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Processing of the many civil partnership cases arising out
of the coal programs in which the Beagles invested was initially
delayed during a criminal investigation of the promoter, Swanton.
As we said in Taylor v. Commissioner, 113 T.C. 206, 212 (1999),
affd. 9 Fed. Appx. 700 (9th Cir. 2001):
“It has long been the policy of the I.R.S. to defer
civil assessment and collection until the completion of
criminal proceedings.” Badaracco v. Commissioner, 693
F.2d 298, 302 (3d Cir. 1982), affd. 464 U.S. 386
(1984).
This policy is predicated on various
considerations. The often-cited reason is potential
conflict between avenues of civil and criminal
discovery if parallel civil and criminal cases proceed.
Compare Campbell v. Eastland, 307 F.2d 478 (5th Cir.
1962), with Commissioner v. Licavoli, 252 F.2d 268 (6th
Cir. 1958), affg. T.C. Memo. 1956-187. But there are
other considerations such as where a party or witness
may be put in a situation of testifying when the
testimony may be incriminating. See United States v.
Kordel, 397 U.S. 1 (1970). There is also the confusion
inherent in two cases that are proceeding concurrently.
It is for these reasons that generally the courts have
held the civil action in abeyance while the criminal
prosecution goes forth. See id. at 12 n.27; see also
United States v. Eight Thousand Eight Hundred and Fifty
Dollars ($8,850) in United States Currency, 461 U.S.
555 (1983), where the Supreme Court held that the delay
by the United States in instituting a civil forfeiture
action pending resolution of criminal charges was
reasonable.
Here, after the criminal investigation was concluded without an
indictment, trial commenced in 1988. Unfortunately, the
litigation process was disrupted because the testimony of Swanton
was stricken for violation of Rule 145, dealing with exclusion of
witnesses. See Smith v. Commissioner, 92 T.C. 1349 (1989).
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