U.S. Appeals Court Upholds Promoter Penalty Assessment Based on Issue Preclusion

The U.S. Court of Appeals for the Tenth Circuit affirmed summary judgment in favor of the government, holding that issue preclusion barred an attorney from relitigating the calculation of penalties imposed for promoting an abusive tax shelter. Taxpayer, an attorney, advised a client about a marketing program to reduce taxes, which the IRS deemed an abusive tax shelter and assessed $36,000 in penalties against Taxpayer for his role as a promoter. Taxpayer challenged the penalties in Tax Court, arguing the IRS miscalculated them by basing the amount on his legal fees, but the Tax Court rejected this argument, concluding Taxpayer ...