In Uncategorized on 11/26/2014 at 08:41

Although candor should be applauded, this is not a good reason to fail to file returns, much less pay the tax due, especially if one has an unbroken twenty-year record of not filing returns.

And there is even a better reason not to say so to the IRS. It might prove fraudulent nonfiling, which sets up the 75% chop.

This is the lesson Judge Chiechi teaches Paul Neil Filzer, a successful attorney and investor, in 2014 T. C. Memo. 241, filed 11/25/14.

When it comes to the trial of the six nonfiling years at issue in this volume of Paul Neil’s saga, Paul Neil defaults. No brief, no show.

When he was still speaking to the IRS, Paul Neil said “…he had no good reason for not filing his tax returns, except that he knew he would owe a lot of money.” 2014 T. C. Memo. at p. 4 and p. 5.

IRS well-pleads all of Paul Neil’s various delictions and departures from the path in its answer, which Judge Chiechi quotes in extenso. So I’ll spare you; little irks me as much as CLE or CPE lecturers whose lectures consist of reading aloud their materials, which I already have in my possession, to me, as if I were illiterate.

There is a permissible inference, if not a rebuttable presumption, that attorneys, who are also Enrolled Agents, can read the English language, and possibly even comprehend what they have read.

Anyway, IRS gets a Rule 123(a) default against Paul Neil. That, you’ll remember (and if not see my blogpost “Defaulters”, 5/27/14) is not dismissal for failure to prosecute, but a real default (like what we call here in NY a default judgment), which means that IRS is deemed to have successfully borne whatever burdens of production or burdens of proof it might have had.

Hence Paul Neil gets the 75% fraud chops on everything.

So, while candor is to be applauded generally (there’s that word “generally” again), “telling it in Gath, and whispering it in the tents of the Philistines”, to misquote a much more exalted source, can get very expensive.


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