-40- This badge of fraud applies to both petitioners for each year in issue. d. Filing False Payroll Tax Returns Filing false payroll tax returns is an indication of fraud. See Estate of Santuccio v. Commissioner, a Memorandum Opinion of this Court dated April 11, 1952. Petitioner-husband directed that pre-signed payroll papers be prepared and provided to petitioners' income tax return preparer showing that masseuses were paid about $200 a week. Petitioner-husband withheld taxes from the masseuses at a fixed amount regardless of how much money the masseuses earned and issued Forms W-2 which he knew showed substantially less income than the masseuses earned. This badge of fraud applies to petitioner-husband for each year in issue. e. Implausible or Inconsistent Explanations Implausible or inconsistent explanations of behavior by a taxpayer can show fraudulent intent. Bradford v. Commissioner, supra at 307. Many of petitioners' explanations of their behavior are implausible or inconsistent. Petitioner-husband testified that the Joplin Tokyo Sauna closed due to zoning changes; however, it closed because prostitution was occurring on its premises. Petitioner-husband stated that he did not keep money in banks, yet petitioners maintained bank accounts which paid $30,800 in interest from 1983 to 1987 and IRA accounts during the years in issue. Petitioner-wife denied that shePage: Previous 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Next
Last modified: May 25, 2011