T.C. Memo. 2009-13
UNITED STATES TAX COURT
EDWARD R. VOCCOLA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7700-05. Filed January 15, 2009.
Edward R. Voccola, pro se.
Nina P. Ching, for respondent.
MEMORANDUM OPINION
NIMS, Judge: This matter is before the Court on
respondent’s motion for summary judgment under Rule 121. Unless
otherwise indicated, all Rule references are to the Tax Court
Rules of Practice and Procedure, and all section references are
to the Internal Revenue Code in effect for the years in issue.
-2-
Respondent determined the following deficiencies and
penalties with respect to petitioner’s Federal income tax:
Penalty
Year Deficiency Sec. 6663
1993 $49,170 $36,836
1994 45,481 36,362
1995 45,252 33,863
The issues for consideration are: (1) Whether petitioner
underreported income during the years in issue, and (2) whether
petitioner is liable for fraud penalties under section 6663.
Background
On January 27, 2005, respondent mailed petitioner a notice
of deficiency for the 1993, 1994, and 1995 taxable years.
Petitioner filed a petition with this Court on April 26, 2005,
challenging the determined deficiencies and penalties.
Petitioner resided in Massachusetts at the time he filed his
petition. On December 22, 2005, respondent served petitioner
with a request for admissions.
Petitioner did not respond, and respondent filed a motion
for summary judgment on the basis of the deemed admissions under
Rule 90(c). The Court ordered petitioner to file a response, but
he did not do so. The Court heard respondent’s motion on May 21,
2007. Petitioner did not appear at the hearing and did not file
a Rule 50(c) statement in lieu of an appearance.
Respondent’s motion for summary judgment requests that we
sustain the deficiencies and fraud penalties set forth in the
-3-
notice of deficiency. As discussed below, the allegations in the
request for admissions are deemed admitted under Rule 90(c) as a
result of petitioner’s failure to deny or object to them.
Respondent contends those deemed admissions are sufficient to
sustain his deficiency determination as well as satisfy his
burden of affirmatively proving fraud. Additionally, respondent
contends that petitioner’s prior criminal conviction under
section 7201 collaterally estops petitioner from denying that he
willfully filed false and fraudulent income tax returns for the
years in issue.
The deemed admissions under Rule 90(c) establish the
following facts.
Petitioner prepared, signed, and filed, on behalf of himself
and his then wife, joint Forms 1040, U.S. Individual Income Tax
Return, for the years in issue. Petitioner holds a master’s
degree in business administration from Temple University Graduate
School of Business, a juris doctor degree from Suffolk University
School of Law, and a master of laws degree in Taxation from
Boston University School of Law. He also has years of work
experience as a tax specialist.
-4-
On March 29, 2000, petitioner was convicted of violating
section 72011 for the 1993, 1994, and 1995 taxable years.
Petitioner willfully and knowingly filed false income tax returns
which understated taxable income for those years. He reported
taxable income of negative $64,566, negative $69,417, and
negative $97,0082, and thereby understated his taxable income by
$241,349, $233,701, and $263,406, respectively. He failed to
report early retirement plan distributions in 1994 and 1995 from
Shawmut Bank, N.A., and a Massachusetts State tax refund received
in 1993. He also submitted Forms W-2, Wage and Tax Statement,
that incorrectly stated the amount of income that he and his then
wife received from several employers. These Forms W-2 were not
the ones actually issued by those employers.
Petitioner also claimed substantial amounts of capital
losses, capital loss carryovers, and itemized deductions for all
3 tax years. He presented no documentation to substantiate most
of these deductions. Respondent accordingly disallowed all of
the capital losses and most of the itemized deductions.
Petitioner’s correct taxable income for those years was
$176,783, $164,284, and $166,398, respectively. His correct tax
1
Respondent’s request for admissions mistakenly alleged that
petitioner was convicted under sec. 7206(1). Respondent’s motion
for summary judgment correctly indicates petitioner was, in fact,
convicted under sec. 7201.
2
Respondent’s requested admission incorrectly alleged
petitioner’s reported 1995 taxable income was negative $105,865.
-5-
liabilities for those years were $49,170, $45,481, and $45,252.
As a result of his understatement of taxable income, petitioner
understated his income tax liability by $49,170, $45,481, and
$45,252.3
Discussion
Summary judgment may be granted when there is no genuine
issue of material fact and a decision may be rendered as a matter
of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C.
