A seven-year-old secret report by a special trial judge of the U.S. Tax Court in the lengthy and complex fraud trial of a renowned tax lawyer and his business partners found no fraud — not even a suspicion of fraud — by the three men, despite a subsequent Tax Court decision to the contrary.
The conflict between the original report and the Tax Court decision has prompted some to raise ethical questions about Tax Court procedures and to call on Congress to examine them.
The Tax Court recently released the report after the U.S. Supreme Court held earlier this year that “no statute authorizes, and the current text of [Tax Court] Rule 183 does not warrant,” the concealment of special trial judge reports by the Tax Court.
The Supreme Court ruling — Ballard v. Commissioner of Internal Revenue, No. 03-184, and Estate of Kanter v. Commissioner of Internal Revenue, No. 03-1034 — followed years of litigation over the report in three federal circuits by lawyers for estate and tax attorney Burton W. Kanter and his business partners Claude Ballard and Robert Lisle, all of whom believed the report would exonerate them.