- 19 -
Cir. 1950); Petzoldt v. Commissioner, 92 T.C. 661, 700 (1989).
However, fraud may be proved by circumstantial evidence and
reasonably inferred from the facts, because direct proof of the
taxpayer's intent is rarely available. Spies v. United States,
317 U.S. 492 (1943); Rowlee v. Commissioner, supra; Stephenson v.
Commissioner, 79 T.C. 995 (1982), affd. 748 F.2d 331 (6th Cir.
1984). A taxpayer's entire course of conduct may establish the
requisite fraudulent intent. Stone v. Commissioner, 56 T.C. 213,
223-224 (1971); Otsuki v. Commissioner, supra at 105-106. The
intent to conceal or mislead may be inferred from a pattern of
conduct. See Spies v. United States, supra at 499.
Courts have relied on several indicia of fraud when
considering the section 6653(b) addition to tax. Although no
single factor may conclusively establish fraud, the existence of
several indicia may be persuasive circumstantial evidence of
such. Solomon v. Commissioner, 732 F.2d 1459, 1461 (6th Cir.
1984), affg. per curiam T.C. Memo. 1982-603; Beaver v.
Commissioner, supra at 93.
Circumstantial evidence that may give rise to a finding of
fraudulent intent includes: (1) Understating income; (2) keeping
inadequate or no records; (3) failing to file tax returns;
(4) maintaining implausible or inconsistent explanations of
behavior; (5) concealing assets; (6) failing to cooperate with
tax authorities; (7) filing false Forms W-4; (8) failing to make
estimated tax payments; (9) dealing in cash; (10) engaging in
illegal activity; and (11) attempting to conceal an illegal
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011