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B. Section 6653(b)(1) and (2) Additions to Tax for Fraud
The second issue is whether petitioner is liable for the
additions to tax for fraud under section 6653(b)(1) and (2).
The additions to tax for fraud are civil sanctions "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).
Fraud is defined as intentional wrongdoing on the part of
the taxpayer with the specific purpose of evading a tax believed
to be owing. Mitchell v. Commissioner, 118 F.2d 308, 310 (5th
Cir. 1941), revg. 40 B.T.A. 424 (1939); Petzoldt v. Commissioner,
92 T.C. 661, 698 (1989). Section 7454 provides in pertinent part
that "In any proceeding involving the issue whether the
petitioner has been guilty of fraud with intent to evade tax, the
burden of proof in respect of such issue shall be upon the
Secretary." Rule 142(b) requires that this burden be carried by
clear and convincing evidence. Castillo v. Commissioner, 84 T.C.
405, 408 (1985).
For the fraud additions to be imposed, there must be an
underpayment of tax required to be shown on the return that is
due to fraud. Fraud is shown by proof that the taxpayer intended
to conceal, mislead, or otherwise prevent the collection of his
or her taxes, and that there is an underpayment of tax. Spies v.
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