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IRS Suffers $36 Million Penalty Judgment On 500 Out Of 1800 Cases Nationwide For Its Fraud, Involving $200 Million As A Sanction Per I.R.S. And U.S. Tax Court



CASTLE ROCK, CO – MAY 23, 2006 - Long time Colorado Attorney, Declan J. O’Donnell, today released the details of his 16-year quest for closure on an IRS abuse that affected over 100 of his clients and up to 1,700 other taxpayers. The United States Tax Court ruled that all of the settled cases in the Kersting Tax Shelter program should receive 64% of their monies back as a sanction. (Another group of taxpayers who never settled will owe 64% less. Mr. O’Donnell also represents many cases in that group). Only 500 taxpayers had settled and Mr. O’Donnell represents over 100 of them. The others have not been located as of today and were pilots for United, Continental, and other airlines during the 1970’s and 1980’s.

Fraud on the Court was officially decreed by the 9th Circuit Court of Appeals on January 17, 2003. The IRS had effectively bribed three witnesses in a lead case that determined the tax aspects for 1,800 tax shelter taxpayers. The three were bribed with cash, pre-paid expenses, tax settlements below par, and ten years of added tax benefits in one case. O’Donnell and certain other Tax Court lawyers suspected chicanery from the beginning, i.e. when the Tax Court’s first decision was recorded almost 20 years ago. They pursued appeals, remands, and more appeals and a final remand to the U.S. Tax Court that was filed on May 2, 2006, as a sanction against the IRS, (requiring the 64% refund or discount). See, (opinion search, May 2, 2006).

The refund is made with interest, attorney’s fees, and other concessions. The May 2, 2006, decision described interest as follows, at p. 129 of the decision:

“Interest would amount to almost six times the amount of the deficiencies:
Deficiencies are: $27,442,000
Interest will be: $155,078,212”

TOTAL TAX AND INTEREST: $192,520,212 (as of December 31, 2005) and over $200,000,000 (at May 2006).

The IRS may appeal this decision. However, liability was decided three years ago and that decision was not appealed. The currently filed Tax Court remand decision, (referred to as Dixon (VI)), calculated the exact percentage penalty.

The IRS has not yet decided to appeal. O’Donnell is predicting it will not appeal because interest rates are rising and the daily compounding plus very large base already adds undue risks to its protracted delays. Furthermore, liability is not appealable any longer.

Fraud on the court is rare and has only occurred a few times in our country’s history. This particular ruling is the only time the IRS has ever been adjudicated with a money judgment against them. All others were either sanctioned or the cases were retried.

Mr. O’Donnell believes this penalty judgment against the IRS is unique, perhaps the only large money judgment against any national taxing authority ever worldwide. His clients and the settled group will receive an estimated $56 million from the IRS in due course (500 / 1800 tax payers = 28% of $200 million is $56 million, x 64% = $36 million).

About Mr. Declan J. O’Donnell
Mr. O’Donnell represents the group of settled and fully paid investors in the Kersting Tax Shelters. He accepts such representation with deferred billings (because potential IRS liability was decided years ago). He also represents many unsettled Kersting Program investors. Other attorneys in this larger group of 1,800 tax payers include: Mr. Henry Binder, Esq. of Houston, Texas; Mr. Joe Alfred Izen, Jr., Esq. of Houston, Texas, Mr. Robert Alan Jones, Esq. of Las Vegas, Nevada; Mr. Michael L. Minns, Esq. of Texas; and Mr. Robert Patrick Sticht, Esq. of Los Angeles, California. This dream team of well-known tax attorneys has committed to press this case to satisfactory conclusion no matter how long it takes.

Mr. O’Donnell has appeared on 60 Minutes on three occasions in regards to his last previous major IRS Court victory. He is featured in Chapter 5 of “The Prosecutors,” a New York Times best seller and has been mentioned in literature, tax magazines, and newspapers worldwide. Mr. O’Donnell may be reached at (303) 688-1193 or at (800) 632-2828.

Mr. R. Alan Jones, admitted in Colorado Courts and U.S. Tax Court, is co-counsel with Mr. O’Donnell on the “Kersting” settled cases. Mr. Jone’s telephone number is: (702) 791-0742 in Las Vegas, Nevada.

Company contact:
Declan Joseph O’Donnell, P.C.
Declan J. O’Donnell
777 Fifth Street
Castle Rock, Colorado 80104
303 688-1193
800 632-2828
303 663-8595 Fax

IRS Attorney Contact:
Henry O’Neill
808 541-3350


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