Court will uphold tax penalty

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News,Nation

WASHINGTON (AP) — The Supreme Court says two Texans' partnership doesn't keep the IRS from penalizing them for what the agency called a sham tax shelter.

The Supreme Court unanimously upheld the agency's 40 percent penalty against Gary Woods and Billy Joe "Red" McCombs, who held ownership positions with the San Antonio Spurs and the Minnesota Vikings.

The two men were involved in a tax shelter that was disallowed by the IRS. The agency then billed Woods and McCombs for the past taxes and added a 40 percent penalty, which they challenged in court.

The 5th U.S. Circuit Court of Appeals threw out the penalty. But Justice Antonin Scalia said for the unanimous court that the lower court's decision was reversed, the penalty was legal and could be applied in this case.

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