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herein as to the tax deficiencies and the fraud additions to tax
was substantially justified.
We are aware of the recent District Court opinions involving
petitioner and respondent. See Payne v. United States, 91 F.
Supp. 2d 1014 (S.D. Tex. 1999), on appeal (5th Cir., argued
Apr. 3, 2001), and Payne v. United States, 85 AFTR 2d 564, 2000-1
USTC par. 50,218 (S.D. Tex. 1999), on appeal (5th Cir., argued
Apr. 3, 2001), in which damages and litigation costs were awarded
to petitioner as a result of what was regarded by the District
Court as improper disclosure by respondent of tax return
information relating to petitioner’s 1987 and 1988 tax
liabilities, the same years involved herein. Secs. 6103,
7431(a)(1). At the District Court level, petitioner was awarded
$1,536,680 in actual damages, $1,000 in punitive damages, and
$105,361 in litigation costs. Payne v. United States, 91 F.
Supp. 2d at 1029; Payne v. United States, 85 AFTR 2d at 567,
2000-1 USTC par. 50,218 at 83,590.
We emphasize, however, that the above District Court
opinions, now on appeal, involved the manner by which respondent
conducted the audit of petitioner’s 1987 and 1988 Federal income
tax returns. In contrast, the instant litigation pertains to
respondent’s substantive tax deficiencies and additions to tax
arising out of that audit.
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