Malcolm Curtis, et ux. v. Department of the Treasury, et al.

The question presented is as follows: Whether granting the IRS a judicial presumption of correctness violates due process and equal protection in a case where a taxpayer is accused of not reporting income from a ‘legal source’, when the IRS fails to introduce any evidence that the taxpayer actually received the alleged unreported income? *** The courts of appeals have almost universally held that when a taxpayer is accused of failing to report income from an ‘illegal source’, a presumption of correctness does not arise until after the IRS presents substantive evidence that links the taxpayer to the alleged criminal activity, along with evidence that substantiates the charge the alleged unreported income was received. In cases of alleged unreported income from ‘illegal sources’, the evidence linking the taxpayer to the alleged criminal activity gives rise to a presumption that the taxpayer actually received unreported income from the criminal activity, leaving only the question of how much estimated unreported income was actually received (i.e., computational evidence). In an effort to extend comparable due process protections to taxpayers accused of failing to report income from ‘legal sources’, such as Petitioners in the case at bar, the Fifth Circuit has held that the IRS will only be granted a ‘presumption of correctness’, if