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Petitioner argues that, because the regulations to section
6664 were not issued until after he filed his 1989 Federal income
tax return, the regulations cannot apply retroactively to
establish that he had an underpayment. See sec. 7805(b).
Section 7805(b) gives respondent the authority to "prescribe the
extent, if any, to which any ruling * * * [or regulation],
relating to the internal revenue laws, shall be applied without
retroactive effect." Section 1.6664-1(b), Income Tax Regs.,
provides that "Sections 1.6664-1 through 1.6664-3 apply to
returns the due date of which * * * is after December 31, 1989."
Thus, because petitioner's 1989 Federal income tax return was due
on April 15, 1990, the cited regulations govern the definition of
an underpayment with respect to respondent's penalty
determination.
Petitioner admitted committing fraudulent acts with respect
to his 1989 Federal income tax return. He intentionally reported
false withholding information, the false withholding information
was used to offset his income tax liability in 1989, and he thus
obtained an erroneous refund of $10,172 for that year. In
addition, he fabricated and attached to his return false Forms
W-2 to substantiate his withholding. Petitioner was later
convicted of filing a false claim for a refund and of subscribing
a false Federal income tax return.
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