Former IRS agent penalized for tax fraud

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Kestrel
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Former IRS agent penalized for tax fraud

Postby Kestrel » Wed Dec 04, 2013 6:56 am

http://www.ustaxcourt.gov/InOpHistoric/ ... CM.WPD.pdf

The case is 9721-11, Bohdan Senyszyn. Decision was entered on December 12, 2013. This week's decision was issued subsequent to his 2007 criminal conviction for tax evasion. Mention of the original case is found in Q's read-only public archives here.

From this week's decision:
During 2003, Mr. Senyszyn was employed as a revenue agent in the Internal
Revenue Service's (IRS) Large and Mid-Size Business Division. In that capacity,
Mr. Senyszyn was responsible for examining and investigating complex tax
returns filed by large corporations. Among other things, Mr. Senyszyn's duties as
a revenue agent included recognizing indicators of fraudulent activity. In 2007,
respondent removed Mr. Senyszyn from his position as a revenue agent after he
pleaded guilty in Federal District Court to filing false returns as an IRS agent, tax
evasion, structuring evasive financial transactions, and bank fraud.

Petitioners timely filed their Form 1040, U.S. Individual Income Tax Return,
for 2003. On that return, petitioners reported wages of $78,116, gross receipts of
$25,850 on Schedule C, Profit or Loss From Business, and gross receipts of $1,200
on Schedule F, Profit or Loss From Farming. Petitioners did not report gross
income from any other sources on their return, nor did they otherwise disclose any
other sources of income on the return or on a statement attached to the return.

Mr. Senyszyn was the defendant in a criminal case, United States v.
Senyszyn, No. 2:06-CR-0311-01 (D.N.J. filed Apr. 13, 2006), brought in the U.S.
District Court for the District of New Jersey. On September 20, 2007, the U.S.
Attorney for the District of New Jersey filed a superseding information in that
case, which set forth the following charge against him:

COUNT TWO
TAX EVASION
1. The allegations contained in paragraphs 1 through 10 of
Count One of this Superseding Information are repeated, realleged,
and incorporated by reference as though fully set forth herein.

2. During the calendar year 2003, defendant BOHDAN
SENYSZYN embezzled taxable income from the sale of real estate
owned by DH that was in addition to the income paid to him as salary
and wages by the IRS. Specifically, defendant BOHDAN
SENYSZYN embezzled approximately $252,726.00 from the
November 19, 2003 sale of DH-owned property in Andover Township
identified as Lot 72, which was sold for $351,000.00.

3. On or about January 29, 2004, defendant BOHDAN
SENYSZYN prepared, co-signed, and filed a United States Individual
Income Tax Return, Form 1040, for himself and his wife, who also
signed the return. That joint return declared $78,115.80 in wages and
salaries as their only income, and stated that the amount of tax due and
owing was $0.

4. The return did not include about $252,726.00 in additional
taxable income that defendant BOHDAN SENYSZYN embezzled in
2003 from the sale of Lot 72. Upon this additional income, an
additional tax of about $85,016.27 was due and owing to the United
States.

5. On or about January 29, 2004, in the District of New Jersey,
and elsewhere, defendant BOHDAN SENYSZYN knowingly and
willfully did attempt to evade and defeat a substantial part of the
income tax due and owing by him to the United States for the calendar
year 2003 in that he signed, filed and caused to be filed a false and
fraudulent United States Individual Income Tax Return, Form
1040, as described in paragraph 3, knowing it to be false and
fraudulent as described in paragraph 4. In violation of Title 26,
United States Code, Section 7201.

Contemporaneous with the U.S. attorney's filing the superseding
information, Mr. Senyszyn signed a plea agreement with him, in which Mr.
Senyszyn agreed to plead guilty to the above-set-forth count 2 (i.e., "tax evasion for
[the] tax year 2003 in violation of sec. 7201"). He agreed to stipulate at
sentencing: "BOHDAN SENYSZYN knowingly and willfully did not include
about $252,726.00 in additional taxable income that he acquired in 2003. Upon
this additional income, an additional tax of about $85,016.27 was due and owing to
the United States."

On September 20, 2007, Mr. Senyszyn entered a plea of guilty to all of the
charges set forth in the superseding information, including the charge of tax
evasion. During the plea colloquy, Mr. Senyszyn was asked whether he was
pleading guilty to the crimes listed in the superseding information because he was,
in fact, guilty. He responded, "Yes, I am."

