                           T.C. Memo. 1995-548



                      UNITED STATES TAX COURT



                MICHAEL J. FITZPATRICK, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9269-94.                 Filed November 20, 1995.



     Michael J. Fitzpatrick, pro se.

     Thomas F. Eagan and Daniel K. O'Brien, for respondent.


                           MEMORANDUM OPINION

     TANNENWALD, Judge:      Respondent determined deficiencies in

and additions to petitioner's Federal income taxes as follows:

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

     1981        $30,601          $15,301        --          --
     1982         96,418            --       $48,209         *

     * 50 percent of the interest due on $96,418, the
     understatement of tax for the calendar year 1982
     attributable to fraud.
                               - 2 -

     This case is before us on respondent's motion for partial

summary judgment under Rule 121,1 petitioner's motion to dismiss

on grounds of estoppel, and petitioner's motion to dismiss on

grounds of double jeopardy attaching.

     Petitioner resided in Taos Ski Valley, New Mexico, at the

time the petition was filed.

     In the 1981 and 1982 calendar years, petitioner was a loan

officer at the Bank of New York.   With respect to certain

activities undertaken in this capacity, two indictments were

filed against petitioner.   The first indictment charged

petitioner with violation of 18 U.S.C. sec. 1952 (1988)

(hereinafter referred to as the Travel Act), and conspiracy to

violate the Travel Act, 18 U.S.C. sec. 371 (1988).   On May 19,

1989, the District Court for the District of Rhode Island entered

a judgment of guilty on both counts, following a trial upon the

merits.   Said judgment was affirmed by the U.S. Court of Appeals

for the First Circuit on December 27, 1989.   United States v.

Fitzpatrick, 892 F.2d 162 (1st Cir. 1989).

     The second indictment charged petitioner with willfully

attempting to evade and defeat the income tax due and owing on

unreported income in the amounts of $67,253 and $206,087 for the



1
   Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
                              - 3 -

1981 and 1982 taxable years, respectively, by filing false and

fraudulent U.S. individual income tax returns in violation of

section 7201, and conspiracy to defraud the U.S. Government by

hindering the function of the Internal Revenue Service in its

efforts to collect income taxes.   On May 19, 1989, the District

Court for the District of Rhode Island, following a trial upon

the merits, entered a judgment of guilty on the first two

charges, regarding income tax evasion, and not guilty on the

conspiracy charge.

     Among the issues of fact determined in connection with the

tax charges was whether petitioner did in fact willfully file

false and fraudulent income tax returns for 1981 and 1982 with

the intent to evade and defeat income tax, and whether he did in

fact by such means understate a part of the income tax due and

owing by him to the United States for each of the years.

     Petitioner was sentenced to 3 years of imprisonment for each

of the Travel Act charges, to run concurrently, and 15 months'

imprisonment on the first tax evasion charge, to run

consecutively to the aforesaid sentence.   For the remaining tax

evasion charge, petitioner received a 2-year suspended sentence

and was placed on probation consecutive to the expiration of the

aforesaid terms of imprisonment.   Petitioner was also ordered to

pay a fine of $10,000 to the United States.
                                - 4 -

     On September 20, 1991, respondent issued a letter to

petitioner stating that an examination of his returns for the

1981 and 1982 years showed no change was necessary in the

reported tax (no-change letter).

     Shortly thereafter, an agent of respondent began the process

of reopening the examination of petitioner's 1981 and 1982 tax

years.    It was explained in the agent's request for approval of

the reopening, dated December 12, 1991, that, upon notification

by the U.S. Attorney's office that petitioner had requested the

District Court to vacate his conviction based on the no-change

letter, the chief, examination division, who had not been a party

to the original decision, had reviewed the circumstances and

information relating to the decision to issue the no-change

letter.    As a result, it was determined that, based upon the tax

evasion conviction and various unresolved questions, failure to

reopen would result in serious criticism of the Service's

administration of the tax laws, and establish a precedent that

would seriously hamper future actions.

