T.C. Memo. 2009-13



                      UNITED STATES TAX COURT



                EDWARD R. VOCCOLA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7700-05.              Filed January 15, 2009.



     Edward R. Voccola, pro se.

     Nina P. Ching, for respondent.



                        MEMORANDUM OPINION


     NIMS, Judge:   This matter is before the Court on

respondent’s motion for summary judgment under Rule 121.   Unless

otherwise indicated, all Rule references are to the Tax Court

Rules of Practice and Procedure, and all section references are

to the Internal Revenue Code in effect for the years in issue.
                                  -2-

     Respondent determined the following deficiencies and

penalties with respect to petitioner’s Federal income tax:


                                                     Penalty
         Year                 Deficiency            Sec. 6663

         1993                   $49,170              $36,836
         1994                    45,481               36,362
         1995                    45,252               33,863

     The issues for consideration are:     (1) Whether petitioner

underreported income during the years in issue, and (2) whether

petitioner is liable for fraud penalties under section 6663.

                              Background

     On January 27, 2005, respondent mailed petitioner a notice

of deficiency for the 1993, 1994, and 1995 taxable years.

Petitioner filed a petition with this Court on April 26, 2005,

challenging the determined deficiencies and penalties.

Petitioner resided in Massachusetts at the time he filed his

petition.   On December 22, 2005, respondent served petitioner

with a request for admissions.

     Petitioner did not respond, and respondent filed a motion

for summary judgment on the basis of the deemed admissions under

Rule 90(c).     The Court ordered petitioner to file a response, but

he did not do so.    The Court heard respondent’s motion on May 21,

2007.   Petitioner did not appear at the hearing and did not file

a Rule 50(c) statement in lieu of an appearance.

     Respondent’s motion for summary judgment requests that we

sustain the deficiencies and fraud penalties set forth in the
                                  -3-

notice of deficiency.   As discussed below, the allegations in the

request for admissions are deemed admitted under Rule 90(c) as a

result of petitioner’s failure to deny or object to them.

Respondent contends those deemed admissions are sufficient to

sustain his deficiency determination as well as satisfy his

burden of affirmatively proving fraud.    Additionally, respondent

contends that petitioner’s prior criminal conviction under

section 7201 collaterally estops petitioner from denying that he

willfully filed false and fraudulent income tax returns for the

years in issue.

     The deemed admissions under Rule 90(c) establish the

following facts.

     Petitioner prepared, signed, and filed, on behalf of himself

and his then wife, joint Forms 1040, U.S. Individual Income Tax

Return, for the years in issue.     Petitioner holds a master’s

degree in business administration from Temple University Graduate

School of Business, a juris doctor degree from Suffolk University

School of Law, and a master of laws degree in Taxation from

Boston University School of Law.    He also has years of work

experience as a tax specialist.
                                -4-

     On March 29, 2000, petitioner was convicted of violating

section 72011 for the 1993, 1994, and 1995 taxable years.

Petitioner willfully and knowingly filed false income tax returns

which understated taxable income for those years.   He reported

taxable income of negative $64,566, negative $69,417, and

negative $97,0082, and thereby understated his taxable income by

$241,349, $233,701, and $263,406, respectively.   He failed to

report early retirement plan distributions in 1994 and 1995 from

Shawmut Bank, N.A., and a Massachusetts State tax refund received

in 1993.   He also submitted Forms W-2, Wage and Tax Statement,

that incorrectly stated the amount of income that he and his then

wife received from several employers.   These Forms W-2 were not

the ones actually issued by those employers.

     Petitioner also claimed substantial amounts of capital

losses, capital loss carryovers, and itemized deductions for all

3 tax years.   He presented no documentation to substantiate most

of these deductions.   Respondent accordingly disallowed all of

the capital losses and most of the itemized deductions.

     Petitioner’s correct taxable income for those years was

$176,783, $164,284, and $166,398, respectively.   His correct tax


     1
      Respondent’s request for admissions mistakenly alleged that
petitioner was convicted under sec. 7206(1). Respondent’s motion
for summary judgment correctly indicates petitioner was, in fact,
convicted under sec. 7201.
     2
      Respondent’s requested admission incorrectly alleged
petitioner’s reported 1995 taxable income was negative $105,865.
                                 -5-

liabilities for those years were $49,170, $45,481, and $45,252.

As a result of his understatement of taxable income, petitioner

understated his income tax liability by $49,170, $45,481, and

$45,252.3

                              Discussion

     Summary judgment may be granted when there is no genuine

issue of material fact and a decision may be rendered as a matter

of law.     Rule 121(b); Sundstrand Corp. v. Commissioner, 

, 520 (1992), affd. 

