                        T.C. Memo. 1998-359



                      UNITED STATES TAX COURT



              JOHN L. BOETTNER, JR., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23238-96.               Filed October 5, 1998.



     John L. Boettner, Jr., pro se.

     Mary Ann Waters, for respondent.




                        MEMORANDUM OPINION


     PANUTHOS, Chief Special Trial Judge:     This matter is before

the Court on respondent's motion for partial summary judgment

under Rule 121.1   As the basis for this motion, respondent argues

     1
          All section references are to the Internal Revenue Code
in effect for the taxable year in issue, and all Rule references
                                                   (continued...)
                                - 2 -


that petitioner's plea of guilty to tax evasion under section

7201 collaterally estops him from disputing there is an

underpayment of income tax for the 1985 taxable year, and that

the underpayment is due to fraud within the meaning of section

6653(b).    Respondent supports his motion with four exhibits,

namely:    (1) The Information filed by the U.S. Attorney in the

criminal case against petitioner in the U.S. District Court,

Southern District of West Virginia at Charleston, (2)

petitioner's plea agreement (plea agreement), (3) the guilty plea

in the criminal case against petitioner, and (4) the order issued

by the District Court finding petitioner guilty and convicting

him of one violation of 26 U.S.C. sec. 7201 (1994).    Petitioner

filed a response objecting to the granting of respondent's motion

for partial summary judgment.

     The Court must decide whether petitioner is collaterally

estopped from contesting that there is an underpayment of tax and

that part of the underpayment is due to fraud within the meaning

of section 6653(b) for the 1985 taxable year on account of

petitioner's plea of guilty to a violation of section 7201.

     1
      (...continued)
are to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated.

     This case was set for trial on two prior occasions. At
petitioner's request, the matter was continued on each occasion.
Jurisdiction was retained in an attempt to assist the parties in
resolving this matter, or at least narrowing the issues.
Respondent then filed this motion for partial summary judgment.
                                - 3 -


Background

     Petitioner is an attorney who previously practiced law in

West Virginia until his license to practice was suspended in

1992.   In 1974, petitioner was elected to the West Virginia House

of Delegates.   In 1978, he was elected to the West Virginia State

Senate.   Some time later, petitioner became the West Virginia

State Senate majority leader.     In 1984 petitioner unsuccessfully

ran for the position of State Attorney General.

     In 1987, the U.S. Attorney's office began an investigation

of political corruption in West Virginia.    Petitioner was

investigated with respect to certain loan transactions and

interest payments in 1984 and 1985.     The investigation concluded

that petitioner secured a $25,000 loan in 1984.    Interest

payments were made on the loan by certain third parties in 1985.

Petitioner did not report the interest payments as income on his

1985 Federal income tax return.

     At the conclusion of the investigation, petitioner waived

his right to be charged by indictment and consented to the filing

of a one-count information against him.    The information charged

that petitioner:

     did willfully attempt to evade and defeat a significant
     part of the income tax due and owing by him to the
     United States of America for the calendar year 1985, by
     filing and causing to be filed with the Director,
     Internal Revenue Service Center, at Cincinnati, Ohio, a
     false and fraudulent U.S. Individual Income Tax Return,
     Form 1040, wherein he stated that his taxable income
                                - 4 -


     for the calendar year 1985, was the sum of $25,046.00,
     and that the amount of tax due and owing thereon was
     the sum of $8,456.00, whereas, as he then and there
     well knew and believed his taxable income for the
     calendar year was the sum of $29,166.55, upon which
     said taxable income there was owing to the United
     States of America an income tax of $10,033.00; in
     violation of Title 26, United States Code, Section
     7201.

     On August 23, 1989, petitioner entered into a plea agreement

with the United States.    The pertinent parts of the plea

agreement read as follows:

     it is agreed by and between the United States and Mr.
     Boettner as follows:

          1. Mr. Boettner will waive his right * * * to be
     charged by indictment and will consent to the filing of
     a one count information to be filed in the United
     States District Court for the Southern District of West
     Virginia * * *.

          2. Mr. Boettner will plead guilty to a violation
     of Title 26, United States Code, Section 7201 (tax
     evasion) as charged in said information.