     Subsequently, on December 13, 1991, respondent issued a

letter to petitioner signed by the chief, examination division,

requesting that petitioner make available his books and records

for a reexamination (reopening letter).   On June 2, 1994, the

notice of deficiency herein was issued.
                               - 5 -

Motion to Dismiss on Ground of Estoppel

      Petitioner's first motion to dismiss is predicated on the

argument that respondent is collaterally and equitably estopped

from issuing a notice of deficiency due to the earlier issuance

of the no-change letter to petitioner for the same tax years.

Petitioner asks that the notice of deficiency be cancelled.

      Petitioner has not directly raised any issue as to the

impropriety, under section 7605(b), of a second examination after

the issuance of the reopening letter.   The record does not

indicate whether a second examination occurred.2    In any event,

even if there was a second examination, the record provides no

basis for concluding that there was any impropriety.     United

States v. Powell, 379 U.S. 48 (1964).     Petitioner's emphasis on

the absence of "new information", obtained by respondent after

the issuance of the no-change letter suggests that he may be

seeking support for his claim on the basis that respondent

violated her reopening policy as set forth in Rev. Proc. 85-13,

1985-1 C.B. 514.3   We are not so persuaded.   We think the reasons


2
   If there was no second examination, no violation of sec.
7605(b) occurred. E.g., Hough v. Commissioner, 882 F.2d 1271
(7th Cir. 1989), affg. T.C. Memo. 1986-229; Digby v.
Commissioner, 103 T.C. 441 (1994).
3
    Sec. 4, entitled "POLICY", states:
           .01 The Internal Revenue Service will not reopen any
      case closed after examination by a district office or
      service center to make an adjustment unfavorable to the
      taxpayer unless:
                                                    (continued...)
                                 - 6 -

for the reopening fall well within the parameters of that policy.

In any event, it is clear that Rev. Proc. 85-13 is a directory,

not mandatory, internal procedural set of rules which do not

provide a basis for rejecting a deficiency notice because of a

violation of its provisions.     Collins v. Commissioner, 61 T.C.

693, 700-701 (1974).4    Petitioner makes no argument that the

deficiency notice does not otherwise meet the requirements of

section 6212.     See Abeles v. Commissioner, 91 T.C. 1019, 1025-

1027 (1988).     In view of the foregoing, the validity of the

deficiency notice is not open to challenge, and we need not

explore whether we would have jurisdiction to cancel the notice

if the circumstances were such as to taint it.     Collins v.




3
    (...continued)
             1. There is evidence of fraud, malfeasance, collusion,
        concealment or misrepresentation of a material fact; or
             2. The prior closing involved a clearly defined
        substantial error based on an established Service position
        existing at the time of the previous examination; or
             3. Other circumstances exist that indicate failure to
        reopen would be a serious administrative omission.
             .02 All reopening must be approved by the Chief,
        Examination Division (District Director in Streamlined
        District), or Chief, Compliance Division, for cases under
        his/her jurisdiction. If an additional inspection of the
        taxpayer's books of account is necessary, the notice to the
        taxpayer required by section 7605(b) of the Code must be
        signed by the Chief, Examination Division (District Director
        in Streamlined Districts), or Chief, Compliance Division,
        for cases under his/her jurisdiction. [Rev. Proc. 85-13,
        1985-1 C.B. 515.]
4
     See also Feldman v. Commissioner, T.C. Memo. 1985-132.
                                - 7 -

Commissioner, supra at 700 n.4.5    We shall, however, treat

petitioner's motion to dismiss as a motion for summary judgment

based upon claimed estoppel as a result of the no-change letter.

     Petitioner argues that respondent is equitably estopped from

issuing a notice of deficiency for the 1981 and 1982 tax years

due to the earlier issuance of a no-change letter for those

years, along with his acquittal on the charge of conspiracy to

defraud the United States.    He explains that following the

issuance of the no-change letter, his filing a motion for a new

trial with the District Court in Rhode Island spurred the

prosecutor to meet with respondent's agents with respect to the

no-change letter.   He further explains that this meeting led to

the issuance of the reopening letter with respect to the 1981 and

1982 tax years. Petitioner argues that this letter resulted in

the denial of his request for a new trial, and nearly 1 year of

additional incarceration.    He contends that there was no new

information on which to base the reopening letter, only a desire

to accommodate the prosecutor "and continue the illegal

incarceration of the Petitioner."    He thus asserts that he may

rely upon the no-change letter under the doctrine of equitable or

collateral estoppel.



