In Uncategorized on 05/20/2023 at 01:11

Vincent Fumo, Docket No. 17603-13, a coupled entry with Docket No. 17614-13, filed 5/19/23, finds himself in the posture delineated by George Gordon, as Judge Albert G. (“Scholar Al”) Lauber finds Fumo had a chance to cross-examine witnesses, challenge admission of evidence, and put on witnesses and evidence of his own.

Fumo has been here before, but it’s late as I write this, so I won’t catalogue all his appearances. Now he is fighting both income tax (with concomitant Section 6663 fraud chops) and Section 4958 excess benefits 25% tax (and no, I didn’t know what that was, either). IRS claims Fumo milked Pennsylvania State Senate and Citizens Alliance, an organization exempt under I.R.C. § 501(c)(3), and got benefits in the form of farm equipment, political polling, and work done by Senate employees and contractors for his benefit. Hence the 25% excess benefits excise tax.

Fumo claims the excess benefits evidence came in only because it was relevant to the Section 4958, and shouldn’t have been used to claim a bigger deficiency (underreporting) and enhanced fraud chops.

IRS moves to conform pleadings to proof per Rule 41(b).

“Petitioner contends that the matters described in respondent’s Motion were included in the record of the income tax case only because it was consolidated with the excise tax case. We are not sure that is right: Respondent may well have presented the same evidence in both cases had the two not been consolidated. In any event, the two cases were consolidated, the evidence was presented, and petitioner had the opportunity to contest it.” Order, at p. 2.

As usual, the issue is surprise. Did IRS ambush Fumo so he couldn’t put in evidence, object to IRS’ evidence, put on his own witnesses, or cross-examine IRS’ witnesses? No, says Judge Scholar Al; Fumo did all of the above.

Fumo says letting IRS put in the extra stuff prejudiced him, because it cost him money. But this is true whenever such a motion is granted. The point is, Fumo had a chance to defend, and did.

Maybe the defense here is a motion in limine; whatever evidence goes in for the excise tax is limited to the excise tax issue. Might not work if, as here, there’s substantial overlap (excess benefit is income to beneficiary), but worth a try. And worth considering where multiple categories of taxes are at issue.


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