     *        *        *          *        *        *        *

          4. Mr. Boettner will work with representatives of
     the Internal Revenue Service for the purpose of: (a)
     determining (by taxable period) the total net income
     and taxable income derived by Mr. Boettner as a result
     of his activity which resulted in this plea agreement
     for the calendar years 1985 to the present; (b) filing
     correct federal income tax returns for the calendar
     years 1985 to the present, if due: (c) amending
     existing returns on file for the calendar years 1985 to
     the present, if due; (d) amending existing returns on
     file for the calendar years 1985 to the present to
     include the net income and taxable income determined in
     item (a); and (e) paying all taxes determined to be due
     and owing to the fullest extent possible. * * * Mr.
     Boettner will agree to the release of all tax-related
     information obtained by the United States Attorney's
     Office during the course of this investigation for the
                               - 5 -


     purpose of complying with the provisions of this
     paragraph to civil representatives of the Internal
     Revenue Service. This agreement does not preclude Mr.
     Boettner from pursuing any appeal rights he may have
     civilly with respect to any tax liability.

Petitioner was also required to resign his position with the West

Virginia Senate.

     On August 30, 1989, petitioner pleaded guilty to tax evasion

for the taxable year 1985 in violation of section 7201.   On

December 14, 1989, the District Court for the Southern District

of West Virginia issued the order of conviction based upon

petitioner's plea of guilty of one violation of section 7201 (tax

evasion).   Such order was entered only after a lengthy discussion

with petitioner which included, inter alia, his understanding of

the charge against him, the ramifications of his entering a

guilty plea as opposed to going to trial, whether his guilty plea

was a voluntary one, and whether he was satisfied with the

competency of his counsel, as per rule 11 of the Federal Rules of

Criminal Procedure.   Pursuant to the order, petitioner was placed

on probation.   As one of the conditions of the probation, it was

ordered:

          2. Pursuant to his plea agreement promise, the
     defendant shall file an amended federal income tax
     return for the calendar year 1985 and shall pay the
     income tax determined to be due and owing, plus
     interest and penalties, in payments of not less than
     $100.00 per month commencing February 1, 1990.
                                  - 6 -


     Petitioner filed a motion to vacate his criminal conviction

pursuant to 28 U.S.C. sec. 2255 (1994).        The District Court

denied petitioner's motion on March 31, 1994.         Petitioner

appealed the District Court's judgment to the Court of Appeals

for the Fourth Circuit.   In an unpublished per curiam opinion

filed April 21, 1995, the Court of Appeals for the Fourth Circuit

affirmed the judgment of the District Court.         On June 14, 1995,

the Court of Appeals entered its judgment affirming the District

Court.

     For the taxable year 1985, respondent determined petitioner

received $4,120 of unreported income.2        Respondent determined a

deficiency in, and additions to, petitioner's Federal income tax

for the taxable year 1985 as follows:

                               Additions to Tax
Deficiency      Sec. 6653(b)(1)           Sec. 6653(b)(2)

  $1,577            $5,017                50 percent of the interest
                                          due on $1,577

     Petitioner resided in St. Michaels, Maryland, at the time he

petitioned this Court to redetermine respondent's determination

of a deficiency in his income tax and additions to tax as set

forth above.   Respondent's answer and amended answer included


     2
          Respondent's motion is for partial summary judgment
with respect to whether petitioner is estopped to dispute that
there is an underpayment in his income tax for 1985 and that part
of the underpayment is due to civil fraud pursuant to sec.
6653(b). The amount of the underlying deficiency for 1985
remains to be adjudicated.
                               - 7 -


affirmative allegations that (1) petitioner is liable for

additions to tax for fraud under sections 6653(b)(1) and (2);

(2) petitioner is estopped, under the doctrine of collateral

estoppel, from denying that a portion of the underpayment in his

income tax is due to fraud within the meaning of section 6653(b);

and (3) petitioner is estopped from denying the existence of a

tax deficiency resulting from petitioner's admitted tax evasion

for the 1985 taxable year.

Discussion

     Rule 121(a) provides that either party may move for summary

judgment upon any or all parts of the legal issues in

controversy.   Summary judgment is intended to expedite litigation

and avoid unnecessary and expensive trials.   Florida Peach Corp.

v. Commissioner, 90 T.C. 678, 681 (1988); McHan v. Commissioner,

T.C. Memo. 1997-139; London v. Commissioner, T.C. Memo. 1996-192.

     Summary judgment is appropriate

     if the pleadings, answers to interrogatories,
     depositions, admissions, and any other acceptable
     materials, together with the affidavits, if any, show
     that there is no genuine issue as to any material fact
     and that a decision may be rendered as a matter of law.
     A partial summary adjudication may be made which does
     not dispose of all the issues in the case.

Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520

(1992), affd. 17 F.3d 965 (7th Cir. 1994); Kroh v. Commissioner,

98 T.C. 383, 390 (1992); Fox v. Commissioner, T.C. Memo. 1996-79.

The burden of proof is on the moving party, Bertoli v.
                               - 8 -


Commissioner, 103 T.C. 501, 507 (1994), and we are required to

view the factual material and inferences drawn therefrom in the

light most favorable to the party opposing the motion.      Blanton

v. Commissioner, 94 T.C. 491, 494 (1990); Dahlstrom v.

