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TRYING THE 'TWO WRONGS MAKE A RIGHT' DEFENSE

March 01, 2005

Bonnie and Ernest Werts of Carson City had never paid taxes on their Social Security before and nobody said anything; ergo, they should never have to. At least, that's what they told the Tax Court.

Today the Court said otherwise:

Petitioners contend only that respondent never
challenged their omission of such income on prior years'
returns. The mere fact that omission of such income on
petitioners' prior returns was never questioned by respondent
is not a basis for the exclusion of such income on subsequent
returns that are questioned by respondent. Each taxable year
stands alone, and respondent may challenge in a succeeding
year what was condoned or agreed to in a former year.

The moral: two (or more) wrongs don't make a right, under the tax law.

Cite: Werts v. Commissioner, T.C. Summary Opinion 2005-24.

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