1

 PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 11-1704

____________

WALTER C. ANDERSON,

 Appellant

 

v.

COMMISSIONER OF INTERNAL REVENUE

On Petition for Review of an Order of the 

United States Tax Court

(Agency No. 07-20364)

Administrative Judge: Honorable David Gustafson

Argued on May 7, 2012
2

Before: SLOVITER and ROTH, Circuit Judges

 and POLLAK*, District Judge

(Opinion filed: September 7, 2012 ) 

Steven J. Jozwiak, Esquire (Argued)

601 Longwood Avenue

Suite 300

Cherry Hill, NJ 08002

Counsel for Appellant

Gilbert S. Rothenberg, Esquire

Acting Deputy Assistant Attorney General

Bethany B. Hauser, Esquire (Argued)

Robert W. Metzler, Esquire

Francesca U. Tamami, Esquire

United States Department of Justice

Tax Division

950 Pennsylvania Avenue, N. W.

P. O. Box 502

Washington, DC 20044

Counsel for Appellee

*Honorable Louis H. Pollak, Senior Judge of the 

United States District Court for the Eastern District of 

Pennsylvania, sat by designation. Judge Pollak died on May 

8, 2012; this opinion is filed by a quorum of the court 

pursuant to 28 U.S.C. § 46 and the Third Circuit I.O.P. 

12.1(b).
2

O P I N I O N

ROTH, Circuit Judge:

This appeal arises out of a civil tax fraud proceeding in 

United States Tax Court. The taxpayer challenges the Tax 

Court’s determination that, under the doctrine of collateral 

estoppel, his previous guilty plea for criminal tax evasion 

conclusively established the taxability to him of specific 

income that his criminal indictment charged him with failing 

to report. He additionally argues on the basis of a number of 

preclusion doctrines that the Internal Revenue’s (IRS) 

concession of all tax deficiency and penalty issues for certain 

years should have prevented it from obtaining recovery of 

such payments in other years because the issues for all years 

were identical. As explained below, we find that these

arguments are without merit, and we will therefore affirm the 

Tax Court’s judgment.

I. BACKGROUND

On September 30, 2005, Petitioner Walter Anderson 

was charged in a superseding indictment with federal tax 

evasion for tax years 1995 through 1999, in violation of 26 

U.S.C. § 7201. During those years, Anderson was a 

telecommunications entrepreneur and venture capitalist who 

was actively involved in the operation of several international 

companies. Among these companies was Gold & Appel 

Transfer S.A. (G & A), a British Virgin Islands corporation
3

which generated hundreds of millions of dollars of income 

during the tax years at issue. The government alleged that 

because G & A was a “controlled foreign corporation,” under 

Anderson’s control, he was required to recognize a share of 

its income on his tax return and that he fraudulently failed to 

do so. The government alleged that for the five-year period at 

issue, Anderson had fraudulently underpaid his taxes by $184 

million, 99% of which stemmed from the income of G & A. 

Pursuant to an agreement with the government, on September 

8, 2006, Anderson pleaded guilty to the federal tax evasion 

charges for 1998 and 1999, while those same charges for 

1995, 1996 and 1997 were dismissed.1 He was sentenced to 

108 months imprisonment. 

On July 17, 2007, the IRS issued a notice to Anderson 

determining civil tax deficiencies and fraud penalties for tax 

years 1995 through 1999. See 26 U.S.C. §§ 6212, 6663. 

(The deficiency amounted to the $184 million of underpaid 

 

1 Anderson had also been charged with obstruction of 

the internal revenue laws of the United States, in violation of 

26 U.S.C. § 7212(a), fraud in the first degree under the laws 

of the District of Columbia, specifically 22 D.C. Code § 

3221(a), in relation to D.C. income tax filings and payments 

for years 1995 through 1999, and evasion of D.C. use taxes 

on a number of purchases made between 1997 and 2001, also 

in violation of 22 D.C. Code § 3221(a). All of these charges 

were dismissed with the exception of the charge of first 

degree fraud under D.C. law for 1999, to which Anderson 

pleaded guilty.

