Title: Schussel v. Comm’r of Revenue
Citation: N/A
Docket Number: SJC-11807
State: Massachusetts
Issuer: Massachusetts Supreme Court
Date: July 1, 2015

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SJC-11807 
 
GEORGE SCHUSSEL & another1  vs.  COMMISSIONER OF REVENUE. 
 
 
 
Suffolk.     March 3, 2015. - July 1, 2015. 
 
Present:  Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & 
Hines, JJ. 
 
 
Taxation, Appellate Tax Board:  findings, Income tax, Gross 
income, Income tax returns.  Words, "Tax-related." 
 
 
 
 
Appeal from a decision of the Appellate Tax Board. 
 
 
After review by the Appeals Court, the Supreme Judicial 
Court granted leave to obtain further appellate review. 
 
 
 
Francis J. DiMento for the taxpayers. 
 
John M. Stephan, Assistant Attorney General, for 
Commissioner of Revenue. 
 
 
 
LENK, J.  Since the 1970s, George and Sandra Schussel2 have 
owned property and business interests in Massachusetts, and have 
had other close ties to the Commonwealth.  The Schussels, who 
                     
 
1 Sandra Schussel. 
 
 
2 Because they share a last name, we refer to George and 
Sandra Schussel by their first names. 
2 
 
are married, filed no Massachusetts tax returns between 1989 and 
2007.  In 2007, George was convicted of Federal conspiracy and 
tax evasion charges in the United States District Court for the 
District of Massachusetts.  The Commissioner of Revenue 
(commissioner) then issued the Schussels a notice of failure to 
file Massachusetts income tax returns for the years 1993, 1994, 
and 1995.  When the Schussels subsequently filed tax returns for 
those years, the returns were determined by the commissioner to 
be "false or fraudulent," or to have been filed "with a willful 
attempt . . . to defeat or evade the tax."  See G. L. c. 62C, 
§ 28.  Accordingly, the commissioner imposed a "double 
assessment" against the Schussels.  The Schussels submitted a 
request for abatement of the double assessment, which the 
commissioner denied. 
 
The commissioner's decisions were upheld by the Appellate 
Tax Board (board), and the Appeals Court affirmed.  See Schussel 
v. Commissioner of Revenue, 86 Mass. App. Ct. 419, 431 (2014).  
We allowed the Schussels' petition for further appellate review.  
Before us, the Schussels claim two errors.  First, they contend 
that they were not properly subject to a double assessment.  
They note, in this context, that their tax returns were prepared 
for them by an attorney, and that they attached a "rider" to 
those returns, stating that the sums reported were the subject 
of Federal criminal proceedings against George.  The Schussels' 
3 
 
second claim is that they were entitled to relief from the 
double assessment under an amnesty program established by the 
commissioner in 2009, pursuant to St. 2008, c. 461 (2009 amnesty 
program).  Although the 2009 amnesty program does not apply to 
"any taxpayer who . . . was the subject of a tax-related 
criminal investigation or prosecution," St. 2008, c. 461, § 1, 
the Schussels argue that this exception refers only to 
investigations or prosecutions arising from State, not Federal, 
tax offenses. 
 
We affirm, concluding that the board's findings of fact are 
supported by substantial evidence and that the Schussels' claim 
that the 2009 amnesty program applies to them is not properly 
before us. 
 
1.  Background.  We summarize the facts essential to our 
analysis, as found by the board, reserving disputed issues for 
later discussion. 
 
The Schussels settled in Lynnfield in 1971, purchasing a 
home there.  They subsequently acquired several additional 
Massachusetts properties.  In 1979, George founded a 
Massachusetts corporation named Digital Consulting, Inc. (DCI), 
which he then ran with Sandra's assistance.  At around the same 
time, the Schussels bought a residence in New Hampshire.  They 
retained family ties and social relationships in Massachusetts, 
remained heavily involved with DCI, renewed their Massachusetts 
4 
 
driver's licenses, and registered the vehicles they used most 
frequently in Massachusetts.  From 1989 through 2007, the 
Schussels did not file Massachusetts tax returns, either as 
residents or as nonresidents. 
 
In 2004, George was indicted in the United States District 
Court for the District of Massachusetts on one count of 
conspiracy and two counts of tax evasion.  The conspiracy charge 
concerned the years 1988 to 1998.  One of the tax evasion 
charges was based on George's Federal tax return for 1995.3  In 
January, 2007, a jury returned guilty verdicts on all three 
counts.  George appealed, and the conviction was affirmed.  See 
United States v. Schussel, 291 Fed. Appx. 336 (1st Cir. 2008). 
 
