Doesn’t Pay Off

Michael C. Iaco, Docket No. 19694-18L, filed 8/13/20 “…pled guilty to operating an illegal gambling business. Petitioner’s plea agreement specifically covered his activities from January 2012 thru June 2013.” Order, at p. 1.

MCI falls foul of the Section 4401 excise tax on wagers, and if you’ve never encountered this one, neither have I.

MCI had no books and records, nor did what RO B (name omitted) terms MCI’s “power of attorney” (should be “representative”; a power of attorney is either a piece of paper or a bunch of electrons) furnish any thereof. So RO B took a one-day run of the wiretap that brought MCI down, and extrapolated.

MCI is a sporting guy. He offers RO B “…he would concede to tax liability for one month with the remaining 17 months to be conceded by the Government.” Order, at p. 3. I give MCI a Taishoff “Good Try, third class.”

MCI went to Appeals, but claims “The Appeals Officer made no attempt at all to determine the correct amount of the excise tax. None at all. Instead, she simply ‘rubber stamped’ the Examiners [sic] crazy conclusion.” Order, at p. 5.

Judge James S (“Big Jim”) Halpern gives IRS summary J, and me a designated hitter. MCI had plenty of chances to put in documentation of what wagers he handled with RO B. Uncorroborated oral testimony doesn’t cut it.

Tax Court is a bad place to play longshots.