Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Schussel v. Werfel

United States Court of Appeals, First Circuit

July 8, 2014

GEORGE SCHUSSEL, Transferee, Petitioner, Appellant,
v.
DANIEL I. WERFEL, Acting Commissioner of the Internal Revenue Service, Respondent, Appellee

Page 83

APPEAL FROM THE UNITED STATES TAX COURT. Hon. Mary Ann Cohen, Judge, U.S. Tax Court.

Francis J. DiMento, with whom Jason A. Kosow and DiMento & Sullivan were on brief, for appellant.

Regina S. Moriarty, Attorney, Tax Division, Department of Justice, with whom Richard Farber, Attorney, Tax Division, Department of Justice, and Kathryn Keneally, Assistant Attorney General, were on brief, for appellee.

Before Thompson, Stahl, and Kayatta, Circuit Judges.

OPINION

Page 84

KAYATTA, Circuit Judge.

George Schussel appeals a decision of the United States Tax Court holding him

Page 85

liable, as the recipient of a fraudulent transfer from his former company, for the company's back taxes (including penalties) of over $4.9 million, plus interest of at least $8.7 million. On appeal, he does not dispute that his company fraudulently transferred millions of dollars to him in an effort to avoid paying income taxes to the IRS. What he disputes is how mach he owes the IRS as a result of those transfers. First, he argues that the tax court erred in applying the federal tax interest statute, and that he should only have to pay the likely much lower amount of prejudgment interest that would be due under Massachusetts law. Second, he claims that the tax court should have accepted his corrected tax returns as establishing the amount of the assets he misappropriated. Third, he maintains that he should have received credit for money he loaned back to his company, which the company then used to pay his legal bills. Concluding that the tax court calculated prejudgment interest under the wrong statute, we affirm in part, reverse in part, and remand for further proceedings.

I. Background

We have previously recounted George Schussel's efforts to circumvent U.S. tax law, affirming his convictions for tax evasion and conspiracy to defraud the United States. See United States v. Schussel, 291 F. App'x 336 (1st Cir. 2008). We recount the basics here, adding only the details necessary to resolve this appeal (most of which were stipulated by the parties).

Beginning in the early 1980s, Schussel operated a Massachusetts corporation called Digital Consulting, Inc. (" DCI" ). Until 1996, DCI was a subchapter C corporation.[1] During the relevant period, Schussel controlled 95% of DCI.[2] Schussel set up an offshore shell company to siphon DCI income into accounts that he controlled, all without paying the requisite corporate or individual taxes. DCI failed to report all of its income to the IRS, and eventually, the IRS issued a notice of deficiency regarding DCI's 1993, 1994, and 1995 tax returns. DCI neither contested nor paid the assessed liabilities. It has been insolvent since 2004.

As we explain below, the IRS can, by statute, collect a person's tax debt by reclaiming assets the debtor has transferred to someone else (a " transferee" ). See 26 U.S.C. ยง 6901. On November 24, 2010, the IRS sent Schussel a notice of liability (" Notice" ), claiming that he was liable as a transferee for DCI's 1993-1995 tax deficiencies. The Notice claimed that DCI had tax deficiencies of $1,796,477.71, $2,596,817.21, and $3,878,275.77 for those three years " as shown in the attached statement," and that " [t]his portion of total assessed income tax deficiencies, plus interest ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.