In May, 2007, the commissioner issued the Schussels a 
notice of failure to file Massachusetts income tax returns for 
the years 1993, 1994, and 1995.  The Schussels subsequently 
filed returns for those years.  In those returns, they 
classified themselves as nonresidents, and reported income 
amounts that, at least for the year 1995, were identical to the 
amounts deemed false in George's Federal criminal case.  The 
commissioner assessed the amounts of tax due based on the 
Schussels' returns, and the Schussels paid the assessed amounts. 
                     
 
3 The other count of tax evasion concerned the tax return of 
Digital Consulting, Inc., for the same year. 
5 
 
 
In August, 2007, relying on information that emerged in 
George's prosecution, the commissioner assessed additional taxes 
against the Schussels.  The additional assessment increased the 
amount of revenue attributed to the Schussels, classified the 
Schussels as Massachusetts residents, and imposed a "double 
assessment" pursuant to G. L. c. 62C, § 28.4 
 
In February, 2009, the commissioner issued a tax amnesty 
notice to the Schussels.5  The notice stated that the 
commissioner would waive certain penalties and interest -- not 
including the double assessment -- if the Schussels paid the 
full amount due from them by the end of April, 2009.  The 
Schussels paid the balance demanded in the tax amnesty notice 
and received the benefit described in it. 
 
The Schussels submitted to the commissioner a request for 
abatement of all of the additional taxes that had been imposed 
on them in August, 2007.  The commissioner denied the request.  
The Schussels appealed to the board, arguing primarily that, 
                     
 
4 Before the Appellate Tax Board (board) and the Appeals 
Court, the Schussels argued that the authority of the 
Commissioner of Revenue (commissioner) to impose an additional 
assessment on them was limited to a seven-year "look-back" 
period by force of a written policy issued by the commissioner.  
They do not pursue this argument before us. 
 
 
5 The commissioner asserts that this notice was issued 
inadvertently, and the board so found.  As nothing of substance 
turns on this finding, we do not take up the Schussels' 
challenge to it. 
6 
 
during the tax years in question (1993 through 1995), they had 
not been residents of Massachusetts.  The board upheld the 
commissioner's additional assessment, finding that the Schussels 
were Massachusetts residents during the relevant years, that 
they filed false tax returns "knowingly" and with an "intent to 
evade taxes," and that they were not entitled to relief under 
the 2009 amnesty program. 
 
The Appeals Court affirmed, and we allowed the Schussels' 
petition for further appellate review.  In their appellate 
proceedings, the Schussels have abandoned the claim that they 
were nonresidents during the tax years at issue. 
 
2.  Standard of review.  Appellate review of a decision of 
the board is limited in scope.  By legislative mandate, "[t]he 
decision of the board shall be final as to findings of fact."  
G. L. c. 58A, § 13.  Nevertheless, a decision of the board, like 
that of any administrative agency, see G. L. c. 30A, 
§ 14 (7) (e), may be challenged on the ground that it is not 
supported by "substantial evidence."  See Capital One Bank v. 
Commissioner of Revenue, 453 Mass. 1, 8, cert. denied, 557 U.S. 
919 (2009), quoting Boston Professional Hockey Ass'n, Inc. v. 
Commissioner of Revenue, 443 Mass. 276, 285 (2005).  
"Substantial evidence is 'such evidence as a reasonable mind 
might accept as adequate to support a conclusion.'"  Boston Gas 
Co. v. Assessors of Boston, 458 Mass. 715, 721 (2011), quoting 
7 
 
Tennessee Gas Pipeline Co. v. Assessors of Agawam, 428 Mass. 
261, 262 (1998).  See G. L. c. 30A, § 1 (6).  Otherwise put, a 
conclusion lacks a substantial evidentiary basis if "the 
evidence points to no felt or appreciable probability of the 
conclusion or points to an overwhelming probability of the 
contrary."  Boston Gas Co. v. Assessors of Boston, supra at 721-
722, quoting Tennessee Gas Pipeline Co. v. Assessors of Agawam, 
supra.6 
 
We conduct an independent analysis of the board's rulings 
of law, according "some deference" to the board's "expertise in 
interpreting the tax laws of the Commonwealth."  See Capital One 
Bank v. Commissioner of Revenue, supra; McCarthy v. Commissioner 
of Revenue, 391 Mass. 630, 632 (1984), quoting French v. 
Assessors of Boston, 383 Mass. 481, 482 (1981).  "[W]e are 
precluded," however, "from 'consider[ing] any issue of law which 
does not appear to have been raised in the proceedings before 
the board.'"  Commissioner of Revenue v. New England Power Co., 
411 Mass. 418, 425 (1991), citing G. L. c. 58A, § 13. 
                     