Commissioner, 85 T.C. 812, 821 (1985).   In this case, no dispute

exists as to any material fact.   Therefore, the issue of

collateral estoppel may properly be resolved on respondent's

motion for partial summary judgment.

     Respondent argues the doctrine of collateral estoppel

precludes petitioner from denying the existence of an

underpayment of tax for the 1985 taxable year, and that some part

of such underpayment was attributable to petitioner's fraud in

violation of section 7201.   Petitioner challenges the

applicability of the doctrine of collateral estoppel by alleging

the plea was entered into as a result of the Government's

misconduct, fraud, and misrepresentation of his tax liability.

Specifically, petitioner alleges (1) the Government

misrepresented and then disavowed the theory of fraud in earlier

proceedings; (2) the Government waived collateral estoppel under

the terms of the plea agreement; and (3) the plea agreement

precludes the assessment of any fraud or interest penalty.

Respondent disagrees.

     Collateral estoppel is applicable in Federal tax cases.

Commissioner v. Sunnen, 333 U.S. 591, 598 (1948).     Collateral
                                - 9 -


estoppel precludes relitigation of any issue of fact or law that

was actually litigated and necessarily determined by a valid and

final judgment.    Montana v. United States, 440 U.S. 147, 153

(1979); Brotman v. Commissioner, 105 T.C. 141, 147 (1995).    In

addition, the issue must also have been necessary to the outcome

of the first action, see United States v. Mendoza, 464 U.S. 154,

158 (1984); Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5

(1979); Niedringhaus v. Commissioner, 99 T.C. 202, 213 (1992),

and it cannot be relitigated in a suit between the parties or

their privies.    Blanton v. Commissioner, supra at 495; Peck v.

Commissioner, 90 T.C. 162, 166 (1988), affd. 904 F.2d 525 (9th

Cir. 1990).   Collateral estoppel

     [precludes] parties from contesting matters that they
     have had a full and fair opportunity to litigate [and]
     protects their adversaries from the expense and
     vexation attending multiple lawsuits, conserves
     judicial resources, and fosters reliance on judicial
     action by minimizing the possibility of inconsistent
     decisions.

Montana v. United States, 440 U.S. at 153-154; Spear v.

Commissioner, 91 T.C. 984, 990 (1988).

     It is well established that petitioner's conviction of

criminal tax evasion under section 7201 for 1985 collaterally

estops him from denying that some part of the deficiency in his

income tax for that year was due to fraud for purposes of section

6653(b).   The elements of criminal tax evasion under section 7201

are virtually identical to the elements of civil tax fraud under
                                - 10 -


section 6653(b), and a guilty plea is equivalent to a conviction

after trial for the purpose of collateral estoppel.     Plunkett v.

Commissioner, 465 F.2d 299, 305-306 (7th Cir. 1972), affg. T.C.

Memo. 1970-274; Stone v. Commissioner, 56 T.C. 213, 221-223

(1971); Arctic Ice Cream Co. v. Commissioner, 43 T.C. 68 (1964);

see, e.g., Johnson v. Sawyer, 47 F.3d 716, 722 (5th Cir. 1995);

Gray v. Commissioner, 708 F.2d 243 (6th Cir. 1983), affg. T.C.

Memo. 1981-1.    A guilty plea constitutes an admission of all the

elements of the criminal charge.     McCarthy v. United States, 394

U.S. 459, 466 (1969).    Consequently, it is immaterial that a

conviction is based upon a guilty plea, rather than a trial on

the merits.     Arctic Ice Cream Co. v. Commissioner, supra.

     Petitioner claims his guilty plea was not based on conduct

in violation of section 7201.    This Court has previously

indicated that it will rarely look behind the circumstances of a

guilty plea in applying the doctrine of collateral estoppel.

Stone v. Commissioner, supra at 221-223; Yarbrough Oldsmobile

Cadillac, Inc. v. Commissioner, T.C. Memo. 1993-20.    If a

defendant enters an Alford (North Carolina v. Alford, 400 U.S. 25

(1970)) plea, wherein the defendant pleads guilty pursuant to a

plea agreement, but denies guilt, the collateral consequences are

triggered.

