The Appeals Court for the Federal Circuit affirmed the IRS’s 2008 termination of Revenue Agent, Anthony Agbaniyaka. While employed at the IRS, Mr. Agbaniyaka received excellent performance evaluations, and several promotions. He also obtained a Master’s Degree in Taxation from Long Island University.
Aside from working for the IRS as a Revenue Agent beginning in 1986, Mr. Agbaniyaka also engaged in the selling African arts, crafts and decorative items at trade shows, festivals and street fairs. Sales from Mr. Agbaniyaka’s venture never resulted in a profit, and each tax year he reported an operating loss for a business activity on Schedule C of his Federal tax returns, resulting in a reduction to his Federal tax liability. A subsequent audit of Mr. Agbaniyaka’s revealed that he had not maintained adequate records for the 2001 through 2004 tax years. The audit concluded with a tax deficiency and Mr. Agbaniyaka subsequently appealed to the U.S. Tax Court where they upheld the IRS’s determination.
The IRS Restructuring and Reform Act of 1998 mandates termination of any IRS employee found to have willfully understated his federal tax liability, unless such an understatement is due to reasonable cause and not willful neglect. The agency determined that Mr. Agbaniyaka had willfully understated his tax obligation for 2001 through 2004. Additionally, they found that he had violated the agency’s code of ethics. He sought arbitration under the collective bargaining agreement with the National Treasury Employees Union. The arbitrator ruled:
Given the Grievant’s experience and expertise, he was undoubtedly aware that he had to substantiate his efforts to conduct a business in 2001 and beyond. Being an experienced and knowledgeable Agency employee, he had to have been aware that he could not substantiate his alleged business activities. By claiming deductions on Schedule C, he knowingly and willfully submitted tax filing to which he was not entitled.
Mr. Agbaniyaka alleged that the arbitrator committed several procedural errors amounting to harmful error. The Court, however, held that Mr. Agbaniyaka had not proven that the agency’s action had resulted in harmful error and agreed that the government had met its burden of showing that Mr. Agbaniyaka had willfully understated his income.
To read the Court’s decision, click here.
