Dennis E. Runkle and Debra A. Runkle - Page 11

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          6001 requires taxpayers to maintain books and records.  Mr.                 
          Runkle advised Revenue Agent Andrews that he had researched                 
          section 6001 and there was no requirement to file a tax return              
          under section 6001.  Mr. Runkle encouraged Revenue Agent Andrews            
          to take more time to research what part of the Code made                    
          petitioners subject to taxation.  Revenue Agent Andrews declined            
          Mr. Runkle’s offer.  Revenue Agent Andrews testified that he was            
          intimidated by Mr. Runkle’s questioning on tape in the presence             
          of four unnamed witnesses.                                                  
               Revenue Agent Andrews also testified that he concluded,                
          after the summons conference, that he would need to issue                   
          information request letters to third parties who filed income               
          information returns with respondent reporting income these third            
          parties paid to petitioners in 1991, 1992, and 1993.  Revenue               
          Agent Andrews issued summonses on November 2, 1994, to third-               
          party payors to obtain income and expense information regarding             
               Petitioners filed a petition with the United States District           
          Court for the Northern District of Indiana (Indiana Federal                 
          District Court) to quash the summonses issued to the third-party            
          payors.  The Indiana Federal District Court denied petitioners’             
          petition to quash the summonses issued to the third-party payors.           
          To save costs, Revenue Agent Andrews agreed that Garrett State              
          Bank need provide only the deposit items for petitioners’                   

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