Musa v. Commissioner of Internal Revenue

Tax Court did not err in affirming Commissioner’s finding that petitioner-taxpayer underreported his federal income taxes by more than $500,000 for years 2006 to 2010 and then imposing civil fraud penalty. Moreover, Commissioner was not required to allow petitioner to take additional deductions on his individual amended tax returns in which petitioner had corrected earlier false underreporting of wages, where petitioner made instant corrections only after statute of limitations had run on Commissioner’s ability to collect correct amounts of employment taxes that petitioner’s amended returns indicated were due. As such, “duty of consistency” under tax law prevented petitioner from claiming new expense deductions on his amended income tax returns, where IRS had relied on initial representations on petitioner’s original tax returns to its detriment. Ct. rejected petitioner’s argument that Commissioner did not rely on statements in initial tax returns since, according to petitioner, Commissioner should have known that they were inaccurate.