Reference no: EM133434803

Last November, Roberto Rodriguez was driving from the United States to Canada. Upon reaching the Canadian border, a Canadian customs officer inspected Roberto's car and discovered two bags in the trunk. The customs officer found that one of the bags contained large sums of cash. When asked how much money was in the bag, Roberto said "several thousand dollars." The customs officer sent Roberto back to the United States side of the border to talk to U.S. customs officials.

When a U.S. customs agent asked if Roberto had anything in the car, he said there was money in the trunk. When asked how much, Roberto initially responded $30,000 or $35,000. The agent asked several more times, and each time the amount went up until Robert finally said there was over $300,000 in the car. The agent had Roberto fill out a customs report of international transport of currency in excess of $10,000, and then seized the money because Roberto had not filled out the customs report form prior to crossing the Canadian border. The bags contained $359,500 in $10 and $20 bills.

The IRS then served Roberto with a termination assessment for $169,973 as income tax due on the money. A termination serves to terminate the person's tax year as of a certain date so that any tax liability becomes due immediately, and the IRS files a tax lien to secure payment of the tax debt. The termination assessment does not relieve the taxpayer of the obligation to file a tax return for the year. Upon his lawyer's advice, Roberto did not file a tax return for that tax year because of pending litigation concerning Roberto's failure to file the required customs report form.

Roberto was convicted of income tax evasion under section 7201 based on the foregoing facts. He now appeals. How should the court rule? Why