Pildes wins appeal in 23-year-old tax fraud case

Richard Pildes, Sudler Family Professor of Constitutional Law, won the last round of a 23-year legal battle on December 1, when a unanimous opinion by the U.S. Court of Appeals for the Seventh Circuit cleared deceased Chicago tax attorney Burton Kanter and threw out a $15 million bill for back taxes, penalties, and interest demanded by the IRS. Pildes represented Kanter's family; Kanter was one of three defendants charged with tax fraud in 1986.

"The frustration is that it's taken this many years to get to the point where all three taxpayers were completely vindicated," said Pildes in a Law.com article on the case.

As meaningful as this victory was for Pildes's clients, the most significant and lasting effect of this case occurred four years ago when the Supreme Court ruled on the case Estate of Kanter v. Commissioner. Pildes had successfully argued on behalf of Kanter’s survivors that the reports of the U.S. Tax Court’s hearing judges, or special trial judges, could not be kept secret, as had been the practice for 20 years. Pildes’s 2005 Supreme Court victory ended that practice.

In the aftermath of that Supreme Court decision, the special trial judge’s report was revealed to have concluded that there was insufficient evidence for the tax fraud allegations against Kanter. Despite that finding, however, the Tax Court ultimately upheld the allegations, triggering the appeal. The new Seventh Circuit opinion finally vindicates Kanter of the charges against him, eight years after his death and nine years after Pildes became involved in the case. Other appellate courts had already overturned the Tax Court ruling with regard to the two other defendants.

Posted December 4, 2009

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