Whether granting the IRS a judicial presumption of correctness violates due process and equal protection when the IRS fails to introduce evidence of unreported income from a legal source

The question presented is as follows: Whether granting the IRS a judicial presumption of correctness violates due process and equal protection in a case where a taxpayer is accused of not reporting income from a ‘legal source’, when the IRS fails to introduce any evidence that the taxpayer actually received the alleged unreported income? * * * The courts of appeals have almost universally held that when a taxpayer is accused of failing to report income from an ‘illegal source’, a presumption of correctness does not arise until after the IRS presents substantive evidence that links the taxpayer to the alleged criminal activity, along with evidence that substantiates the charge the alleged unreported income was received. In cases of alleged unreported income from ‘illegal sources’, the evidence linking the taxpayer to the alleged criminal activity gives rise to a presumption that the taxpayer actually received unreported income from the criminal activity, leaving only the question of how much estimated unreported income was actually received (i.e., computational evidence). In an effort to extend comparable due process protections to taxpayers accused of failing to report income from ‘legal sources’, such as Petitioners in the case at bar, the Fifth Circuit has held that the IRS will only be granted a ‘presumption of correctness’, if ii the IRS presents evidence that the taxpayer actually received unreported income and thereon substantiates the charge with evidence as to the amount of unreported income actually received. Judicial ‘presumptions of correctness’ in favor of the IRS where a taxpayer is accused of failing to report income from a ‘legal source’ puts the taxpayer in the awkward position of having to ‘prove a negative’ which the U.S. Supreme Court has flagged as problematic on several occasions. The approach adopted by the Fifth Circuit attempts to address this problem; most courts of appeals, however, have failed to embrace this approach and continue to put taxpayers, who find themselves accused by the IRS of allegedly having failed to report income from a ‘legal source’, in the difficult position of having to ‘prove a negative’—that the alleged unreported income was not received. The resolution of this conflict between the circuits is a matter of national importance to the American public that the federal courts have ignored for far too long.