Sunday, September 9, 2012

Walter Anderson Re-Appears But Unsuccessfully (9/9/12)

Walter Anderson has occupied the attention of the IRS and the courts for some time now.  (See his Wikipedia entry, here, appropriately titled "Walter Anderson (tax evader)."  I have previously blogged on him -- Walter Anderson -- The Fight Continues (2/2/11), here.

Mr. Anderson just lost an appeal regarding his civil tax liability for the years for which he was convicted.  See Anderson v. Commissioner, 698 F.3d 160 (3d Cir. 2012), here.  The gravamen of the holding on appeal is the well settled proposition that a tax evasion conviction is collateral estoppel for the year(s) of conviction as to tax fraud for purposes of the civil fraud penalty and the unlimited statute of limitations.  The amount can still be in issue, but Mr. Anderson ultimately stipulated the amount in the Tax Court.  Thus the court said early in the opinion that "we agree with the numerous courts that have held that, under the doctrine of collateral estoppel, a conviction for criminal tax evasion conclusively establishes the defendant's civil liability for tax fraud for the same year."  (Citations omitted.)  In reaching the conclusion, the court analyzed the basis for his plea agreement and determined that it necessarily included as admission that certain income was taxable to him and that the admission was necessary to the conviction.

Mr. Anderson also argued that the IRS's concession in the Tax Court as to three years for which Mr. Anderson had not been convicted was necessarily a concession as to the two years for which he was convicted, arguing that the fact patterns were the same.  The IRS's concession for the nonconviction years, however, was a strategic one because most of the income was in the years of conviction and thus having to mount the substantial burden of proving fraud and the tax involved for the nonconviction years was not justified.  But, that concession was not a concession that the taxpayer had not committed fraud in those years.

Procedural note

Because a panel member, Judge Louis H. Pollak, Senior Judge of the United States District Court for the Eastern District of Pennsylvania, sitting by designation died before the decision was rendered, the opinion could be filed by "a quorum of the court pursuant to 28 U.S.C. § 46 and the Third Circuit I.O.P. 12.1(b)."  That I.O.P. provision is
(b) If a member of a panel  becomes unavailable after the disposition date but before the opinion is filed with the clerk, the two remaining judges will inform the chief judge of the status of the case, e.g. whether the remaining members of the panel agree on the disposition of the case, and whether an opinion has been drafted.  The chief judge in his or her discretion will decide whether to reconstitute the panel by naming a substitute.  A case may be decided without naming a substitute judge if the remaining judges  agree as to disposition.

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