- 11 -
until he "received a bill from the IRS." Karras testified that
he "couldn't believe that the case was over with and nobody had
told us anything." In the end, Karras was "bowled over" by the
size of the tax liability that had resulted from his "simple
$50,000 investment."
E. The Winer Section 7408 Injunction Proceeding
In 1984, Winer and Winer Development Corp. were identified
by respondent as persons who had violated section 6700 by
promoting or selling partnerships or other arrangements that
included gross valuation overstatements. Subsequently,
respondent issued prefiling notification letters to Winer and the
notice partners of Davenport, including participants, regarding
Davenport on April 14, 1984. These letters stated that the
Internal Revenue Service (IRS) planned to review the 1982 and
1983 tax returns of each investor in Davenport for claimed tax
deductions and credits resulting from an investment in the
partnership, which had been identified as a tax shelter. The
letters indicated that the IRS did not believe the purported tax
deductions and/or credits were allowable and that if such tax
deductions and/or credits had been claimed by the investor, his
or her return would be audited. The investor also was provided
an opportunity to file an amended return.
On April 13, 1984, respondent, through the Office of
District Counsel in Jacksonville, authorized the U.S. Department
of Justice (DOJ) to seek injunctions under section 7408 against
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