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Tax Court: Walter Anderson has to pay up.

February 26, 2009

The man convicted of what was called the "largest individual tax evasion case in U.S. history," is still fighting. Walter Anderson, a telecom entrepreneur who is serving a nine-year prison sentence, argued in Tax Court that he was innocent of tax fraud, despite of his guilty plea on federal tax charges.

When tax fraud is involved, there is no statute of limitations on asserting a tax liability. Absent fraud, the IRS would be unable to collect the taxes. Considering that the IRS says Mr. Anderson owes $183,779,618 for 1995-1999, the stakes are reasonably high. The IRS is also asserting the 75% fraud penalty for an additional $137 million or so.

The IRS says that his guilty plea for 1998 and 1999 prevents him from fighting fraud penalties for those years. As the guilty plea didn't cover 1995-1997, he can still argue that he didn't commit fraud then in fighting collection.

When Mr. Anderson was convicted, there was a little kerfuffle over his plea agreement, which didn't specifically require restitution of unpaid taxes. An appellate court later reopened the door to collection. It may not make much difference. His deficiency and penalties for 1998-1999 alone total over $253 million, and he has argued that he is indigent. As he argued his Tax Court case without a lawyer, it's not clear that he has much ready cash to give the IRS.

Cite: Anderson, T.C. Memo 2009-44.

Tags: Walter Anderson.