Jerry V. Rice - Page 7

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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                        
               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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