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IRS seeks millions from tax swindler

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A telecommunications executive once called the biggest tax cheat in U.S. history is getting hit with new Internal Revenue Service demands seeking hundreds of millions of dollars just as he starts a nine-year federal prison term.

The IRS sent Walter C. Anderson a notice of deficiency for more than $180 million and additional fraud penalties totaling more than $130 million, according to a recent court filing by the U.S. Attorney's Office in the District.

Assistant U.S. Attorney Susan B. Menzer disclosed the tax demands in a recent memo to a federal judge seeking permission to share grand jury testimony with the IRS. Anderson is suing the IRS from federal prison in New Jersey.

In his lawsuit, Anderson, who made his fortune in telecommunications and once backed plans to privatize the Mir Space Station, disputes the IRS calculations, denies committing tax fraud and says his guilty plea wasn't voluntary, court documents show.

Anderson pleaded guilty in September 2006 to tax-evasion charges for failing to report more than $350 million in income on his 1998 and 1999 tax returns.

Authorities said the unpaid taxes from Anderson could have funded hundreds of new police officers and teachers in the District.

At Anderson's sentencing last year, U.S. District Judge Paul L. Friedman gave Anderson nine years in prison, but did not order him to make restitution to the IRS. The judge cited an error by prosecutors who failed to include probation as part of Anderson's plea agreement.

The ruling meant authorities would have to try to pursue restitution through civil courts.

Anderson has said he doesn't have money stashed away as prosecutors speculated early in his case; he was represented by the public defender's office during his criminal proceedings.

In court documents filed this week, prosecutors said an IRS agent who helped investigate the case against Anderson is needed to help prepare for an upcoming tax court case between the IRS and Anderson.

But to secure the agent's help, prosecutors said they first need a court order to disclose grand jury materials concerning Anderson's tax liabilities from 1995 to 1999.

The IRS needs the grand jury evidence to prove Anderson committed tax fraud from 1995 to 1997, because those years weren't included as part of the plea deal, prosecutors said.

Walter Anderson may not pay the full tax due because the Internal Revenue Service cannot fully and adequately defend against the assertions he has made in [tax court] without the grand jury materials, Miss Menzer wrote.

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