- 267 - This tentative and qualified reaction by the trial Judge was made before a review of all the testimony and massive documentary evidence and before any briefs were filed.29 We are not bound by the comments made by the trial Judge about the fraud issue. They were of a preliminary or tentative nature, and were not embodied in a ruling. In our view the totality of the clear and convincing evidence contained in this record establishes that petitioner's underpayment of tax for each of the years 1972 through 1976 was due to fraud with intent to evade tax. In the trial Judge's qualified reaction there was no analysis of the indicia of fraud present in this record. By contrast, our conclusion regarding the section 6653(b) additions to tax is based on consideration of the indicia of fraud discussed below. 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 the taxpayer's fraud. Helvering v. Mitchell, 303 U.S. 391, 401 (1938). The Commissioner bears the burden of proof with respect to the additions to tax for fraud, and that burden must be carried by 29 Compare North American Rayon Corp. v. Commissioner, 12 F.3d 583, 586 & n. 4 (6th Cir. 1993), affg. T.C. Memo. 1992-610, where the trial Judge wrote a letter to counsel indicating that the Court was inclined to rule in favor of the taxpayer, but in a subsequent opinion decided against the taxpayer. The Court of Appeals affirmed the decision. See also Milbrew, Inc. v. Commissioner, 710 F.2d 1302, 1308 (7th Cir. 1983), affg. T.C. Memo. 1981-610.Page: Previous 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 Next
Last modified: May 25, 2011