- 12 - Respondent has the burden of proving fraud by clear and convincing evidence. Sec. 7454(a); Rule 142(b). To prove that a taxpayer fraudulently underpaid a dollar of tax, respondent must prove both the fact of the underpayment and fraudulent intent with respect thereto. See, e.g., Recklitis v. Commissioner, 91 T.C. 874, 909 (1988). “Fraud is established by proving that the taxpayer intended to evade tax believed to be owing by conduct intended to conceal, mislead, or otherwise prevent the collection of such tax.” Id. We have found that, based on the plea agreement and the statement of facts, petitioner received proceeds from illegal drug activities, which proceeds were not reported as income for the years in question, and sustained respondent's determination of deficiencies against petitioner (with one adjustment). We believe that the evidence in this case clearly and convincingly supports findings of underpayments in equal amounts. See sec. 6653(c)(1). Thus, the sole issue remaining for consideration in determining the applicability of the additions to tax for fraud is whether petitioner acted willfully to evade taxes known to be owing. We believe that he did, for each year, with respect to the totality of that year’s underpayment. Petitioner filed income tax returns for the years in question, establishing that he understood his obligation to file returns and pay tax. Petitioner’s failure to report substantialPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011