- 11 - Respondent has the burden of proving, by clear and convincing evidence, that some part of an underpayment for each year was due to fraud.6 Sec. 7454(a); Rule 142(b). Respondent's burden with respect to fraudulent intent is met if it is shown that the taxpayer intended to evade taxes known to be owing by conduct intended to conceal, mislead, or otherwise prevent the collection of such taxes. Stoltzfus v. United States, 398 F.2d 1002, 1004 (3d Cir. 1968); Webb v. Commissioner, 394 F.2d 366, 377 (5th Cir. 1968), affg. T.C. Memo. 1966-81. Fraud is not presumed. Beaver v. Commissioner, 55 T.C. 85, 92 (1970). However, fraud may be proved by circumstantial evidence because direct proof of the taxpayer's intent is rarely available. Stephenson v. Commissioner, 79 T.C. 995, 1005-1006 (1982), affd. 748 F.2d 331 (6th Cir. 1984). The 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, 53 T.C. 96, 105-106 (1969). Fraudulent intent may be inferred from various kinds of circumstantial evidence or "badges of fraud", including 6 For the taxable years 1983, 1984, and 1985 respondent must prove the specific portion of the underpayment of tax attributable to fraud for purposes of establishing the addition to tax under sec. 6653(b)(2). However, for the taxable years 1986 and 1987, sec. 6653(b)(2) provides that, if respondent establishes that any portion of an underpayment is attributable to fraud, the entire underpayment shall be treated as attributable to fraud unless the taxpayer shows that some portion of the underpayment is not attributable to fraud.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011