Musa v. Commissioner of Internal Revenue, No. 16-1841 (7th Cir. 2017)
Annotate this CaseMusa owns and operates a restaurant in Milwaukee. The IRS determined that Musa made misrepresentations on his tax returns, including underreporting his federal income taxes by more than $500,000 for the years 2006-2010. The Tax Court upheld that determination, plus a civil fraud penalty of more than $380,000. The Seventh Circuit affirmed, rejecting, as “heavy on chutzpah but light on reasoning or any sense of basic fairness,” Musa’s argument that after his fraud was discovered, the Commissioner should have allowed him additional deductions on his individual tax returns based on amended employment tax returns in which Musa had corrected earlier false underreporting of wages. The court noted that he made those corrections after the statute of limitations had run on the Commissioner’s ability to collect the correct amounts of employment taxes that Musa’s amended returns admitted were due. The court also rejected Musa’s argument that the Tax Court erred by permitting the Commissioner to amend his answer to add the affirmative defense of the duty of consistency under tax law, and then erred by granting partial summary judgment to the Commissioner on that defense.
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