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1983 and some of the lease payments on the Mercedes in 1985 may
have been delinquent. Petitioners also regularly used several
credit cards, including a Visa card from Chemical Bank. The
income tax returns for each year reflect deductions ranging from
a high of $2,431 in 1981 to a low of $1,384 in 1985 for credit
card interest. Although petitioners began to experience
financial difficulties in 1986, they were not dunned by creditors
for unpaid bills during 1981 through 1985.
3. IRS Investigation
After petitioners failed to file timely income tax returns
beginning in 1982 for tax year 1981, IRS agents contacted Mark on
at least three occasions: November 23, 1982, July 18, 1985, and
October 23, 1985. Mark contacted the IRS in the wake of at least
one of these visits. Thereafter in 1986, the IRS began a
criminal investigation of Mark's failure to file income tax
returns. On July 24, 1986, agents from the IRS Criminal
Investigation Division (CID) interviewed Mark. On August 20,
1987, petitioners mailed income tax returns to the IRS for tax
years 1981 through 1985 and paid all taxes shown on the returns
and interest through August 19, 1987.4
On April 11, 1989, a criminal information was filed against
Mark in the U.S. District Court for the Eastern District of New
4See supra note 3 for excess of taxes owed for each year
over amounts withheld. Mark made no additional payments until
petitioners delinquently filed their tax returns.
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