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On March 10, 2003, the District Court entered a judgment
finding petitioner guilty of income tax evasion under section
7201, sentencing him to 42 months in prison and imposing a
$250,000 fine. This judgment has become final.
On February 8, 2005, respondent issued a notice of
deficiency with respect to petitioner’s 1996 tax year,
determining that petitioner owed additional income taxes of
$608,395 based on additional income of $1,551,863 and asserting a
section 6663 civil fraud penalty of $454,221.
In a letter to the IRS dated March 24, 2005, petitioner
stated in part:
the income upon which the Notice of Deficiency is based
was income that I restored to the U.S. Government over
the succeeding few years after receipt. This income
was restored to the U.S. Government many years before
the Internal Revenue Service even considered this
matter. * * *
In 1996, I received approximately USD1,550,000 [sic]
that was not reported as income. Between 1999 and
2001, I restored this income in full to the U.S.
Government.
In his petition, filed April 29, 2005, petitioner assigns
error to respondent’s determinations in the notice of deficiency
and seeks relief on these grounds:
Relief requested is to eliminate and cancel all claimed
tax due and penalties imposed. The funds upon which
said tax and penalties are imposed were received under
a claim of right and were subsequently restored to the
U.S. Government in full. Accordingly, no tax should be
imposed as the funds were restored.
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Last modified: May 25, 2011