Court Opinion

ID: 4480629
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:26.724167+00
Date Added: 2024-06-11T15:03:34.596266
License: Public Domain

Baum, J., dissenting: I cannot agree with the conclusion that the Commissioner erred in determining the 50-percent addition to tax for fraud with respect to 1959. Section 6653(b) calls for such addition where “any part of any underpayment * * * of tax required to be shown on a return is due to fraud” (Italics supplied.) Plainly, the taxpayer William Kahr was deliberately pursuing a course of conduct which proximately resulted in the falsification of his books, which in turn was the proximate cause of the underpayment of the 1959 tax. That fraudulent course of conduct was merely a continuation of the identical course of conduct carried on in 1958. The majority has found fraud for 1958, but not for 1959, and has relied upon the circumstance that the widow and executor who signed the 1959 return were innocent of fraud. In so doing, I think the majority has misconceived the scope of the statute. The governing provisions of sections 6653(b) require merely that the “underpayment” be “due to fraud.” There is no requirement that those who sign the return be participants in the fraud. Kahr, as a taxpayer, was plainly guilty of fraud, and his fraud was the proximate cause of the underpayment, regardless of the possible innocence of those who relied upon the false records in preparing the return. In the circumstances, I can see no basis for departing from the plain words of the Statute in this case. The contrary conclusion produces the bizarre result that where a taxpayer has followed a course of conduct over a period of years until his death to cheat the Government of taxes, an addition for fraud will be approved for each such year except the last provided that he dies before the final return is filed and those Who sign that return are unaware of the fraud. I cannot believe that Congress intended any such easy escape from the civil consequences of a taxpayer’s fraud. DreNNEN, TietjeNS, Withet, and Hott, JJ., agree with this dissent.