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In his posttrial briefs, respondent continued to rely on
information contained in the plea agreement, the plea hearing
transcript, and Special Agent Bautista’s testimony despite being
informed that the sealed documents would not be considered and
after the testimony was struck from the record.
The only other information used by respondent in an attempt
to establish fraud was the testimony of Agent Golub. Agent Golub
offered general statements that petitioner failed to maintain
adequate books and records, concealed assets and income, and
dealt heavily in cash. However, there is nothing in the record
to provide any detail with respect to Agent Golub’s testimony.
Respondent failed to provide sufficient information that would
allow the Court to consider these purported badges of fraud.
Respondent did not present fact witnesses or introduce clear
and convincing evidence to establish that petitioner’s failure to
file a return in 1996 was due to fraud. Instead, respondent
relied on sealed documents, testimony struck from the record, and
vague testimony of one of his agents. We find that respondent
failed to meet his burden of proving fraud by clear and
convincing evidence. Therefore, we hold that petitioner is not
liable for an addition to tax under section 6651(f) for
fraudulent failure to file.6
6 Respondent has not argued in the alternative that
petitioner is liable for an addition to tax under sec.
(continued...)
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