petitioner was convicted by a jury of attempting to evade or defeat tax for 1983 under section 7201 and of willfully making and subscribing a false return for the same year under section 7206(1).

Petitioner and Emmens were subsequently indicted for tax evasion under section 7201 for 1982, 1983, and 1984.

The agent’s final report (the report), in which he recommended prosecuting petitioner for tax evasion under section 7201, was based primarily on statements made by petitioner's hostile and estranged husband, as well as information supplied by people other than petitioner, to establish her intent in failing to report the embezzled funds.

Paragraph 1(c) of Wiltzius' plea agreement states: "Defendant agrees to make restitution to the Internal Revenue Service in an amount of - 11 - $11,329.94 or any lesser amount as determined and ordered by the Court." On February 20, 1992, Waldorf pled guilty to violations of section 7201 and 18 U.S.C.

In June 1989, petitioner was indicted on one count of tax evasion for the 1985 tax year, in violation of section 7201, and four counts of filing false, fictitious or fraudulent claims for the years 1981 through 1984, in violation of 18 U.S.C.

District Court for the District of Hawaii returned an indictment charging petitioner with criminal tax evasion under section 7201 for the taxable years 1983, 1984, 1985, and 1986.

Indeed, the judge at the criminal trial explicitly instructed the jury that it could convict on the section 7206(2) counts whether or not petitioner intended to evade tax, whereas he issued a contrasting instruction on a section 7201 charge - 13 - against petitioner's co-defendant Murray Glantz, who was convicted under section 7201, and who has conceded receipt of skim income and liability for the fraud addition.

July 8, 1991, Ms. Dawson pled guilty in the U.S. District Court, Eastern District of Texas (District Court) to one count of embezzlement, in violation of 18 U.S.C. sec. 666, and one count of income tax evasion for the tax year 1988, in violation of section 7201. - 13 - Ms. Dawson was sentenced to 28 months’ incarceration in Federal prison. At the time of trial, Ms. Dawson was on supervised release from Federal prison. She was ordered by the District Court to pay, and, at the time of trial, she

On September 13, 1993, petitioner entered a plea of guilty, and, on September 17, 1993, he was adjudged guilty of violation of section 7201, tax evasion, for his taxable year 1989.

section 7201 (1994) for not reporting as income in the joint returns for 1987 and 1988 - 22 - certain funds that he had embezzled and that had not been re- ported as gross receipts of Accu-Data or Meadows. Bad Debt and Legal Expenses Petitioner and Mr. Morris claimed deductions of $37,596 for a business bad debt and $2,851.25 for legal expenses in

Where the addition to tax under section 6653(b) is assessed following a conviction under section 7201 for criminal tax evasion, the addition to tax does not constitute a second - 15 - punishment.

nt in the aforesaid criminal case which took place before Magis- trate Tyler. (d) On December 20, 1989, Petitioner Ferdinand DeCaprio appeared before Judge Gerard L. Goettel, District Court Judge, Southern District of New York, and pled guilty under I.R.C. § 7201 to evading income taxes in the taxable year 1983. (e) Among the questions asked by Judge Goettel during Petitioner Ferdinand DeCaprio's allocution was whether he willfully filed a false and fraudulent income tax return for the taxable y

In late 1990 or early 1991, after completion of a criminal tax investigation by respondent of both Elvin and of YOC, Elvin was indicted for willfully attempting to evade payment of his personal Federal income taxes for 1983, 1984, 1985, and 1986 in violation of section 7201, and for willfully aiding and assisting in the preparation of false and fraudulent corporate Federal income tax returns of YOC for 1983, 1984, 1985, and 1986 in violation of section 7206(2).

Cadwell, Docket No. A91-0022CR (D. Alaska 1991). Respondent herein is a party in privity with the United States, the prosecuting party in the aforesaid case. In that case, petitioner was indicted on four counts of income tax evasion, in violation of section 7201. On July 1, 1991, petitioner entered a plea of guilty to counts III and IV of the indictment for the charged offense of Attempted Evasion of Income Tax relating to his personal income tax returns for tax years 1986 and 1987. The District

On April 4, 1974, O'Byrne testified before the grand jury that indicted petitioner under section 7201 for willful tax evasion for 1967 to 1969.

- 10 - income tax evasion under section 7201, filing a false return under section 7206(1), and conspiracy under 18 U.S.C.

LaMagra, alleging, among other things, criminal tax evasion under section 7201 for 1983 and 1984 and interstate transportation of stolen property under 18 U.S.C.

al Case No. 82-00218). Counts I and II of the indictment charged that petitioners willfully and knowingly attempted to evade Federal income taxes due and owing for the taxable years 1976 and 1977 by filing false and fraudulent returns, violations of section 7201. Count III alleged that Leon Spear willfully and knowingly signed Ezy’s 1976 corporation tax return knowing that the information therein was not true and correct, a violation of section 7206(1). Count IV alleged that Jeanette Spear aided