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Taxpayer's Guilty Plea Precludes Civil Defense - Anderson v. Commissioner of Internal Revenue, No. 11-1704

In a precedential ruling, the Third Circuit has held in Anderson v. Commissioner of Internal Revenue, No. 11-1704 that "under the doctrine of collateral estoppel, [the Defendant's] previous guilty plea for criminal tax evasion conclusively establishe[s] the taxability to him of specific income that his criminal indictment charged him with failing to report."

Per the New Jersey Law Journal:

"Walter Anderson was charged in 2005 with failing to pay more than $200 million in taxes on nearly $500 million in unreported income from offshore businesses for the 1995 to 1999 tax years.

"Nearly all the income was from Gold & Appel Transport, a British Virgin Islands entity Anderson formed in 1992 to which he transferred his interests in three companies: Mid-Atlantic Telecom, Esprit Telecom and Telco Communications Group. The government alleged that he hid his ownership of Gold & Appel and another company also set up to evade taxes.

"Facing up to 80 years in prison, Anderson pleaded guilty on Sept. 8, 2006, to failing to report a combined $365 million in income for 1998 and 1999, the years with the highest amounts. He was sentenced to nine years in prison.

"Charges for the other three years were dismissed, but the Internal Revenue Service then went after him for unpaid taxes for all five years. In July 2007, it issued a notice of a $184 million tax deficiency as well as a fraud penalty of $138 million."

Links to full decision and NJLJ article after the jump...