The latest addition to my list of those who cannot add comes from Judge Cary Douglas Pugh. She denies IRS’ motion for issue preclusion summary J on the amount of deficiency to be assessed against Craig P. Orrock, Docket No. 113-24, filed 1/7/24. Notwithstanding Craig’s conviction on three (count  ’em, three) counts, two Section 7201 tax evasions and one Section 7212 attempting to interfere with the internal revenue laws, by a jury of his peers in USDCDNV and affirmance thereof by 9 Cir, that doesn’t preclude Craig from litigating how much he owes.

I’ve told this story before, but the result always puzzled me. Craig’s story is even more puzzling. “The District Court sentenced petitioner to 32 months of imprisonment and ordered him to pay a $300 assessment and $923,667 in restitution to the Internal Revenue Service.” Order, at p. 2.

Seriously? $300? Y’all will recollect that the word “assessed” in Section 6751(b) triggered the whole Boss Hoss fandango; is this “assessment” the amount of tax IRS is to enter upon its books? And for that Craig gets 2 years 8 months in jail? And must pay $900K in restitution?

Of course not. IRS gave Craig a SND at no extra charge that determined a “$340,260 deficiency largely attributable to $965,816 in unreported ‘Other Income.'” Order, at p. 3. This was the result of some corporate shenanigans to hide the proceeds of a real estate sale that was the basis of the criminal case.

Apparently computing basis and deducting same from net sales proceeds is beyond the competence of an AUSA to explain, and a Federal trial jury to comprehend.

Anyway, though Craig is precluded from relitigating fraud (hence the Section 6663 chop is in), he can fight about what the tax is.

“Petitioner points out that the specific amount of reported income was not an essential element of his conviction. A jury plausibly could reach a guilty verdict at count two of the indictment without finding that petitioner owed the entire $340,260 deficiency determined in respondent’s notice of deficiency. Nor does the restitution ordered in the District Court’s final judgment conclusively establish that petitioner is liable for the entire deficiency. Thus while certain admissions from the criminal trial may constitute evidence in determining petitioner’s liability, the conviction alone does not establish that there is no genuine issue of fact as to the precise amount of petitioner’s unreported [year at issue] income.” Order, at p. 4.