          Once accepted by a court, it is the voluntary plea
     of guilt itself, with its intrinsic admission of each
     element of the crime, that triggers the collateral
     consequences attending that plea. Those consequences
                              - 11 -


     may not be avoided by an assertion of innocence. As
     long as the guilty plea represents a voluntary and
     intelligent choice among alternative courses of action
     open to the defendant, * * * and a sufficient factual
     basis exists to support the plea of guilt, * * * the
     collateral consequences flowing from an Alford plea are
     the same as those flowing from an ordinary plea of
     guilt. Were this not so, defendants pleading guilty
     would routinely proclaim their innocence to reap two
     benefits: (1) the avoidance of a trial and a possible
     reduction in sentence, and (2) the extinguishment of
     all collateral consequences of their plea. * * * [Blohm
     v. Commissioner, 994 F.2d 1542, 1554 (1993)(citations
     omitted), affg. T.C. Memo. 1991-636.]

See also Yarbrough Oldsmobile Cadillac, Inc. v. Commissioner,

supra; Lackey v. Commissioner, T.C. Memo. 1977-213.

     In this case petitioner has not presented any evidence that

the plea was entered involuntarily.    Additionally, petitioner's

arguments were thoroughly rejected by the District Court when

evaluating petitioner's motion to vacate his conviction.    The

order of the District Court denying that motion was affirmed by

the Court of Appeals for the Fourth Circuit stating "The court

found there was a factual basis for the plea and that the

movant's plea was entered freely and voluntarily, and with full

knowledge of the consequences of the plea".

     Petitioner argues respondent is barred from asserting

collateral estoppel.   Petitioner claims the Government waived

collateral estoppel under the plea agreement.   Petitioner relies

on this pertinent language: "This agreement does not preclude Mr.

Boettner from pursuing any appeal rights he may have civilly with
                               - 12 -


respect to any tax liability".    However, such language does not

amount to a waiver of collateral estoppel by respondent.    Such

language ensures to petitioner that he has the right to appeal

his liability with respect to the amount of the tax liability, by

contesting the total amount of the unreported income, or by

contesting respondent's computation of the tax liability.

     Petitioner also claims the plea agreement precludes the

assessment of any fraud penalty, late filing penalty, or interest

penalty, and limits the respondent to "taxes determined to be due

and owing".   This Court does not read such meaning into the

agreement.    In addition, it was the order of the District Court

for the Southern District for West Virginia that petitioner

"shall pay the income tax determined to be due and owing, plus

interest and penalties." (Emphasis added.)

     We are satisfied that the issues in the present case are the

same as the issues which were presented and determined adversely

to petitioner in the criminal case.     The underlying issue in this

case is that of fraud.    Petitioner's prior conviction was based

on fraud; i.e., the charge of his knowingly and willfully

attempting to evade Federal income tax by filing a false and

fraudulent Federal income tax return in violation of section

7201.

     The District Court for the Southern District of West

Virginia, a court of competent jurisdiction, has rendered a final
                                - 13 -


judgment that is no longer subject to appeal.     In addition, it is

clear that the parties to the two proceedings are the same.

Petitioner in the present case was the defendant in the criminal

case.     It is well established that the Commissioner of Internal

Revenue (respondent) is a party in privity with the United

States, the plaintiff in the criminal proceeding.     See Tait v.

Western Md. Ry. Co., 289 U.S. 620 (1933).     Privity between the

United States and the Commissioner of Internal Revenue

(respondent) has repeatedly been recognized by this Court.

Gammill v. Commissioner, 62 T.C. 607, 614 (1994); Shaheen v.

Commissioner, 62 T.C. 359, 364 (1974); Amos v. Commissioner, 43

T.C. 50, 52 (1964), affd. 360 F.2d 358 (4th Cir. 1965).

        We find that the controlling facts and legal principles have

not changed significantly since the criminal trial, and no

special circumstances warrant an exception to the normal rules of

preclusion in this case.     Accordingly, we hold that collateral

estoppel applies in this case by reason of the prior conviction.

See Amos v. Commissioner, supra; McCall v. Commissioner, T.C.

Memo. 1993-95.

        Consistent with the foregoing, petitioner's prior criminal

conviction under section 7201 in respect to his 1985 taxable year

collaterally estops him from denying in the present civil tax

proceeding:     (1) There is an underpayment in his income tax for

1985, and (2) part of the underpayment is due to fraud within the
                              - 14 -


meaning of section 6653(b).   Tomlinson v. Lefkowitz, 334 F.2d

262, 266 (5th Cir. 1964); C.B.C. Super Markets, Inc. v.

Commissioner, 54 T.C. 882, 893 (1970). Consequently, we shall

grant respondent's motion for partial summary judgment.

     To reflect the foregoing,

                                         An appropriate order will

                                    be issued.
