WHITE PLAINS, NY (February 1, 2023) — Convicted felon, fraudster, former federal prisoner and tax cheat Philip Colasuonno remains on the hook for more than $2.5 mm in penalties, including interest, after Magistrate Judge Judith C. McCarthy swept aside a series of absurd and unsubstantiated excuses for why he failed to pay what once was restitution of $781,467 he was ordered to pay on June 18, 2007.
In 1789, Benjamin Franklin wrote, “…in this world nothing can be said to be certain, except death and taxes.”
Franklin never met Phil Colasuonno
While his motion was denied, the aging felon has continued to duck responsibility for millions of dollars owed to the IRS as the years pass gets closer to cheating one by approaching the other.
AUSA Anthony Jan-Huan Sun representing the United States of America states that as of November 30, 2021, Colasuonno owed more than $2,490,889.32 — plus penalties and interest over the past 14 months, and growing every day.
According to court records, on June 18, 2007, Colasuonno pleaded guilty to a two-count Information charging him with conspiracy to commit tax fraud and aiding and assisting in the preparation of a false tax return. During his plea allocution, Colasuonno admitted to the criminal conduct described above. Judge Hellerstein sentenced Defendant to time-served, to be followed by five years of supervised release on count one to be served concurrently with five years of probation on count two, along with restitution in the amount of $781,467.00.
Colasuonno thereafter violated the conditions of his probation by failing to make a good faith effort to make restitution payments, and was sentenced to a four-month prison term for probation violations. He then pleaded guilty, was sentenced to time served, given supervised released and again ordered to make restitution of $781,467.
Colasuonno never paid the restitution.
Colasuonno filed a petition for bankruptcy pursuant to Chapter 7 of the Bankruptcy Code on July 24, 2009 (Maria and Philip Colasuonno). On April 21, 2011, while the bankruptcy case was pending, the IRS assessed penalties for the nineteen quarterly tax periods Colasuonno did not remit payment, in the total amount of $1,747,190.30. On May 26, 2011, the IRS issued a Notice of Federal Tax Lien, which was filed with the Westchester County Clerk on June 8, 2011. On July 20, 2011, the Bankruptcy Court entered a discharge in Defendant’s bankruptcy action.
The USA began the current action on December 20, 2021.
Anthony Jan-Huan Sun is representing the United States of America. Erin Kathleen Flynn is representing Philip Colasuonno.
In his 2022 motion, Colasuonno maintained that he is entitled to judgment on the pleadings (the case dismissed) because the Complaint was not timely filed.
Colasuonno claims that the collection of restitution to the IRS was suspended for the period of his bankruptcy proceedings because the IRS is prohibited by reason of a bankruptcy proceeding brought under Chapter 11 of the United States Code from collecting and for 6 months thereafter.
In other words, when the assessment is filed after the bankruptcy proceeding begins, Plaintiff has ten years and six months from the date Defendant was discharged from bankruptcy to begin collection proceedings.
Essentially, Colasuonno contends the 10-year clock began when the IRS issued a Notice of Federal Tax Lien on May 26, 2011, and the U.S. Attorney was required to file any complaint by May 26, 2021, plus six months, or by November 26, 2021. By waiting to file their Complaint on December 20, 2021, the U.S. Attorney missed the deadline.
Judge McCarthy did not find this argument persuasive, but notes that if Colasuonno believed that he should have brought his claim to the bankruptcy court at the time.
“Colasuonno failed to do so, and is likely now time-barred from doing so,” she wrote.
“In any event,” McCarthy wrote, “since there is no support for the proposition that filing a NFTL during the pendency of the automatic stay nullifies the tolling provision and so the Court finds that the instant collection action was timely filed.”
As to Colasuonno’s claim that the “IRS clearly did not believe they were stayed,” because it filed the NFTL and “therefore, they cannot now, when they’ve exceeded the statute of limitations, claim that they believed they were stayed to gain extra time,” Judge McCarthy found that this argument fails because Colasuonno offered nothing supporting it, nor can could the Court find any support for it.
“The tolling provisions have no requisite mens rea”, she wrote, “and, therefore, the IRS’s ‘belief’ is irrelevant to the tolling of the statute of limitations.”
McCarthy found for the Plaintiff. She denied Colasuonno’s motion to dismiss and for judgment on the pleadings. His motion is terminated.
Opinion and Order of Judith C. McCarthy, dated January 27, 2023
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EDITOR’S NOTE: Robert Cox is the last remaining court reporter working in Westchester County. He attends court regularly to monitor progress on dozens of cases; that reporting is included in his weekly Court Reporters Notebook and is often the basis for stories on Talk of the Sound (like this one). To subscribe to his newsletter visit Words in Edgewise on Substack.