IRS says Texas businessman and late brother owe more than $3 billion in back taxes, penalties

The IRS wants $3.2 billion to cover back taxes that it says are owed by a prominent Texas businessman and his late brother who the IRS says hid income by setting up overseas trust funds.

The Internal Revenue Service detailed its claim in documents filed Wednesday in federal bankruptcy court in Dallas. It seeks to recover more than $2 billion in unpaid income taxes, interest and penalties from Sam Wyly and more than $1.2 billion from the estate of his brother, Charles Wyly.

Continue Reading Below

A lawyer for the Wylys, Stewart Thomas, called the IRS claims "unfair and absurd."

The brothers founded or bought controlling interest in software companies, a restaurant chain and Michaels crafts stores. Sam Wyly filed for bankruptcy last year. Charles Wyly died in a car crash in 2011.