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payments he received directly from patients; attempted to conceal
the existence of two bank accounts; omitted substantial amounts
of income over a 3-year period; and was uncooperative with IRS
agents because his representative canceled many meetings.
Respondent further argues that Dr. Rao cannot shift
responsibility to his accountant since he did not provide him
with all the information necessary to prepare accurate returns.
Petitioners argue that Dr. Rao has not committed fraud
because the omissions from income were caused by his return
preparer on whom Dr. Rao reasonably relied; no bank accounts into
which income was deposited were concealed from the IRS agents;
Dr. Rao has no accounting or financial expertise; Mr. Raclaw's
cancellation of appointments cannot be considered lack of
cooperation by Dr. Rao; and Dr. Rao provided his accountant with
all the information necessary to compute gross income.
B. The Law of Fraud
The addition to tax in the case of fraud is a civil sanction
provided primarily as a safeguard for the protection of the
revenue and to reimburse the Government for the heavy expense of
investigation and the loss resulting from a taxpayer's fraud.
Helvering v. Mitchell, 303 U.S. 391, 401 (1938). Respondent has
the burden of proving, by clear and convincing evidence, an
underpayment for each year and that some part of the underpayment
was due to fraud. Sec. 7454(a); Rule 142(b); Katz v.
Commissioner, 90 T.C. 1130, 1143 (1988); Otsuki v. Commissioner,
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