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Form W-4, the Navy did not withhold any Federal income taxes from
petitioner’s wages for 1983 through 1990.
During the years in issue, petitioner received the following
amounts of wages in connection with his employment with the Navy:
$35,700, $31,995, $33,322, $33,169, $34,623, $34,596, $40,307,
$40,158, and $39,402 for 1983, 1984, 1985, 1986, 1987, 1988,
1989, 1990, and 1991, respectively. Petitioner also received
Forms W-2, Wage and Tax Statement, for 1983 through 1991. For
1983 through 1991, petitioner was required to file individual
Federal income tax returns. He failed to timely file these
returns.
During 1991, the Internal Revenue Service (IRS) assigned
members of its Compliance Action Response Team (CART) to review
records at the Navy and to work on tax compliance issues related
to civilian employees of the Navy. Revenue Agent Georgene
Bonovich, a member of CART, interviewed petitioner because he
claimed on his Form W-4 to be exempt from Federal income tax
withholding. After Revenue Agent Bonovich asked petitioner why
he had not filed tax returns for tax years following 1982,
petitioner explained that he understood that tax returns could be
used against him in a judicial proceeding, that IRS publications
stated that he did not have to file tax returns, and that he did
not have a tax liability until he received a bill from the
Government. Revenue Agent Bonovich asked to see any items
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