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OPINION
A. Addition to Tax for Fraud Under Section 6653(b)
1. Contentions of the Parties and Background
Petitioner contends that he is not liable for the addition
to tax for fraud for the years in issue because he was misled by
some of his friends who were not filing tax returns and who were
claiming to be exempt from withholding; that he sincerely
believed that he did not have to pay tax; and that respondent did
not advise him that his conduct was illegal in response to his
letters. Respondent contends that petitioner intended to evade
taxes for each year in issue.
A taxpayer who commits fraud is liable for an addition to
tax of 50 percent of the underpayment for 1985, and 75 percent
of the underpayment due to fraud for 1986 and 1987. Sec.
6653(b)(1); sec. 6653(b)(1)(A). Respondent has the burden of
proving fraud by clear and convincing evidence. Sec. 7454(a);
Rule 142(b). First, respondent must prove the existence of an
underpayment. Sec. 6653(b)(1); King's Court Mobile Home Park,
Inc. v. Commissioner, 98 T.C. 511, 515-516 (1992); Parks v.
Commissioner, 94 T.C. 654, 660 (1990). Second, respondent must
show that petitioner intended to evade taxes he believed to be
owing by conduct intended to conceal, mislead, or otherwise
prevent tax collection for each year in issue. Stoltzfus v.
United States, 398 F.2d 1002, 1004 (3d Cir. 1968); Parks v.
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Last modified: May 25, 2011