 
6 We have stated on occasion that the board's findings of 
fact will stand if they are supported by "sufficient" evidence.  
See, e.g., Boston Professional Hockey Ass'n, Inc. v. 
Commissioner of Revenue, 443 Mass. 276, 285 (2005); General 
Mills, Inc. v. Commissioner of Revenue, 440 Mass. 154, 161 
(2003), cert. denied, 541 U.S. 973 (2004), quoting Olympia & 
York State St. Co. v. Assessors of Boston, 428 Mass. 236, 240 
(1998).  In this context, "substantial evidence," as defined by 
G. L. c. 30A, § 1 (6), is sufficient to support the board's 
findings. 
8 
 
 
3.  Imposition of double assessment.  General Laws c. 62C, 
§ 28, authorizes the commissioner to impose an assessment of 
"not more than double" the amount of tax he or she determines to 
be due in three situations:  (a) where a person, after being 
notified of deficiencies in his or her tax return, "refuses or 
neglects within thirty days . . . to file a proper return"; 
(b) where a person "has filed a false or fraudulent return"; or 
(c) where a person "has filed a return with a willful attempt in 
any manner to defeat or evade the tax." 
 
There is now no dispute that the Schussels' Massachusetts 
tax returns for the years from 1993 to 1995, filed in response 
to the commissioner's May, 2007, notice of failure to file, were 
incorrect in at least two ways.  First, the returns classified 
the Schussels as nonresidents when they were, in fact, 
residents.  Second, the amounts of income reported in the 
returns were lower than the amounts that the Schussels actually 
earned.  For instance, in their 1995 tax return, the Schussels 
reported their total income as $1,057,361.  This was essentially 
the same amount of income reported to the Internal Revenue 
Service (IRS) for that year.  That report culminated in George's 
conviction of Federal tax evasion.  The IRS since has determined 
9 
 
that the Schussels' true income for 1995 was $3,341,868.  The 
Schussels do not contest that determination.7 
 
Not every inaccurate tax return represents a "false or 
fraudulent return" within the meaning of G. L. c. 62C, § 28.  As 
the board has said, "[f]raud cannot be shown by mere proof that 
a party made an error of fact.  Rather, the [commissioner] must 
demonstrate 'an actual intent to deceive.'"  Food Serv. Assocs., 
Inc. v. Commissioner of Revenue, 26 Mass. App. Tax Bd. Rep. 438, 
444 (2001), quoting Metropolitan Life Ins. Co. v. Burno, 309 
Mass. 7, 10 (1941), overruled on other grounds by Pahigian v. 
Manufacturers' Life Ins. Co., 349 Mass. 78, 87 (1965).  
Likewise, a "willful attempt to defeat or evade [taxation]," in 
the board's words, "does not include negligence, carelessness, 
misunderstanding or unintentional understatement of income."  
Scagel v. Commissioner of Revenue, 13 Mass. App. Tax Bd. Rep. 
38, 48 (1990), quoting United States v. Pechenik, 236 F.2d 844, 
846 (3d Cir. 1956).  Thus, a double assessment penalty may be 
                     
 
7 The Schussels contend that the amounts of income that they 
earned in the relevant years were not "finally determined" when 
they filed their Massachusetts returns.  This argument appears 
to be premised on the fact that the Internal Revenue Service 
(IRS) adjusted its assessment of the Schussels' income in 
January, 2009.  But by the time the commissioner imposed a 
double assessment on the Schussels, the Federal government 
already had determined that the Schussels had substantially 
underreported their income.  Moreover, the IRS corrected its 
assessment quickly enough that the new figures were submitted to 
the board and considered in its decision. 
10 
 
imposed under G. L. c. 62C, § 28, only on taxpayers whose 
conduct was knowing and intentional; negligence or carelessness 
do not suffice. 
 
