U.S. Appeals Court Holds Civil Tax Deficiency Not Barred by Prior Criminal Proceeding

The U.S. Court of Appeals for the Ninth Circuit affirmed the Tax Court’s determination of a tax deficiency, holding that res judicata did not bar the civil tax proceedings following the taxpayer’s prior criminal conviction. Taxpayers, a married couple, appealed the Tax Court’s determination of a tax deficiency for tax year 2000 following the husband’s criminal conviction involving forfeited funds. The husband had paid restitution to individual victims as part of his criminal judgment and argued this should reduce their tax liability to the government. The Tax Court upheld the IRS’s deficiency determination after a bench trial, and Taxpayers appealed ...