 
4

taxes, resulting in a fraud penalty of $138 million.2) On 

September 7, 2007, while he was incarcerated in New Jersey, 

Anderson filed a petition in the United States Tax Court to 

redetermine these deficiencies. See 26 U.S.C. § 6213(a). In 

response to motions by both parties, the Tax Court granted 

partial summary judgment to the IRS, finding that under the 

doctrine of collateral estoppel, Anderson’s criminal 

conviction for tax evasion in 1998 and 1999 precluded him 

from contesting that he fraudulently underpaid his incomes 

taxes in those two years. The Tax Court denied summary 

judgment on the fraud issue for tax years 1995-1997, without 

prejudice to renew the motion “with a better record and more 

focused contentions.” 

The holding on the 1998 and 1999 tax years had three 

principal effects. First, it established that Anderson had 

underpaid his income taxes in 1998 and 1999. Second, 

because a fraud penalty can only be assessed where a tax 

underpayment is due to fraud, it relieved the IRS of its burden 

of proving this penalty was applicable to Anderson for those 

two years. See 26 U.S.C. § 6663(a). Finally, because the 

three-year statute of limitations on the assessment of a tax 

does not apply where a tax return has been filed falsely or 

fraudulently with the intent of evading tax, 26 U.S.C. § 

6501(c)(1), it prevented Anderson from arguing that the IRS’s 

attempts to collect taxes for 1998 and 1999 were untimely.3 

 

2

The penalty is equal to 75% of the amount of the 

underpayment of tax that is due to fraud. See 26 U.S.C. § 

6663(a).

3 Anderson filed his tax return for 1998 on September 

30, 1999, and his tax return for 1999 on October 19, 2000. 

Without this exception to the three-year statute of limitations, 
5

Though this decision established that Anderson had 

fraudulently underpaid his income taxes in 1998 and 1999, it 

left open for further proceedings the determination of the 

amounts of the tax deficiencies and penalties for those years.

Based on this ruling, the IRS filed a motion to sever 

tax years 1995, 1996, and 1997 from the case, stating that it 

“ha[d] decided to concede all tax and penalty issues for [those 

years] and wishe[d] to file a motion for entry of decision as to 

those years.” In its motion, the IRS explained that nearly 

80% of the total deficiency and penalties for the five-year

period stemmed from just 1998 and 1999, and that because 

proving fraud for 1995 through 1997 via trial would 

needlessly complicate and lengthen the case for a 

comparatively limited additional monetary recovery, it 

preferred to abandon its efforts for those years. The Tax 

Court found that, given its particular procedural rules, 

severing the case in this way would needlessly create clerical 

and administrative complexities, and it therefore denied the 

motion. It stated in its order, however, that it would “take 

notice of the [IRS’s] concession of all tax and penalty issues 

for 1995, 1996, and 1997 and [would] reflect that concession 

in its eventual entry of decision in [the] case.” 

This order led to the filing of a second set of summary 

judgment motions. Anderson argued in his motion that, 

notwithstanding the Tax Court’s earlier holding that his 

criminal convictions for tax evasion collaterally estopped him 

from denying fraudulent underpayment of tax in 1998 and 

1999, the IRS’s subsequent concession of all tax and penalty 

 

the IRS’s notice of tax deficiency issued on July 17, 2007, 

would have been untimely.
6

issues for 1995, 1996, and 1997 established that the income 

of G & A and interest income from an account at Barclays 

Bank were not taxable to him even in 1998 and 1999. The 

IRS, meanwhile, argued in its motion that Anderson was 

precluded from contesting that the income of G & A in 1998 

and 1999 constituted taxable income to him under Subpart F 

of the Tax Code. The Tax Court denied Anderson’s motion 

and granted partial summary judgment to the IRS. It held, in 

favor of the IRS, that the concessions related to tax years 

1995 through 1997 did not resolve the deficiency and penalty 

issues for 1998 and 1999. It further agreed with the IRS’s 

position that the proceedings in Anderson’s criminal case 

established that G & A’s income in 1998 and 1999 was

taxable to him. The Tax Court rejected the IRS’s argument, 

however, that Anderson’s guilty plea estopped him from 

contesting that the income of G & A was taxable to him 

specifically under Subpart F of the Tax Code. Anderson now 

challenges the adverse holdings.