5
   Compare United States v. Powell, 379 U.S. 48, 58 (1964), where
the Supreme Court adopted a narrow view of circumstances that
would constitute improper purpose justifying judicial refusal to
enforce a summons.
                               - 8 -

     We see no need to dissect the various elements of equitable

estoppel6 except to note that it is applied against respondent

with the utmost caution and restraint.   Norfolk S. Corp. v.

Commissioner, 104 T.C. 13, 60 (1995) modified on another issue

104 T.C. 417 (1981); Boulez v. Commissioner, 76 T.C. 209, 214-215

(1981), affd. 810 F.2d 209 (D.C. Cir. 1987).   A no-change letter

simply does not provide the necessary foundation for estopping

respondent herein.   Opine Timber Co. v. Commissioner, 64 T.C. 700

(1975), affd. without opinion 552 F.2d 368 (5th Cir. 1977);

Lawton v. Commissioner, 16 T.C. 725 (1951); cf. Estate of

Freeland v. Commissioner, 393 F.2d 573, 585 (9th Cir. 1968),

affg. T.C. Memo. 1966-283.7   Moreover, petitioner's basis for

claiming detrimental reliance on the no-change letter, a key

condition which a taxpayer claiming estoppel of the Government

must satisfy, Boulez v. Commissioner, 76 T.C. at 215, is totally

inadequate.   The extent of petitioner's argument in respect of

reliance are statements that he believed in the "authenticity" of


6
   The traditional elements of equitable estoppel include: (1)
Conduct constituting a representation of material fact; (2)
actual or imputed knowledge of such fact by the representor; (3)
ignorance of the fact by the representee; (4) actual or imputed
expectation by the representor that the representee will act in
reliance upon the representation; (5) actual reliance thereon;
and (6) detriment on the part of the representee. Graff v.
Commissioner, 74 T.C. 743, 761 (1980), affd. per curiam 673 F.2d
784 (5th Cir. 1982).
7
   See also Feldman v. Commissioner, T.C. Memo. 1985-132; Dorl v.
Commissioner, T.C. Memo. 1973-145, affd. 507 F.2d 406 (2d Cir.
1974).
                               - 9 -

the no-change letter, and that he requests we "allow him to

proceed with the remainder of his life unencumbered by the

effects of spurious and venal allegations concerning events

dating back 15 years which were reviewed for years resulting in

the issuance of the 'No Change Letter'."   Clearly, these

assertions do not reflect any actions taken by petitioner in

reliance upon the no-change letter.

     Petitioner also argues that he may rely upon the no-change

letter under the doctrine of collateral estoppel.    Under that

doctrine, "once an issue is actually and necessarily determined

by a court of competent jurisdiction, that determination is

conclusive in subsequent suits based on a different cause of

action involving a party to the prior litigation."    Montana v.

United States, 440 U.S. 147, 153 (1979); Brotman v. Commissioner,

105 T.C. 141 (1995).   The immediate point on which petitioner's

argument fails is that respondent is not a judicial body and

therefore is not a "court of competent jurisdiction".   In any

event, our previous holding in respect of the equitable estoppel

effect of the no-change letter, see supra p. 8-9, is equally

applicable in respect of any claim of collateral estoppel.

Indeed, to hold otherwise would have the effect of according the

no-change letter the status of a closing agreement as to which

there are specific statutory requirements.   See Freeland v.

Commissioner, T.C. Memo. 1966-283 n.10.
                              - 10 -

     Nor does the doctrine of collateral estoppel operate against

respondent with respect to the acquittal on the conspiracy

charge.   There is a higher standard of proof in criminal

proceedings (beyond a reasonable doubt) than there is in this

civil proceeding (preponderance of the evidence), so that failure

of proof in the criminal proceeding does not necessarily lead to

the conclusion that there will be a failure of proof herein.    See

Helvering v. Mitchell, 303 U.S. 391, 397-398 (1938); Neaderland

v. Commissioner, 424 F.2d 639, 642-643 (2d Cir. 1970), affg. 52

T.C. 532 (1969); Traficant v. Commissioner, 89 T.C. 501, 510 n.9

(1987), affd. 884 F.2d 258 (6th Cir. 1989).   Moreover, acquittal

on the conspiracy charge does not necessarily lead to the

conclusion that all the facts alleged were found in favor of

petitioner.   See United States v. Levy, 803 F.2d 1390, 1400 (5th

Cir. 1986); Spear v. Commissioner, 91 T.C. 984, 992-995 (1988).

