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$6,709.91 and $20,289.03 of gross income in their 1995 and 1996
returns, respectively.
At some point before April 15, 1998, petitioners were
referred by respondent’s Examination Division to respondent’s
Criminal Investigation Division for a potential criminal fraud
action with respect to their use of the petitioner trusts in
1994, 1995, and 1996.3 While a recommendation was made in 2000
to prosecute petitioners for violations of section 7201 for 1995,
1996, and 1997, no criminal action was initiated, for reasons not
disclosed in the record.
Respondent issued notices of deficiency to petitioners and
the petitioner trusts for 1995, 1996, and 1997 on August 2, 2001.
The notices were issued more than 3, but fewer than 6, years
after the 1995 and 1996 returns were filed. Petitioners concede
that the notice issued to them was timely with respect to their
1997 return.
Petitioners and the petitioner trusts timely mailed their
petitions for the 1995, 1996, and 1997 tax years to the Tax Court
on October 31, 2001. During the fall/winter of 2001-2002, the
Court experienced significant delays in the receipt of mail
3 Although the fraud referral report prepared by the
Examination Division is undated, it is stated therein that the
“earliest statute expiration date” for the years under review is
Apr. 15, 1998, indicating that the referral was being made before
that date.
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