II. DISCUSSION

This Court has jurisdiction to review final orders of the 

Tax Court based on 26 U.S.C. § 7482(a)(1). 4 On March 7, 

2001, pursuant to an agreement between the parties, the Tax 

Court entered an order determining the tax deficiency and 

fraud penalty for each year from 1995 through 1999, leaving 

no issues for it to decide and thus providing this Court with 

jurisdiction under that statute. We review the Tax Court’s 

legal conclusions de novo and its factual findings for clear 

 

4 Venue in this Court is appropriate because Anderson 

was a resident of New Jersey at the time he filed his petition 

for redetermination. See 26 U.S.C. § 7482(b)(1)(A).
7

error. Capital Blue Cross v. Comm’r, 431 F.3d 117, 123-24 

(3d Cir. 2005).

A. The Preclusive Effect of Anderson’s Criminal 

Conviction

Under the doctrine of collateral estoppel, “once an 

issue is actually and necessarily determined by a court of 

competent jurisdiction, that determination is conclusive in 

subsequent suits based on a different cause of action 

involving a party to the prior litigation.” Montana v. United 

States, 440 U.S. 147, 153-54 (1979). It applies, however, 

only if: “(1) the issue sought to be precluded [is] the same as 

that involved in the prior action; (2) that issue [was] actually 

litigated; (3) it [was] determined by a final and valid 

judgment; and (4) the determination [was] essential to the 

prior judgment.” In re Graham, 973 F.2d 1089, 1097 (3d Cir. 

1992) (citations omitted). In light of these principles, we

agree with the numerous courts that have held that, under the 

doctrine of collateral estoppel, a conviction for criminal tax 

evasion conclusively establishes the defendant’s civil liability 

for tax fraud for the same year. See Blohm v. Comm’r, 994 

F.2d 1542, 1554 (11th Cir. 1993); Klein v. Comm’r, 880 F.2d 

260, 262 (10th Cir. 1989); Gray v. Comm’r, 708 F.2d 243, 

246 (6th Cir. 1983); United States v. Moore, 360 F.2d 353, 

356 (4th Cir. 1966). This is because the elements of evasion 

under 26 U.S.C. § 7201 and fraud under 26 U.S.C. § 6663 are 

identical. See, e.g., Gray, 708 F.2d at 246. 

Anderson nevertheless argues that the Tax Court erred 

in holding that his tax evasion conviction collaterally 

estopped him from litigating the taxability to him in 1998 and 

1999 of the income of G & A in the civil tax fraud 
8

proceedings. Where, as here, a conviction is the result of a 

guilty plea, its preclusive effect extends to all issues that are

necessarily admitted in the plea. See De Cavalcante v. 

Comm’r, 620 F.2d 23, 27 n.9 (3d Cir. 1980); United States v. 

$448,342.85, 969 F.2d 474, 476 (7th Cir. 1992); United States 

v. Wight, 839 F.2d 193, 196 (4th Cir. 1987); United States v. 

Podell, 572 F.2d 31, 35 (2d Cir. 1978). We find that 

Anderson admitted in his plea that the income of G & A was 

taxable to him in 1998 and 1999, and that this admission was 

necessary to his conviction.

Anderson pleaded guilty to a charge that in 1998 “a 

substantial additional tax was due and owing to the United 

States” from him and that “[s]pecifically, he failed to report . . 

. $126,303,951 Subpart F investment-type income from G & 

A.” He also pleaded guilty to another charge that alleged the 

same with respect to 1999, except that the amount of 

unreported G & A income was $238,561,316. These charges 

essentially allege that Anderson underpaid his taxes in 1998 

and 1999 because he did not report the income of G & A, 

which is comprehensible only to the extent that such income 

was taxable to him in those years. By pleading guilty to these 

charges, Anderson thus admitted that required premise.

This admission could be considered necessary, though,

only if Anderson’s conviction “hinge[d] on it.” Bobby v. 

Bies, 556 U.S. 825, 835 (2009). To convict Anderson of tax 

evasion, the Government was required to prove the existence 

of a tax deficiency. See 26 U.S.C. § 7201. Were the income 

of G & A not taxable to him in 1998 and 1999, however, 

Anderson’s failure to report it on his tax return would not 

have given rise to a deficiency. The Government thus could 

not have secured his conviction without establishing the 
9

taxability of this income. We therefore find that Anderson’s 

conviction did hinge on that issue. Our conclusion is not 

affected by the fact that Anderson was also charged with 

failing to report income from other sources in 1998 and 1999 

– including an account he held at Barclays Bank, a company 

called Esprit Telecom, and various capital gains – the 

taxability of which could also have substantiated his 

conviction. As we have previously held, all “independently 

sufficient alternative findings should be given preclusive 

effect,” Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 

458 F.3d 244, 255 (3d Cir. 2006). The taxability to Anderson 

of the income of G & A in 1998 and 1999 was independently 

sufficient to establish the existence of a tax deficiency in 

those years and was thus a fact that was necessary to his 

conviction. His admission to it in his guilty plea accordingly 

precludes him from contesting that issue in his civil tax fraud 

case.

