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stacked on Mrs. Grothues’s desk and the failure of many of the
checks written to pay corporate employment taxes to clear the
Bank. Mr. Hooks also knew that Mrs. Grothues altered fuel excise
tax returns. She instructed him to create a second database and
reconstruct invoices to conform with the numbers that had been
reported on the State and Federal fuel excise tax returns.
On March 30, 1987, petitioners filed a petition for relief
under chapter 11 of the Bankruptcy Code in the U.S. District
Court for the Western District of Texas in case No. 87-50747-LC-
11. Respondent filed proofs of claim in petitioners’ bankruptcy
proceedings that included claims for past-due corporate
employment taxes of petitioners’ corporations. The bankruptcy
plan of reorganization for petitioners and their corporations,
confirmed on August 14, 1992, provided for payment by petitioners
of the corporate employment tax liabilities of their
corporations.
On January 5, 1990, after several years had passed without
correction of the false fuel excise tax returns, Mr. Hooks
terminated his employment with petitioners’ corporations and
contacted the IRS. Mr. Kanz tried to dissuade Mr. Hooks from
talking to the IRS. When it became apparent that Mr. Hooks could
not be dissuaded, Mr. Kanz informed the IRS about petitioners’
practices with respect to reporting and paying their
corporations’ employment and fuel excise taxes.
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