concurring in part and dissenting in part. I concur in the opinion of Judge Scott insofar as it relates to the issue of Lucille H. Bodney’s liability for the penalty prescribed under section 6653 (b), I.B.C. 1954. However, the opinion, in my view, does not go far enough .to remedy the gross inequities presently existing with regard to an innocent spouse in this situation. Even if respondent had introduced proof of Henry M. Bodney’s fraud, I would not hold Lucille accountable for the 50-percent fraud penalty. Only if respondent had produced clear and convincing evidence of Lucille’s fraud should she be held so answerable.
1 am well aware of the long line of authority holding that the joint and several liability provisions contained in section 6013 (d) (3), I.R.C. 1954, and its predecessor (sec. 51 (b), I.R.C. 1939) extends to the civil fraud penalty, notwithstanding that one of the parties to the joint venture may be innocent of the fraud. Ginsberg's Estate v. Commissioner, 271 F. 2d 511, 513-514 (C.A. 5, 1959); Furnish v. Commissioner, 262 F. 2d 727, 731-732 (C.A. 9, 1958); Kann v. Commissioner, 210 F. 2d 247, 252 (C.A. 3, 1953); Howell v. Commissioner, 175 F. 2d 240, 241 (C.A. 6, 1949) ; Michael Pendola, 50 T.C. 509, 521 (1968), and the cases cited therein.1 Nevertheless, I find it almost inconceivable that Congress, when enacting the joint and several liability provision, could have intended that the fraud of a wrongdoing spouse should be imputed to an innocent spouse for purposes of imposing the 50-percent fraud penalty. While the above-noted authority2 to the contrary is considerable, I am convinced that it is time to revisit this area. No legal principle is so deeply imbedded as to be immune from being uprooted when shown to be clearly erroneous.
During the course of such a revisitation, it should be noted that, although the statute speaks in terms of an addition to tax, the 50-percent penalty clearly evidences quasi-criminal characteristics and is commonly referred to as a fraud penalty with all the stigma that attaches to such a characterization. Its quasi-criminal nature is apparent from the fact that the Commissioner has the burden of proving the requisite fraudulent intent to evade the tax by clear and convincing evidence. This burden, while not as stringent as that in a criminal case, is much heavier than the usual burden the taxpayer bears in challenging a proposed deficiency determination. Valetti v. Commissioner, 260 F. 2d 185, 188 (C.A. 3, 1958). Imposition of this quasi-criminal sanction should be limited to those persons who harbor the proscribed evil intent.
It is with respect to the question of the innocent spouse’s liability for the underlying deficiency that I dissent from the majority’s holding. I would hold the criminally convicted spouse collaterally estopped from denying the fraudulent nature of the return. Therefore, having found the return to be fraudulent, I would hold that the statute of limitations is no bar to tlie assertion of a deficiency against the innocent spouse under the joint liability provisions of the Code. He or she. should fare no better by virtue of having unknowingly cosigned a fraudulent return rather than an honest one.
1 have grave doubts that the law would be in its present form if the original cases (i.e., Helvering v. Mitchell, 303 U.S. 391 (1938)) could have arisen in the context of an innocent spouse being held liable for the fraud penalty.
It can be argued that sec. 0659 lends additional support to the result reached by the above-mentioned line of authority inasmuch as that section states that the word “tax” as used in the Code (and more particularly as it is used in sec, 6013 (d) (3)) shall include “additions to the tax, additional amounts, and penalties.” To the extent that this section applies to the 50-pereent fraud penalty, I believe it is intended to deal with the situation where both spouses are party to the fraud. X do not believe that Congress by the enactment of this Code provision is addressing itself to the issue discussed herein.