- 24 -
Harrison v. Commissioner, 854 F.2d 263 (7th Cir. 1988), affg.
T.C. Memo. 1987-52.
Petitioners and PCCL also contend that the notices of
deficiency were based on respondent's sole reliance on a "bad
whistle blower", and, therefore, respondent was not substantially
justified in issuing the notices. Petitioners contend that they
notified respondent of Paige's lack of credibility and
questionable motives for making allegations against petitioners
and PCCL in August 1995. Petitioners claim that respondent was
therefore notified at an early stage of the investigation and,
essentially, should not have continued the investigation.
Petitioners' letter was dated August 19, 1996, not 1995 as
petitioners contend. Respondent was provided information which
asserted that Paige lacked credibility a year and 10 months after
the investigation had begun. Respondent's determinations were
not based solely on Paige's allegations. Paige also submitted
substantial documentation to respondent, along with a list of
witnesses. Paige's allegations may have triggered an examination
of the 1993 and previous years tax returns; however, it was the
subsequent examination and criminal investigation that provided
information that caused respondent to issue the notices of
deficiency.
There is no indication in the record that respondent
undertook a position that was not substantially justified. For
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011