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notified by C&L's Orlando office that a reporting entity had to
report each transaction with a related party on a Form 5472,
which should be filed with their tax returns. The Federal tax
forms specifically requested information about related parties.
Petitioners failed to disclose all of the required information
and to file the appropriate Forms 5472. Taxpayers cannot hide
behind a claim that they were not aware of the need to provide
the information because they did not read their returns. The
voluntary failure to read a return and blind reliance on another
for the accuracy of a return are not sufficient bases to avoid
liability for negligence additions to tax. Bailey v.
Commissioner, 21 T.C. 678, 687 (1954). Additionally, petitioners
continued to withhold related-party information. During the IRS
audit, Santandreu provided a document to the IRS that stated that
he did not know the shareholders of Dapy, Manver, Lince, and
Promidux.
Petitioners were owned and operated by sophisticated
businessmen. They did not have to have knowledge of U.S. tax
laws or any special training to understand the significance of
creating and backdating documents. A central figure with respect
to the backdated documents, Onate, was not called by petitioners
to testify, notwithstanding the Court's expressed interest in
having him called as a witness. Respondent was unable to
effectuate service on Onate because Onate was out of the country.
Petitioners also did not call A. Gelabert or Segui to testify.
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