The board found that the Schussels' filing of false returns 
was "knowing," and that they made their filings with an "intent 
to evade taxes."8  The board based these findings on essentially 
the following factors.  First, from 1989 through 2007, the 
Schussels did not merely fail to classify themselves in their 
returns as Massachusetts residents; rather, they did not file 
any Massachusetts returns, either as residents or as 
nonresidents, despite their substantial Massachusetts property 
and business interests.  Second, during the same period, the 
Schussels also abstained from filing any tax returns in New 
Hampshire (as to income from interest or dividends; New 
Hampshire does not have a general income tax).  Third, the 
amounts of income stated in the Schussels' tax returns were the 
same sums that, by that time, had resulted in George's 
conviction of tax evasion in Federal court.  The board also 
stated repeatedly that, having heard the testimony of the 
Schussels, the board did not find that testimony credible. 
                     
 
8 The board wrote also that the Schussels exhibited, "at a 
minimum, reckless indifference to the obligation to file 
accurate taxes."  The board's decision as a whole leaves no 
doubt that, notwithstanding this delicate phraseology, the board 
found the Schussels' actions to have been knowing and 
intentional, not merely reckless or indifferent. 
11 
 
 
The Schussels present two main arguments against the 
board's finding that their false returns were filed knowingly 
and intentionally.9  Neither argument persuades us that the 
board's determinations were based on an error of law, or that 
its findings are not supported by substantial evidence.  See 
Capital One Bank v. Commissioner of Revenue, 453 Mass. at 8, 
quoting Boston Professional Hockey Ass'n, Inc. v. Commissioner 
of Revenue, 443 Mass. at 285. 
 
First, the Schussels point to a "rider" attached to each of 
their three Massachusetts tax returns.  Each rider stated as 
follows: 
 
"Taxpayer is currently a party to a criminal tax case 
brought by the U.S. Attorney's office . . . . Items of 
gross income determined pur[su]ant to said case are the 
subject of a pending appeal regarding amount, 
characterization and source.  Income which is the subject 
of said case/appeal has not been reported on this return 
due to the uncertain[]ties described above." 
 
The Schussels contend that this rider undermines the board's 
conclusion that they knowingly and intentionally filed false 
                     
 
9 The Schussels also argue that it was not necessarily 
fraudulent for them to have reused, in their Massachusetts tax 
returns, the income figures that the IRS and the United States 
District Court jury had found to be false.  They suggest, in 
essence, that the unreported income absent from their Federal 
returns might not have been taxable in Massachusetts in any 
event.  We need not dwell on this argument, which was not made 
below, is not supported by record evidence, and, even if 
correct, would not alter our conclusion that the board's 
findings were grounded in substantial evidence. 
12 
 
returns.  This argument lacks merit, as the rider itself was 
misleading. 
 
George's Federal appeal arose from his conviction of 
criminal offenses.  The issues presented in the appeal were "(1) 
whether documents turned over to the government from [George's] 
attorney's files violate[d] the attorney-client privilege; 
(2) whether the refusal of the trial court to give certain 
requested jury instructions violated [George's] right to a fair 
trial; and (3) whether sufficient evidence support[ed] 
[George's] conviction for conspiracy."  United States v. 
Schussel, 291 Fed. Appx. 336, 337 (1st Cir. 2008).  The appeal 
thus did not contend that the figures reported by the Schussels 
to the IRS represented their true levels of income.  Nor was it 
possible that an appeal from George's criminal conviction, given 
its procedural posture, would culminate in an adjustment of the 
Schussels' tax liability.  In short, the pendency of George's 
criminal appeal provided no good faith basis for the Schussels 
to continue to report their income, in their Massachusetts tax 
returns, using the false figures originally reported to the IRS.  
Their suggestion to the contrary, set forth in their rider, was 
itself a misrepresentation. 
 
Next, the Schussels note that their tax returns were 
prepared by a tax attorney.  This fact, the Schussels argue, 
"cuts against" a finding that they acted knowingly and 
13 
 
intentionally in filing the false returns.  We recognize, as the 
board previously has, that a taxpayer ordinarily should not be 
determined to have filed false returns knowingly and 
intentionally if he or she disclosed the relevant facts to an 
accountant or an attorney, and relied in good faith on the 
advice of that accountant or attorney.  See Scagel v. 
Commissioner of Revenue, 13 Mass. App. Tax Bd. Rep. at 48.  See 
also United States v. Boyle, 469 U.S. 241, 251 (1985) ("When an 
accountant or attorney advises a taxpayer on a matter of tax 
law . . . it is reasonable for the taxpayer to rely on that 
advice"); McMurray v. Commissioner of Internal Revenue, 985 F.2d 
36, 43 (1st Cir. 1993) ("Reasonable reliance on expert opinion, 
asserted in good faith, can shield a taxpayer" from penalties 
for failure to pay tax). 
 