(7th Cir. 1994).     The opposing

party cannot rest upon mere allegations or denials in his

pleadings and must “set forth specific facts showing that there

is a genuine issue for trial.”    Rule 121(d).   The moving party

bears the burden of proving there is no genuine issue of material

fact, and factual inferences will be read in a manner most

favorable to the party opposing summary judgment.     Dahlstrom v.

Commissioner, 

, 821 (1985); Jacklin v. Commissioner,

, 344 (1982).

     The first issue for decision is whether we should grant

respondent summary judgment as to the deficiencies for the years

in issue.




     3
      Respondent’s request for admissions mistakenly alleged that
petitioner understated his 1995 tax liability by $45,481. The
notice of deficiency and motion for summary judgment list the
correct amount of $45,252.
                                -6-

     Respondent’s motion is supported by his unanswered request

for admissions.   A request for admissions is deemed admitted

unless an objection or written answer specifically denying the

matter is served within 30 days after service of the request.

Rule 90(c); Freedson v. Commissioner, 

, 334-336

(1975), affd. 

(5th Cir. 1978).    Facts deemed

admitted under Rule 90(c) may satisfy the burden of proving that

no genuine issue of material fact exists as to the Commissioner’s

deficiency determinations and that the Commissioner is entitled

to a decision as a matter of law.     Marshall v. Commissioner, 

, 272 (1985).

     Respondent served petitioner with a request for admissions

which alleged that petitioner understated income and failed to

substantiate deductions for the years in issue.    Because

petitioner failed to deny or object to these allegations, he is

deemed to have admitted these facts under Rule 90(c).    These

admissions are adequate to support respondent’s burden of proving

no genuine issue of material fact exists as to the deficiency

determinations.   Accordingly, we will grant respondent’s motion

for summary judgment as to the deficiencies determined for the

years in issue.

     The second issue is whether we should grant respondent’s

motion for summary judgment on the section 6663 fraud penalties.
                                 -7-

       Section 6663 imposes a penalty equal to 75 percent of the

portion of any underpayment attributable to fraud.     The

Commissioner bears the burden of proving by clear and convincing

evidence that an underpayment exists and that some portion of the

underpayment for each year is due to fraud with the intent to

evade tax.    Sec. 7454(a); Rule 142(b).   Facts deemed admitted

under Rule 90(c) may satisfy this burden.     Coninck v.

Commissioner, 

, 499 (1993); Marshall v. Commissioner,

supra at 273.

       Petitioner’s deemed admissions are also sufficient to meet

respondent’s burden of proof for the section 6663 fraud

penalties.    By failing to respond to the request for admissions,

petitioner is deemed to have admitted that he knowingly and

willingly filed false income tax returns and fraudulently

understated income for the years in issue.     The deemed admission

of these facts sufficiently establishes that some portion of the

underpayment for each year was due to fraud with intent to evade

tax.

       Furthermore, petitioner is estopped from denying fraud on

account of his prior criminal conviction under section 7201.       The

doctrine of collateral estoppel precludes the relitigation of any

issue or fact that was actually litigated and necessarily

determined by a valid and final judgment.     Peck v. Commissioner,

, 166 (1988), affd. 

(9th Cir. 1990).
                                 -8-

Since the elements of criminal tax evasion and civil tax fraud

are identical, Gray v. Commissioner, 

, 246 (6th Cir.

1983), affg. T.C. Memo. 1981-1, collateral estoppel has been

routinely applied to hold that a conviction for an attempt to

evade or defeat tax pursuant to section 7201, either upon a

guilty plea or upon a jury verdict, conclusively establishes

fraud in a subsequent civil tax fraud proceeding, DiLeo v.

Commissioner, 

, 885 (1991), affd. 

(2d Cir.

1992); Frey v. Commissioner, T.C. Memo. 1998-226.

     Petitioner was convicted for willful evasion of tax in

violation of section 7201 for the 1993, 1994, and 1995 tax years.

These are the same years for which respondent currently seeks

section 6663 fraud penalties.    Petitioner’s prior conviction

collaterally estops him from denying that he willfully committed

fraud with intent to evade tax in those years and conclusively

establishes that petitioner’s underpayments of tax are due to

fraud within the meaning of section 6663.     For these reasons, we

will grant respondent’s motion for summary judgment as to the

section 6663 penalties.

     To reflect the foregoing,


                                       An appropriate order and

                                 decision will be entered.