                   United States Court of Appeals
                              For the Eighth Circuit
                          ___________________________

                                  No. 14-2342
                          ___________________________

                                     Gary Kaplan

                              lllllllllllllllllllllAppellant

                                            v.

                         Commissioner of Internal Revenue

                               lllllllllllllllllllllAppellee
                                     ____________

                      Appeal from the United States Tax Court
                                  ____________

                              Submitted: April 14, 2015
                                Filed: July 29, 2015
                                  ____________

Before BYE, BEAM, and SMITH, Circuit Judges.
                           ____________

BYE, Circuit Judge.

       Gary Kaplan challenges a decision of the tax court1 dismissing his petition and
sustaining the Commissioner of Internal Revenue's (the "Commissioner") tax
determinations. On appeal, Kaplan argues the court erred in holding 1) the statute of




      1
          The Honorable David Laro, United States Tax Court Judge.
limitations had not run, 2) Kaplan's 2009 plea agreement did not bar a civil action for
unpaid taxes, and 3) the doctrine of judicial estoppel did not apply. We affirm.

                                           I

      Kaplan operated an illegal sportsbooking business called BetOnSports. The
business originated in New York City, but Kaplan eventually moved it to several
Caribbean islands, followed by Costa Rica in the late 1990s. In July 2004, the
company went public on the London Stock Exchange. Prior to going public, Kaplan
engaged in several transactions and stock transfers, resulting in $98 million being
placed in two trusts (the "Bird Trusts") off the coast of France. Kaplan and his family
were the beneficiaries of the Bird Trusts and Kaplan was the sole grantor. As the
grantor, Kaplan was responsible for the taxable income of the trusts; however, Kaplan
neglected to pay federal income or capital gains tax for the Bird Trusts for either 2004
or 2005.

      In 2006, a federal grand jury indicted Kaplan for operating an illegal online
gambling business within the United States. Subsequently, Kaplan accepted a plea
agreement for a reduction of charges and pleaded guilty to five of the remaining
charges associated with his illegal gambling enterprise. One relevant part of the plea
agreement, Section 2.E, which dealt with the ability of the government to bring civil
actions against Kaplan, stated:

      [N]othing contained in this document is meant to limit the rights and
      authority of the United States of America to take any civil, civil tax or
      administrative action against the defendant . . . except that the United
      States shall not seek civil forfeiture in connection with this case or any
      asset constituting or derived from the receipt of income from the
      BetOnSports Organization, the sale of stock in BetOnSports, PLC and/or
      the investment of the proceeds of any such income or sale.



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        In 2009, the district court held a change of plea hearing. The court specifically
questioned Kaplan about the above provision in the plea agreement (Section 2.E).
First, the government noted "there is nothing in the agreement . . . that this office
lacks . . . the power of the government to pursue any civil, civil tax, or administration
action." Then, the court asked Kaplan, "Do you understand, Mr. Kaplan, that there
is a difference between a criminal tax proceeding and a civil tax proceeding?" Kaplan
stated, "Yes, I do, Your Honor." The court continued, "And in this document, the
U.S. Attorney's Office has agreed it will not bring any criminal tax proceeding against
you; however, that doesn't preclude the initiation of any civil tax proceeding or
administrative action against you." Kaplan replied, "I understand that. And
we've—we've agreed to that." The court subsequently accepted the plea agreement
and sentenced Kaplan to fifty-one months of imprisonment, and ordered him to forfeit
$43,650,000 to the United States.

       In 2012, the Commissioner issued Kaplan a notice of deficiency for failure to
file and pay taxes for 2004 and 2005. In addition to being liable for self-employment
tax and income tax on capital gains, Kaplan was also liable for the following
penalties: failure to file timely returns, failure to pay tax in a timely manner, and
failure to pay estimated tax. The taxes and penalties totaled $25,479,233 for 2004
and $11,248,856 for 2005. Kaplan challenged the Commissioner's determinations by
filing a petition in the tax court. Instead of challenging the income determination,
Kaplan argued 1) the statute of limitations had run on the Commissioner's ability to
assess the unpaid taxes, 2) Kaplan's 2009 plea agreement barred the claim, and 3)
judicial estoppel barred the Commissioner's determination. The tax court rejected all
three arguments.

      On the statute of limitations issue, the court noted since Kaplan failed to file
a return, the period for the Commissioner to assess taxes never began to run.
Furthermore, while the enforcement period is generally six years, income from illegal
sources can allow for a longer enforcement period. On the 2009 plea agreement

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issue, the tax court determined the agreement was unambiguous as to the ability of
the government to bring a civil tax proceeding. Additionally, the court referenced the
questions and answers given at the change of plea hearing, demonstrating Kaplan's
knowledge and admitted understanding of the government's ability to bring a civil tax
proceeding. On the issue of judicial estoppel, Kaplan argued the government's failure
to object to the Presentence Report (PSR) prevented the government from bringing
a civil tax proceeding against Kaplan.2 The tax court rejected Kaplan's argument for
several reasons. First, the representations in Kaplan's financial disclosure letter were
his, not the government's. Second, representations of assets and liabilities are used
to determine a defendant's ability to pay a fine or restitution, which was not at issue;
therefore, the government had no immediate reason to object to the report. Third,
even assuming the government did take an initial position, the government did not
persuade the court of this position nor derive any benefit from taking the position.
Finally, Kaplan did not suffer any detriment or prejudice from the government's
"position" because the plea agreement explicitly preserved the government's right to
bring a civil tax proceeding against Kaplan.

