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In May of 1994 the Respondent sent a Notice to the
Petitioner who tried to come up with extra monies to
hire experts to help with the demands of the
Respondent. By July 1994, two different experts
assisted the Petitioner in preparing answers to the
Respondent’s demand. The information used by the
experts in preparing the Petitioner’s U.S. Individual
Income Tax Returns for the three years in dispute, came
from the IRS’s own Income Tax Examination Changes. The
experts advised the Petitioner of deductions that the
Petitioner should claim and the experts assisted the
Petitioner in estimating deductions which were reported
on Schedule C for each of the years in dispute. The
Petitioner hired tax preparers who advised to claim
that the Petitioner did work “. . . just to get the IRS
off his back.” They scared teh [sic] Petitioner into
filing these returns.
At trial, petitioner was questioned on several occasions
regarding this issue. An early exchange went as follows:
MR. ROBERTS: What I’m challenging is they said
that I had a business. I never had any business. And
they based my income on my address, which I live in a
very low-income place. Just because it happened to be
in Newport Beach didn’t--you know, which I don’t think
they ever checked out or anything. And these are the
things I’m disputing.
So they gave me like forty some thousand dollars
extra income, which--
THE COURT: Well, I know--I hear what you’re
saying. The trouble is when Congress passed this law
in ’98 to--to make it possible to come in and challenge
the propriety of liens and levies, they put in that law
you can’t attack the underlying tax if you’ve already
had a chance to do so and you didn’t do it, and that’s-
-that’s where your case falls down here. You got a
deficiency notice. You didn’t respond to it.
MR. ROBERTS: I’m not sure--excuse me. I’m not
sure if I ever got one because--I mean, not that I
recall. I mean, this is back in ’94, I believe.
Later a similar discussion ensued:
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