518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994). The opposing
party cannot rest upon mere allegations or denials in his
pleadings and must “set forth specific facts showing that there
is a genuine issue for trial.” Rule 121(d). The moving party
bears the burden of proving there is no genuine issue of material
fact, and factual inferences will be read in a manner most
favorable to the party opposing summary judgment. Dahlstrom v.
Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner,
79 T.C. 340, 344 (1982).
The first issue for decision is whether we should grant
respondent summary judgment as to the deficiencies for the years
in issue.
3
Respondent’s request for admissions mistakenly alleged that
petitioner understated his 1995 tax liability by $45,481. The
notice of deficiency and motion for summary judgment list the
correct amount of $45,252.
-6-
Respondent’s motion is supported by his unanswered request
for admissions. A request for admissions is deemed admitted
unless an objection or written answer specifically denying the
matter is served within 30 days after service of the request.
Rule 90(c); Freedson v. Commissioner, 65 T.C. 333, 334-336
(1975), affd. 565 F.2d 954 (5th Cir. 1978). Facts deemed
admitted under Rule 90(c) may satisfy the burden of proving that
no genuine issue of material fact exists as to the Commissioner’s
deficiency determinations and that the Commissioner is entitled
to a decision as a matter of law. Marshall v. Commissioner, 85
T.C. 267, 272 (1985).
Respondent served petitioner with a request for admissions
which alleged that petitioner understated income and failed to
substantiate deductions for the years in issue. Because
petitioner failed to deny or object to these allegations, he is
deemed to have admitted these facts under Rule 90(c). These
admissions are adequate to support respondent’s burden of proving
no genuine issue of material fact exists as to the deficiency
determinations. Accordingly, we will grant respondent’s motion
for summary judgment as to the deficiencies determined for the
years in issue.
The second issue is whether we should grant respondent’s
motion for summary judgment on the section 6663 fraud penalties.
-7-
Section 6663 imposes a penalty equal to 75 percent of the
portion of any underpayment attributable to fraud. The
Commissioner bears the burden of proving by clear and convincing
evidence that an underpayment exists and that some portion of the
underpayment for each year is due to fraud with the intent to
evade tax. Sec. 7454(a); Rule 142(b). Facts deemed admitted
under Rule 90(c) may satisfy this burden. Coninck v.
Commissioner, 100 T.C. 495, 499 (1993); Marshall v. Commissioner,
supra at 273.
Petitioner’s deemed admissions are also sufficient to meet
respondent’s burden of proof for the section 6663 fraud
penalties. By failing to respond to the request for admissions,
petitioner is deemed to have admitted that he knowingly and
willingly filed false income tax returns and fraudulently
understated income for the years in issue. The deemed admission
of these facts sufficiently establishes that some portion of the
underpayment for each year was due to fraud with intent to evade
tax.
Furthermore, petitioner is estopped from denying fraud on
account of his prior criminal conviction under section 7201. The
doctrine of collateral estoppel precludes the relitigation of any
issue or fact that was actually litigated and necessarily
determined by a valid and final judgment. Peck v. Commissioner,
90 T.C. 162, 166 (1988), affd. 904 F.2d 525 (9th Cir. 1990).
-8-
Since the elements of criminal tax evasion and civil tax fraud
are identical, Gray v. Commissioner, 708 F.2d 243, 246 (6th Cir.
1983), affg. T.C. Memo. 1981-1, collateral estoppel has been
routinely applied to hold that a conviction for an attempt to
evade or defeat tax pursuant to section 7201, either upon a
guilty plea or upon a jury verdict, conclusively establishes
fraud in a subsequent civil tax fraud proceeding, DiLeo v.
Commissioner, 96 T.C. 858, 885 (1991), affd. 959 F.2d 16 (2d Cir.
1992); Frey v. Commissioner, T.C. Memo. 1998-226.
Petitioner was convicted for willful evasion of tax in
violation of section 7201 for the 1993, 1994, and 1995 tax years.
These are the same years for which respondent currently seeks
section 6663 fraud penalties. Petitioner’s prior conviction
collaterally estops him from denying that he willfully committed
fraud with intent to evade tax in those years and conclusively
establishes that petitioner’s underpayments of tax are due to
fraud within the meaning of section 6663. For these reasons, we
will grant respondent’s motion for summary judgment as to the
section 6663 penalties.
To reflect the foregoing,
An appropriate order and
decision will be entered.