In the present case, however, the record contains no 
indication that the Schussels provided their attorney with such 
a full and accurate disclosure of relevant information 
concerning either their ties to Massachusetts or their actual 
income.  In these circumstances, the fact that the tax returns 
were prepared by an attorney has little, if any, significance 
for the question whether the Schussels filed their false returns 
knowingly and intentionally.  Cf. Smaland Beach Ass'n, Inc. v. 
Genova, 461 Mass. 214, 222 (2012), citing G.S. Enters., Inc. v. 
Falmouth Marine, Inc., 410 Mass. 262, 275 (1991) (advice-of-
14 
 
counsel defense to suit requires "a showing that the clients 
made a full and honest disclosure of material facts to the 
attorney and that they followed the attorney's advice"); 
Commonwealth v. Ballou, 283 Mass. 304, 314 (1933) (approving of 
jury instructions, in trial for fraud and corrupt conduct, 
stating that, "the fact that the defendants consulted counsel 
would have a bearing on their good faith, but they must show 
that they made a full and frank disclosure to those whose advice 
they sought"). 
 
The short of the matter is that the factors identified by 
the board, as described supra, coupled with the board's 
assessment of the Schussels' credibility, amounted to "such 
evidence as a reasonable mind might accept as adequate" to 
support the determination that the Schussels knowingly and 
intentionally filed false tax returns.  See Boston Gas Co. v. 
Assessors of Boston, 458 Mass. 715, 721 (2011), quoting 
Tennessee Gas Pipeline Co. v. Assessors of Agawam, 428 Mass. 
261, 262 (1998). 
 
4.  Amnesty program.  In St. 2008, c. 461, the Legislature 
instructed the commissioner to establish a two-month tax amnesty 
program.  The program described by the Legislature was to grant 
taxpayers relief from penalties for unfiled returns, improper 
returns, and failures to make full and timely tax payments.  See 
St. 2008, c. 461, § 1.  Taxpayers would gain the privilege of 
15 
 
amnesty by filing proper returns, making proper payments, and 
"otherwise com[ing] into compliance with the tax laws of the 
[C]ommonwealth" by a deadline to be established by the 
commissioner.  See id.  The Legislature stated, however, that 
"[t]he commissioner's authority to waive penalties . . . shall 
not apply to any taxpayer who, before the start date of the 
amnesty program . . . was the subject of a tax-related criminal 
investigation or prosecution."  Id. 
 
The commissioner complied, administering the 2009 amnesty 
program during March and April of that year.  See Technical 
Information Release 09–3 (Feb. 19, 2009), 5 Official MassTax 
Guide, at PWS-260 (Thomson Reuters 2015).  As directed, the 
commissioner announced that amnesty would not be granted to "any 
taxpayer who, prior to March 1, 2009, was the subject of a tax-
related criminal investigation or prosecution."  Id. part 
III.A.2, at PWS-261. 
 
The 2009 amnesty program resulted, as mentioned, in the 
Schussels being relieved of certain penalties, but not of the 
double assessment imposed on them.  The Schussels claim that 
they were entitled to amnesty from that penalty as well.  They 
argue, to this end, that a criminal investigation or prosecution 
excludes a taxpayer from the 2009 amnesty program only if it 
concerns "Massachusetts taxes imposed pursuant to Massachusetts 
statutes." 
16 
 
 
Because this argument "does not appear to have been raised 
in the proceedings before the board," it is not properly before 
us.  See G. L. c. 58A, § 13.  We note, nevertheless, that it 
would not affect the outcome.  Assuming, without deciding, that 
the term "tax" in the context of the 2009 amnesty program refers 
to Massachusetts taxes only, a Federal prosecution for 
underreporting Federal income taxes would nevertheless be "tax-
related," given that income tax liability in Massachusetts is 
calculated on the basis of Federal tax liability.  See G. L. 
c. 62, §§ 2, 6F. 
 
 
 
 
 
 
 
Decision of the Appellate 
 
 
 
 
 
 
 
  Tax Board affirmed.