Collateral estoppel applies only as to those issues which it can

be said were necessarily determined in the prior proceeding.

Montana v. United States, supra.

     Petitioner's first motion to dismiss will be denied.



Motion to Dismiss for Double Jeopardy

     Petitioner's second motion to dismiss is predicated on the

doctrine of double jeopardy. In a similar fashion as in the first

motion to dismiss, petitioner alleges he is being punished for
                              - 11 -

seeking a new trial with respect to his criminal convictions.

Petitioner argues that because there was no new information to

support the reopening letter, and because he "believes in his

innocence of the charges contained in the Notice of Deficiency",

that the Court should dismiss the notice of deficiency as being

in violation of the Double Jeopardy Clause of the Fifth

Amendment.

     The ultimate focus of the Double Jeopardy Clause is

"punishment".   Ianniello v. Commissioner, 98 T.C. 165, 177 (1992)

(interpreting Helvering v. Mitchell, 303 U.S. 391 (1938)).   In

Ianniello, we determined that a civil tax proceeding, addressing

liability for the addition to tax for fraud, did not have the

intention or effect of punishing the taxpayer, and was properly

characterized as remedial, and we concluded that such a

proceeding did not constitute a second prosecution, or multiple

punishment.   See Helvering v. Mitchell, supra.8

     Petitioner's characterization of the events leading up to

the issuance of the notice of deficiency does not distinguish

this case from Ianniello v. Commissioner, supra.   The reasons

that led to the reopening letter, and the subsequent notice of

deficiency, are irrelevant to the issue of double jeopardy, as

the outcome remains the same. Section 6201 states that respondent


8
   See also Miller v. Commissioner, T.C. Memo. 1994-249;
McNichols v. Commissioner, T.C. Memo. 1992-120 and T.C. Memo.
1993-61, affd. 13 F.3d 432 (1st Cir. 1993).
                             - 12 -

is authorized and required to make the inquiries, determinations,

and assessments of all taxes imposed by the Internal Revenue

Code. The notice of deficiency represents nothing more than an

attempt by respondent to recover revenue lost due to the

taxpayer's underpayment of Federal income tax.     Traficant v.

Commissioner, 884 F.2d 258, 263 (6th Cir. 1989), affg. 89 T.C.

501 (1987); Ianniello v. Commissioner, supra at 179.

     Petitioner's second motion to dismiss will be denied.



Respondent's Motion for Partial Summary Judgment

     Lastly, we reach respondent's motion for partial summary

judgment on the basis that petitioner is collaterally estopped

from denying certain facts with respect to his conviction for

violation of the Travel Act and conspiracy to violate the Travel

Act, and that as a result of petitioner's conviction for

violation of section 7201 for the 1981 and 1982 tax years,

petitioner is collaterally estopped from denying that he

willfully attempted to evade Federal income taxes for those

years.

     The disposition of a motion for summary judgment under Rule

121(b) is controlled by the following principles: (a) The moving

party must show the absence of dispute as to any material fact

and that a decision may be rendered as a matter of law; (b) the

factual materials and the inferences to be drawn from them must
                                 - 13 -

be viewed in the light most favorable to the party opposing the

motion; and (c) the party opposing the motion cannot rest upon

mere allegations or denials, but must set forth specific facts

showing there is a genuine issue for trial.        Brotman v.

Commissioner, 105 T.C. 141 (1995).        Summary judgment is available

to establish the collateral estoppel defense, as respondent seeks

to do herein.   Id.

     Under the doctrine of collateral estoppel, "once an issue is

actually and necessarily determined by a court of competent

jurisdiction, that determination is conclusive in subsequent

suits based on a different cause of action involving a party to

the prior litigation."      Montana v. United States, 440 U.S. 147,

153 (1979); Brotman v. Commissioner, supra.        Collateral estoppel

may apply to matters of fact, matters of law, or to mixed matters

of law and fact.      Meier v. Commissioner, 91 T.C. 273, 283 (1988).

