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Also as part of the examination, the revenue agent conducted
a telephone interview with Wayne Catalano. Catalano informed the
revenue agent that petitioner was present at the first
consultation pertaining to the work to be done at the home. He
also informed the revenue agent that petitioner was aware of the
circumstances surrounding the work and that petitioner delegated
the authority to proceed with the work to Paige. The revenue
agent had also interviewed a former employee of PCCL. This
former employee specifically informed the revenue agent that
petitioners were aware of the payment arrangement for the home
improvements.
During the interviews with the special agents, petitioner
admitted: (1) Making two sales of PCCL's inventory; (2) having
the checks made out in his name; (3) not reporting the income;
(4) using the funds for personal expenses; and (5) having made
these types of sales in the years 1990 through 1993, although
petitioner claimed to have split the income with Paige during
1993. During the course of the investigation, respondent
received evidence of a minimum of eight unreported sales made
payable to petitioner in 1993.
On August 19, 1996, petitioners' attorney, William Neilson
(Neilson), wrote a letter to a special agent involved with the
criminal investigation. In the letter, Neilson questioned
Paige's credibility and motives in contacting the IRS with these
allegations against petitioners and PCCL. In addition, Neilson
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