Mr. Senyszyn subsequently moved to withdraw his guilty plea, asserting his
innocence as to whether a tax was actually due on the money he failed to report in
2003. The District Court denied the motion, and on February 25, 2008, it entered
judgment pursuant to the plea. Mr. Senyszyn appealed the denial of his
motion to withdraw the guilty plea, and the U.S. Court of Appeals for the Third
Circuit affirmed the denial. See United States v. Senyszyn, 338 Fed. Appx. 201 (3d
Cir. 2009). Mr. Senyszyn filed a motion to vacate, set aside, or correct his
sentence, and that motion was denied, as well. See Senyszyn v. United States, No.
2:09-cv-6120 (D.N.J. filed Dec. 3, 2009). He did not file a direct appeal of his
criminal sentence, and his conviction has become final.

Following Mr. Senyszyn's criminal conviction, respondent examined
petitioners' 2003 Federal income tax return for the purpose of determining any
deficiency in tax. The notice followed, respondent making a positive adjustment to
petitioners' gross income on account of unreported income of $252,726.
--------------------------------------------
1. Unreported Income
Respondent argues that Mr. Senyszyn's conviction for tax evasion precludes
petitioners from denying that Mr. Senyszyn received $252,726 of unreported
income in 2003. Relying on Anderson v. Commissioner,
respondent asserts that "a defendant's admission
in a guilty plea for tax evasion that he failed to report a specific amount of income
on his tax return precludes the defendant from contesting that such amount is
taxable to him in a later proceeding." Respondent argues that Mr. Senyszyn's
stipulation in his criminal tax proceeding that he "knowingly and willfully did not
include about $252,726.00 of additional taxable income that he acquired in 2003"
precludes him from challenging the deficiency amount.

We disagree. Although the existence of an underpayment in tax is a
necessary element of tax evasion under section 7201, the determination of an exact
liability evaded is not. Even where the taxpayer has stipulated a specific amount of
underpayment in a guilty plea, such stipulation--though strong evidence of
the deficiency amount--does not collaterally estop the taxpayer from challenging
that amount in a subsequent civil proceeding.
-----------------------------------------------------
2. Section 6663(a) Fraud Penalty
Section 6663(a) provides: "If any part of any underpayment of tax required
to be shown on a return is due to fraud, there shall be added to the tax an amount
equal to 75 percent of the portion of the underpayment which is attributable to
fraud." Respondent bears the burden of proving fraud by clear and convincing
evidence. See sec. 7454(a); see also Rule 142(b). To satisfy that burden,
respondent must show: (1) an underpayment exists; and (2) Mr. Senyszyn intended
to evade taxes known to be owing by conduct intended to conceal, mislead, or
otherwise prevent the collection of taxes.

A conviction for tax evasion pursuant to section 7201, either upon a guilty
plea or upon a jury verdict, conclusively establishes fraud in a subsequent civil tax
fraud proceeding through the doctrine of collateral estoppel.
That is because the elements of criminal tax evasion and
civil tax fraud are virtually identical.

Mr. Senyszyn pleaded guilty to tax evasion under section 7201 for 2003, and
that judgment has become final. Petitioners do not deny the conviction, but raise a
number of objections to the application of collateral estoppel. Petitioners'
arguments that the notice was based on a report prepared by the IRS Criminal
Investigation Division while pursuing an indictment under section 7206(1), a
charge that was apparently dropped by the time Mr. Senyszyn entered his guilty
plea, are without merit. We do not look behind a notice of deficiency to examine
the evidence used, the propriety of the Commissioner's motives, or administrative
policy or procedure used in making that determination. Moreover,
petitioners' claim, even if true, has no bearing on whether the conviction for tax
evasion under section 7201 conclusively establishes that Mr. Senyszyn underpaid
his 2003 tax liability with fraudulent intent.
------------------------------------------------------
Accordingly, petitioners are precluded from challenging respondent's
determination that Mr. Senszyn underpaid his tax for the 2003 tax year and that he
filed a false and fraudulent Federal income tax return with the requisite fraudulent
intent. Mr. Senyszyn is therefore liable for the section 6663(a) fraud penalty for
that year. As with the deficiency, however, the issue of the amount of that penalty
remains for trial.
"Never try to teach a pig to sing. It wastes your time and annoys the pig." - Robert Heinlein

fortinbras
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Re: Former IRS agent penalized for tax fraud

Postby fortinbras » Wed Dec 04, 2013 1:09 pm

One reason that I did not try to get a lawyer job with the IRS, years ago when I had a chance, was that the IRS will FOREVER keep a close eye on the tax returns of its own people (including former employees), just to make sure that they don't use any of the tricks they saw as part of their IRS experience.


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