     With respect to petitioner's convictions for violation of

the Travel Act, and conspiracy to violate the Travel Act,

respondent argues that petitioner is collaterally estopped to

deny his participation in the bribery scheme. Respondent

acknowledges that because the actual receipt of a pecuniary

benefit as a bribe was not an essential element of petitioner's

convictions for violation of the Travel Act and conspiracy to

violate the Travel Act, petitioner is not collaterally estopped

to deny receipt of the amounts determined in the notice of
                               - 14 -

deficiency as income.9   Petitioner argues that, based on

respondent's concession that a completed act of bribery was not

an element of the convictions, "the convictions do not support

the concept of collateral estoppel in this cause [sic] as receipt

of money or goods and services is necessary to create a tax

liability." However, as stated above, respondent does not argue

that collateral estoppel applies to compel final judgment at this

time as to the correctness of the amounts in the notice of

deficiency.

      Petitioner and respondent are thus in seeming agreement that

petitioner is collaterally estopped to deny his participation in

the bribery scheme, while it is left to determine only the amount

petitioner received by his participation.   In any event, we hold

that petitioner is collaterally estopped to deny such

participation.10

      Respondent further argues that petitioner is collaterally

estopped, because of his conviction for violation of section 7201

for the 1981 and 1982 tax years, from denying that he willfully



9
   The elements necessary for conviction under the Travel Act
are: (1) Travel or use of facilities in interstate commerce; (2)
with intent to promote, manage, establish, carry on or facilitate
the promotion, management, establishment, or carrying on of a
prohibited activity, e.g., bribery; and (3) subsequent attempt to
commit or actual commission of the proscribed activity. 18
U.S.C. sec. 1952 (1988); United States v. Davis, 965 F.2d 804,
809 (10th Cir. 1992).
10
     See also Cipparone v. Commissioner, T.C. Memo. 1985-234.
                                - 15 -

attempted to evade and defeat the income tax due and owing by him

for 1981 and 1982, and as a result that he is liable for the

civil fraud additions to tax under section 6653(b).

       With respect to additions to tax for fraud, respondent bears

the burden of proof.    Rule 142; sec. 7454(a).    That burden

requires respondent to establish that there has been an

underpayment and that some part of the underpayment was due to

fraud.    DiLeo v. Commissioner, 96 T.C. 858, 873 (1991), affd. 959

F.2d 16 (2d Cir. 1992).11   Also, for the 1982 tax year,

respondent must establish the specific portion of the

underpayment of tax which is attributable to fraud solely for

purposes of applying the "50 percent of the interest payable"

provisions of section 6653(b)(2).12      Id. at 873.


11
   See also McNichols v. Commissioner, T.C. Memo. 1993-61 and
T.C. Memo. 1992-120, affd. 13 F.3d 432 (1st Cir. 1993).
12
     For the 1981 tax year, sec. 6653(b) provided in part:

            (b) Fraud.--If any part of any underpayment (as
       defined in subsection (c)) of tax required to be shown
       on a return is due to fraud, there shall be added to
       the tax an amount equal to 50 percent of the
       underpayment. * * *

For the 1982 tax year, sec. 6653(b) became sec. 6653(b)(1) and
(2), with sec. 6653(b)(1) retaining language identical to that of
prior sec. 6653(b). New sec. 6653(b)(2) provided in part:

            (2) Additional amount for portion attributable to
       fraud.-- There shall be added to the tax (in addition
       to the amount determined under paragraph (1)) an amount
       equal to 50 percent of the interest payable under
       section 6601--
                                                     (continued...)
                                 - 16 -

        Petitioner argues that the results of the convictions for

tax evasion are inconclusive based on his acquittal on the charge

of conspiracy to defraud the United States. We are not persuaded.

It is a well established principle that a verdict of guilt

rendered by a jury cannot be attacked for inconsistency with an

acquittal on a related charge.     United States v. Powell, 469 U.S.

57 (1984); United States v. Galbraith, 20 F.3d 1054 (10th Cir.