     Having rejected Kaplan's arguments, the tax court entered a decision sustaining
the Commissioner's tax and penalty determinations against Kaplan. On appeal,
Kaplan raises the same three challenges that were before the tax court.

                                           II

      The statute of limitations and plea agreement issues are both issues of law
reviewed de novo. See United States v. Mosley, 505 F.3d 804, 808 (8th Cir. 2007)
(plea agreement); Smithrud v. City of St. Paul, 746 F.3d 391, 395 (8th Cir. 2014)

      2
        The PSR contained Kaplan's financial disclosures, which did not reference any
tax liabilities for 2004 or 2005. Therefore, Kaplan argues the government took the
initial position that Kaplan had no tax liability, which is contrary to its current
position.

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(statute of limitations). A lower court's application and interpretation of the doctrine
of judicial estoppel is reviewed for an abuse of discretion. Schaffart v. ONEOK, Inc.,
686 F.3d 461, 469 (8th Cir. 2012).

       Kaplan first argues the statute of limitations bars the government from pursuing
a civil tax proceeding against Kaplan. We disagree. Generally, the Commissioner
has three years after a return is filed within which to assess income tax liability
against a taxpayer. See 26 U.S.C. § 6501(a). However, Kaplan's failure to file a
return for tax years 2004 and 2005 allows the Commissioner to assess taxes or initiate
a civil tax proceeding against him at any time. See id. § 6501(c)(3). Furthermore,
even if Kaplan filed his returns, the Internal Revenue Manual (IRM) part 4.12.1.3(1)
acknowledges the time period for which the Commissioner can assess taxes may be
extended when the income at issue comes from an illegal source. As the tax court
noted, it is apparent from the record Kaplan's income was obtained from his illegal
gambling business.

      Additionally, Kaplan attempts to bolster his statute of limitations challenge by
claiming "management approval" (under IRM part 4.12.1.3.1) is required for any tax
proceeding initiated over six years after the tax year in question. However, since
Kaplan failed to raise this argument before the tax court, we are not in a position to
determine this factual matter. See Hartman v. Workman, 476 F.3d 633, 635 (8th Cir.
2007) (rejecting an argument because it was not first raised before the district court).
We cannot determine from the record on appeal whether the Commissioner sought
and obtained management approval before initiating this tax proceeding against
Kaplan. This was a matter for the tax court to consider, not us.

      Kaplan's second challenge—his 2009 plea agreement bars the government from
bringing a civil tax claim against him—is also without merit. The plea agreement
explicitly states "nothing contained in this document is meant to limit the rights and
authority of the United States of America to take any civil, civil tax or administrative

                                          -5-
action against the defendant" (emphasis added). Furthermore, at the change of plea
hearing Kaplan acknowledged he understood the agreement did not "preclude the
initiation of any civil tax proceeding . . . against [him]." Kaplan attempts to combat
these statements by claiming the plea agreement is ambiguous. This, he claims, is due
to the agreement also stating the government "shall not seek civil forfeiture in
connection with this case." However, the law clearly distinguishes between a "civil
forfeiture" and a "civil tax proceeding." For example, a civil forfeiture action is an
in rem proceeding brought against property, not an individual. United States v. One
1982 Chevrolet Crew-Cab Truck VIN 1GCHK33M9C143129, 810 F.2d 178, 183 (8th
Cir. 1987). A civil forfeiture action is not an action to collect unpaid taxes.

      Finally, Kaplan argues the doctrine of judicial estoppel prevents the
government from initiating this civil tax proceeding against him. We disagree.
Judicial estoppel applies where a party takes contrary positions during the course of
a lawsuit. Occidental Fire & Cas. Co. v. Soczynski, 765 F.3d 931, 935 (8th Cir.
2014). The factors generally considered include:

      (1) whether a party's later position is clearly inconsistent with its earlier
      position; (2) whether the party has succeeded in persuading a court to
      accept that party's earlier position, so that judicial acceptance of an
      inconsistent position in a later proceeding would create the perception
      that either the first or the second court was misled; and (3) whether the
      party seeking to assert an inconsistent position would derive an unfair
      advantage or impose an unfair detriment on the opposing party if not
      estopped.

Gray v. City of Valley Park, Mo., 567 F.3d 976, 981 (8th Cir. 2009) (citing New
Hampshire v. Maine, 532 U.S. 742, 750-51 (2001)).

     The government did not take a "position" by failing to object to the PSR, which
showed the absence of any relevant tax liability. The financial disclosures contained


                                          -6-
within the PSR were prepared by Kaplan. Therefore, it was Kaplan, if anyone, who
took the position of no tax liability being present. Furthermore, the government did
not have to persuade the court to adopt Kaplan's representation—whether or not
Kaplan had a tax liability was simply not an issue in dispute in his criminal
proceeding. Additionally, as the tax court noted, even if we were to assume the
government did take an initial position, the government did not "derive an unfair
advantage" over Kaplan. Within the plea agreement, the government preserved its
right to initiate a civil tax proceeding against Kaplan. Therefore, any possible unfair
advantage gained was due to Kaplan's own failures, not any action (or inaction) on
behalf of the government. In any event, Kaplan's representation of no tax liability
was accurate at the time since no actual tax liability had yet to be determined; rather,
it was a contingent liability. For all these reasons, the tax court did not abuse its
discretion by refusing to apply judicial estoppel.

                                          III

      We affirm the tax court's decision.
                      ______________________________




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