Last year I referred to the colonial policeman who arranged for justice against a contemptible character who mistreated a woman. See my blogpost “The Daily Grist,” 10/2/25. Now I wish he were real, and able to deal with Adam Shryock, T. C. Memo. 2026-44, filed 5/28/26.

As is often the case, a footnote tells the story. Judge Jeffrey S. (“Schwer”) Arbeit tells it.

“Petitioner also engaged in illegal activities. He solicited monetary donations from the public purportedly for breast cancer research. Several states deemed that [petitioner’s wholly-owned C Corp] and petitioner engaged in deceptive trade practices; when he continued engaging in those practices, he was held in contempt. He concealed his income-producing activities by paying personal expenses from the account of his wholly owned corporation. Finally he was convicted in federal court after pleading guilty to willfully failing to file his 2011 return. The facts in the record thus easily carry respondent’s burden of proving fraud by clear and convincing evidence.” T. C. Memo. 2026-44, at p. 9, footnote 5.

Long ago I suggested that this is less than a brilliant approach, but it would seem that Sang Hun Lee, T. C. Memo. 2026-43, filed 5/27/26, was too busy to read my blog as well as too busy to file a return for the year at issue.

Sang worked three (count ’em, three) jobs during year at issue, although IRS only nailed him for one. Sang claims the SFR he got didn’t allow him his business deductions, but STJ Jennifer E. (“Publius”) Siegel finds these undocumented. Sang’s tale of stolen records doesn’t help.

“Mr. Lee readily admits that he failed to file an income tax return for [year at issue]. He claims he had reasonable cause: Between commuting and working multiple jobs, he just did not have time. His argument is unpersuasive. We have repeatedly held that work demands—even extreme ones—do not constitute reasonable cause for purposes of section 6651(a)(1).” T. C. Memo. 2026-43, at p. 7. (Citations omitted).

Fuhai Li (that’s Doc Li) was a pill pusher, selling prescriptions for controlled substances for unreported cash. In consequence whereof, Doc Li went down for 30 of 32 counts in an indictment in USDCMDPA, including but not limited to Section 7201 fraudulent tax evasion. Hence Doc Li is collaterally estopped from contesting Section 6663 chops on whatever the actual deficiency turns out to be for the three (count ’em, three) years at issue, and Doc Li is likewise collaterally estopped from claiming SOL, as Section 6501(c)(1) keeps SOL open for fraudulent returns.

But this case is Fuhai Li and Hong Hu, T. C. Memo 2026-42, filed 5/27/26, so what about Hong Hu, spouse of Doc Li?

Hong Hu wasn’t a party to the USDCMDPA case, and nobody claims she was part of Doc Li’s fraudulent activities.

Judge Alina M. (“AIM”) Marshall has a bunch somber reasoning and copious citation of precedent, both pre-and-post amendment to Section 6653 (hi, Judge Holmes). While Hong Hu signed the fraudulent returns, she isn’t liable for the fraud chops because she didn’t commit fraud.

What she can contest is whether Doc Li committed fraud, such that SOL is open as to her.

“We read this long line of cases to hold that the unconvicted spouse who was not a party to the convicted spouse’s section 7201 criminal proceedings is allowed her ‘day’ in Court for purposes of litigating the application of the fraud exception to the general three-year period of limitations regardless of whether she herself is subject to a fraud penalty.” T. C. Memo. 2026-42, at p. 20.

And this, even though IRS conceded fraud chops as to Hong Hu; the issue is whether Hong Hu is on the hook for the deficiency.

Doc Li and Hong Hu claim IRS presented no evidence of fraud in Tax Court, but Judge AIM Marshall finds IRS did offer enough to raise a material fact question for trial. 

Taishoff says if IRS can prove what this press release says, Hong Hu has a tough job.