1994).     Inconsistent verdicts may stand, though they clearly

infer the jury's "'assumption of a power which they had no right

to exercise, but to which they were disposed through lenity.'"

Dunn v. United States, 284 U.S. 390, 393 (1932) (quoting Steckler

v. United States, 7 F.2d 59, 60 (2d Cir. 1925)); see United

States v. Powell, supra at 65 ("It is equally possible that the

jury, convinced of guilt, properly reached its conclusion on the

compound offense, and then through mistake, compromise, or

lenity, arrived at an inconsistent conclusion on the lesser

offense.").

        As to the application of collateral estoppel where there is

an inconsistent verdict, the Court of Appeals for the Fifth

Circuit has stated that such reconciliation is best approached on

a case-by-case basis.     United States v. Price, 750 F.2d 363, 366



12
     (...continued)
                   (A) with respect to the portion of the
              underpayment described in paragraph (1) which is
              attributable to fraud, * * *
                               - 17 -

(5th Cir. 1985).   The defendant in Price was acquitted of two

counts and inconsistently convicted on a third count concerning

conspiracy to obtain gratuities.    On appeal, the conviction was

reversed and remanded for a new trial on the conspiracy count.

In the second trial the defendant was again convicted. On appeal,

the defendant argued that under the doctrine of collateral

estoppel, the trial court improperly permitted the introduction

of evidence which should have been barred as a result of the

acquittal on two of the charges.    The Court of Appeals affirmed

the conviction, holding that, by convicting the defendant in the

first trial, the jury necessarily resolved factual issues

adversely to the defendant.    The court stated that the

inconsistent verdicts on the other two counts were not to be read

as a finding of fact favorable to the defendant on evidence which

overlapped each count.   In sum, the teaching of Price is that

collateral estoppel is properly applied as to those facts

necessary to find for conviction, notwithstanding that those

facts may have also been essential to a related charge on which

the defendant was acquitted.    United States v. Chin, 795 F.2d

496, 499 (5th Cir. 1986); cf. Blanton v. Commissioner, 94 T.C.

491 (1990) (Court applies collateral estoppel to certain facts

for which taxpayer was convicted under the Hobbs Act,

notwithstanding the dismissal of related mail fraud charges).
                              - 18 -

     Nevertheless, we find no inconsistency between the

conviction for tax evasion and the acquittal for conspiracy,

based on the differing requirements of proof.13   Cf. Los Angeles

v. Heller, 475 U.S. 796, 806 (1985) (Stevens, J., dissenting)

("when faced with an apparently inconsistent verdict, a court has

a duty to attempt to read the verdict in a manner that will

resolve inconsistencies.").   It is perfectly logical that the

jury may have found all of those facts necessary to convict

petitioner for tax evasion, and which overlap the facts necessary

to be found for the conspiracy charge, but did not find the facts

necessary for the conspiracy charge that do not so overlap.    We

thus do not hesitate in applying collateral estoppel to the tax


13
  Counts I and II, regarding tax evasion, of which petitioner
was found guilty, charged that petitioner:

     did willfully attempt to evade and defeat a large part
     of the income tax due and owing by him to the United
     States of America * * *, by preparing and causing to be
     prepared, and by signing and causing to be signed a
     false and fraudulent U.S. Individual Income Tax Return,
     Form 1040, which was filed with the Internal Revenue
     Service * * *.

   In comparison, count III, regarding conspiracy, of which
petitioner was acquitted, charged that petitioner:

     and others known and unknown, did unlawfully,
     willfully, and knowingly conspire, combine,
     confederate, and agree together and with each other to
     defraud the United States by impeding, impairing,
     obstructing, and defeating the lawful Government
     functions of the Internal Revenue Service of the
     Treasury Department in the ascertainment, computation,
     assessment, and collection of the revenue: to wit,
     income taxes.
                               - 19 -

evasion convictions.   Cf. United States v. Powell, 469 U.S. 57

(1984).

      Petitioner also argues that only the conspiracy charge

required the finding of certain overt acts, which petitioner

seemingly argues are the receipt of the funds alleged in the

notice of deficiency, thus implying that there has been no

finding of the receipt of unreported funds.