5

Finally, that the income of G & A is taxable to 

Anderson specifically under Subpart F of the Tax Code is 

also settled for purposes of this case. The Tax Court rejected 

the IRS’s argument that Anderson’s guilty plea estopped him 

from contesting this tax treatment of G & A’s income. It 

reasoned that, although G & A’s income was described as 

 

5

Pursuant to this reasoning, we also find that Anderson 

was collaterally estopped from disputing that the income from 

his Barclays account was taxable to him in 1998 and 1999. 

Based on this additional finding and on our analysis relating 

to the income of G & A, we reject Anderson’s argument that 

the Tax Court erred in denying him summary judgment on the 

issues of the taxability of income from the Barclays account 

and from G & A in 1998 and 1999.
10

“Subpart F income” in the charges of the indictment to which 

Anderson pleaded guilty, this detail was not essential to his 

judgment of conviction and thus could not be given 

preclusive effect in subsequent proceedings. Regardless of 

this holding, however, the parties’ subsequent stipulation of 

the nature and composition of G & A’s income, designating 

amounts for Deficiency and Penalty for 1998 and 1999,

necessitate the determination that it is taxable to Anderson 

under Subpart F because the figures would not support 

Anderson’s alternate theory that the income was capital gains. 

This conclusion, along with the preclusive effect of 

Anderson’s conviction for tax evasion described above, 

effectively resolve his civil tax deficiency stemming from the 

income of G & A.

A. The Preclusive Effect of the IRS’s Concession of 

All Deficiency and Penalty Issues for 1995-1997

Anderson argues that because the IRS conceded all tax 

deficiency and penalty issues for 1995, 1996, and 1997, the 

Tax Court was required to find in his favor on those issues for 

the 1998 and 1999 tax years as well. He specifically 

advances this argument in relation to the income of G & A 

and the interest income of his account at Barclays Bank. He 

relies on three separate legal doctrines to support this 

argument - collateral estoppel, law of the case, and judicial 

admission – but each is inapplicable. 

1. Collateral Estoppel

Anderson claims that when the Tax Court issued its 

order denying the IRS’s motion to sever, in which it stated 

that it “takes notice of [the IRS’s] concession of all tax and 
11

penalty issues for 1995, 1996, and 1997 and will reflect that 

concession in its eventual entry of decision in [the] case,” it 

decided those issues in his favor. He further claims that all 

deficiency and penalty issues for 1995 through 1997, 

including those related to G & A and his Barclays account, 

are “identical in all respects” to those for 1998 and 1999. On 

this basis, Anderson argues that, by virtue of collateral 

estoppel, it is conclusively established in his civil tax fraud 

proceeding that the income from G & A and from his 

Barclays account gave rise to no tax deficiency or fraud 

penalty in 1998 and 1999.

As we have already noted, an issue is conclusively 

established in future litigation through the doctrine of 

collateral estoppel only when it is determined by a final 

judgment. Graham, 973 F.2d at 1097. This principle is 

firmly established and beyond question. See, e.g., G. & C. 

Merriaman Co. v. Saalfield, 241 U.S. 22, 28 (1916) (“[I]t is 

familiar law that only a final judgment is res judicata . . .”); 

Wilson v. City of Chicago, 120 F.3d 681, 687 (7th Cir. 1997) 

(“[I]f there is no judgment, there is no preclusion.”); Clausen 

Co. v. Dynatron/Bondo Corp., 889 F.2d 459, 465-66 (3d Cir. 

1989) (finding collateral estoppel did not apply to an 

interlocutory disposition). The Tax Court’s denial of the 

IRS’s motion to sever can therefore have no preclusive effect 

under that doctrine. It does not constitute a final judgment on 

any issue, including on that of whether Anderson was liable 

for tax deficiencies or fraud penalties for any year in relation 

to income from G & A or from his account at Barclays. 

