Bachner v. Commissioner of Internal Revenue

Petitioner appealed from a U.S. Tax Court judgment imposing civil penalties against him after it found that he had filed tax returns that fraudulently claimed refunds by inflating both his income and tax withholdings. Petitioner argued on appeal that the Tax Court lacked jurisdiction to conduct a deficiency hearing because the IRS never found a “deficiency” in tax payments and that the Tax Court could not assess a fraud penalty against him because he did not “underpay” his taxes. The Seventh Circuit rejected both arguments and affirmed. The appellate court further dismissed petitioner’s wife, who filed joint tax returns, from the appeal finding that she lacked standing where she had been granted innocent-spouse status and did not allege any damages. (KIRSCH and KOLAR, concurring)