      This is incorrect.   A conviction under section 7201 carries

with it the ultimate factual determination that an underpayment

exists, as well as that some part of the underpayment is due to

fraud.    Arctic Ice Cream Co. v. Commissioner, 43 T.C. 68, 74

(1964); Amos v. Commissioner, 43 T.C. 50, 54-55 (1964), affd. 360

F.2d 358 (4th Cir. 1965).14

      Petitioner further argues that collateral estoppel is

inapplicable because of new evidence. The purported new evidence

he refers to consists of copies of two promissory notes, in the

amounts of $100,000 and $43,000, which he alleges show the

existence of loans to petitioner which would impliedly explain

certain funds received by him in 1981 and 1982, which respondent

asserts in the notice of deficiency constitute unreported income.

At petitioner's sentencing hearing in the District Court

proceeding, he asserted that the notes had been destroyed.




14
     See also Cipparone v. Commissioner, T.C. Memo. 1985-234.
                               - 20 -

     As to their recovery, petitioner has supplied an explanatory

affidavit.   The affidavit is that of an acquaintance of

petitioner who attests that he noticed boxes being thrown out by

a new owner of petitioner's home in 1991, petitioner having sold

the home in the mid-1980's. The acquaintance further attests that

he saw many of the papers in the boxes were addressed to

petitioner, and, knowing of petitioner's incarceration, took the

boxes and placed them in a storage shed. It was further attested

that petitioner visited this acquaintance in the fall of 1993

when he was given the boxes containing the promissory notes.

     Newly discovered evidence does not affect the application of

collateral estoppel where it could have been produced in the

prior proceeding by the exercise of due diligence.      Calcutt v.

Commissioner, 91 T.C. 14, 25 (1988).

     Respondent argues that the documents could have been

produced by petitioner at the prior trial by the exercise of due

diligence.   We agree.   Given that the documents were recovered

from the home once owned by petitioner, we cannot understand how

due diligence would have failed to unearth the promissory notes

at the time of the criminal trial.      The notes thus do not

preclude the application of collateral estoppel.      See Id. at 25.

     In sum, we apply the well established doctrine that a

conviction under section 7201 collaterally estops the taxpayer

from denying fraud for purposes of section 6653(b) for the same
                              - 21 -

tax years.   Moore v. United States, 360 F.2d 353 (4th Cir. 1965);

DiLeo v. Commissioner, 96 T.C. 858, 885-886 (1991), affd. 959

F.2d 16 (2d Cir. 1992).

      We note that petitioner states he will attempt to use this

forum to prove his innocence regarding his violation of the tax

code, having been unable to appeal his conviction on Counts I and

II.   Given this statement, and the form of petitioner's arguments

so far, we now wish to make clear that, based on our holdings as

to the application of collateral estoppel, there remains for

decision only a few items which were not decided in the District

Court proceeding, which are as follows:   (1) The amount of

unreported income received by petitioner in 1981 and 1982 (as to

which petitioner bears the burden of proof, Meier v.

Commissioner, 91 T.C. 273, 288 (1988)); and (2) the amount of the

understatement of tax in 1982 attributable to fraud, for purposes

of section 6653(b)(2), as to which respondent bears the burden of

proof by clear and convincing evidence, DiLeo v. Commissioner, 96

T.C. at 873.   As for those items decided in the District Court

proceeding with respect to the tax evasion charges, petitioner

missed his chance for reargument by his failure to appeal,

notwithstanding his claims as to "the necessity to allege

ineffective assistance of counsel involving an attorney who

showed no malice", and the costliness of appeal.
                             - 22 -

     Furthermore, we decline petitioner's invitation to

"determine the hierarchy of doctrines commonly relied upon in our

legal system", including whether the doctrine of collateral

estoppel is superior to the civil doctrine, nobiliores et

benigniores praesumptiones in dubiis sunt praeferendae,15 and

whether "the doctrine of collateral estoppel [is] superior to the

doctrine of lenity as to the interpretation of the findings of a

jury charged with clear and specific instructions by the trial

court judge?"

     In accordance with the foregoing,

                                         An appropriate order will

                                   be issued.




15
  Black's Law Dictionary 1047 (6th ed. 1990) defines this as
follows:
     In cases of doubt, the more generous and more benign
     presumptions are to be preferred. A civil-law maxim.
