But His Spouse Walks

Dung T. Le ran a couple nail salons (hi, Judge Holmes) in Lincoln, NE. Dung T. was properly nailed for the 75% fraud chop. Handing the RA auditing his returns doctored copies of checks, and getting a Suspicious Activities Report from his bank for his string of under-radar cash deposits, is enough for Judge Paris. And Dung T. also went down for Section 7201 tax evasion in USDCDNE.

There’s more, but spouse Nghia T. Tran, though a woman of many names, “also known by or referred to as Nancy T. Tran, Nghia Hui Thitran, and Nancy Nghia Tran”, 2020 T. C. Memo. 27, filed 2/26/20, at p. 3, walks away chopless.

The whole story is to be found in Dung T. Le and Nghia T. Tran, 2020 T. C. Memo. 27.

Dung T. is toast long before Nghia appears on the scene. It’s the usual criminal conviction plus restitution doesn’t determine tax liability, so no collateral estoppel as to a post-conviction SNOD. Judges have wide discretion to fix restitution. Anyway, “…it is well settled that a sentencing court’s ordering of (or decision not to order) restitution has no effect on the IRS’ authority to determine the taxpayer’s correct civil tax liability and to assess and collect that liability.” 2020 T. C. Memo. 27, at p. 22 (Citations omitted).

But when it comes to the 20% accuracy chops, Dung T. is out because of the fraud chop.

“The accuracy-related penalty cannot be imposed on one spouse where the other spouse is liable for the fraud penalty, as this would lead to impermissible stacking of penalties.  Respondent has not asserted fraud penalties against petitioner Tran but alleges that she is liable for the section 6662(a) accuracy-related penalty for each year in issue.

“Petitioner Le bears principal responsibility for the false statements made to, and the lack of cooperation with, the IRS revenue agent.  Unlike her husband, petitioner Tran did not present testimony lacking credibility at trial.  Also unlike her husband, she did not actively participate in the deposits and manipulation of the business accounts or interaction with the preparation of the tax returns. Because petitioner Le is liable for the section 6663 fraud penalty for each year in issue, petitioner Tran is not liable for the accuracy-related penalties.” 2020 T. C. Memo. 27, at pp. 38-39. (Citations omitted).

Section 6663 is a path to Section 6015 innocent spousery. If you’re an innocent spouse.