Instead, all the Tax Court did in that order was advise the 

parties that it was taking notice of the IRS’s desire not to 

litigate tax years 1995 through 1997 and state that it would 

factor that position into its eventual final judgment. When 
12

that final judgment was issued, it showed deficiencies and 

penalties for 1998 and 1999 that implicitly included amounts 

related to G & A and the Barclays account. Anderson 

identifies no previous final judgment making a determination 

in conflict with this result, and his argument that the Tax 

Court should have held that it had been conclusively 

established via the doctrine of collateral estoppel that he was 

not liable for deficiencies or penalties in relation to these two 

items in 1998 and 1999 thus cannot be accepted.

2. Law of the Case

Anderson makes a similar argument that the Tax 

Court’s denial of the IRS’s motion to sever forecloses 

litigation of the taxability to him of the income G & A in 

1998 and 1999 under the law of the case doctrine. Under that 

doctrine, “when a court decides upon a rule of law, that 

decision should continue to govern the same issues in 

subsequent stages of the same case.” Arizona v. California, 

460 U.S. 605, 618 (1983). Anderson asserts that the Tax 

Court’s statement that it was “taking notice” of the IRS’s 

desire not to litigate tax years 1995 through 1997 was actually 

a holding that he was not liable for tax deficiencies or

penalties for those years, and that because the IRS had alleged 

that he should have recognized income from G & A on his tax 

return for those years, it is additionally a legal determination 

that such income was not taxable to him in any year –

including 1998 and 1999. We disagree. The Tax Court’s 

statement that it took notice of the IRS’s desire to concede tax 

and penalty issues for 1995 through 1997 simply does not 

represent any sort of decision. Even if it did constitute a 

decision as to those three years, there is no merit to 

Anderson’s argument that it necessarily implies that the Tax 
13

Court determined as a matter of law that income from G & A 

is not taxable to him, as the “decision” could be supported by 

any number of rationales. For example, a finding that 

Anderson was not liable for deficiencies or penalties for 1995 

through 1997 could just as easily rest on a lack of evidence of 

fraud in those years, which as discussed earlier, would bar the 

IRS’s claims on statute of limitations grounds. Anderson’s 

argument asks the Court to read more into the Tax Court’s 

“tak[ing] notice” than is warranted or possible, and it must be 

rejected.

3. Judicial Admission

Finally, Anderson argues that the statement in the 

IRS’s motion to sever conceding deficiency and penalty 

issues for 1995 through 1997 constitutes a judicial admission 

that prevents the IRS from arguing “that there is United States 

tax liability for [G & A]” or that interest income from his 

Barclays account was intentionally omitted from his tax 

return in 1998 or 1999. Judicial admissions are “admissions 

in pleadings, stipulations [or the like] which do not have to be 

proven in the same litigation.” Giannone v. U.S. Steel Corp., 

238 F.2d 544, 547 (3d Cir. 1956). To be binding, judicial 

admissions “must be statements of fact that require 

evidentiary proof, not statements of legal theories.” In re 

Teleglobe Commc’ns Corp., 493 F.3d 345, 377 (3d Cir. 

2007). For this reason, even if this Court were to accept the 

dubious claim that the IRS conceded in its motion to sever 

that income from G & A was not taxable to Anderson, that 

concession would not be binding on it because it would be a 

statement of a legal proposition. Additionally, to be binding, 

judicial admissions must be unequivocal. Id. The IRS’s 

motion to sever very clearly relates only to tax years 1995, 
14

1996 and 1997, and thus cannot be deemed to unequivocally 

state that the income of G & A was not taxable to Anderson 

or that he did not intentionally omit the interest on his 

Barclays account from his tax return in subsequent years. 

The doctrine of judicial admissions therefore has no 

application here.

III. CONCLUSION

We hold that Anderson’s conviction for tax evasion in 

1998 and 1999 precludes him, by virtue of the doctrine of 

collateral estoppel, from contesting in subsequent civil fraud 

proceedings that the income of G & A was taxable to him in 

those years. We additionally conclude that the IRS’s 

concession of all deficiency and penalty issues for the years 

1995, 1996, and 1997 has no preclusive effect on those issues 

for 1998 and 1999. For these reasons, we will affirm the Tax 

Court’s judgment.