Roy G. and Dorothy M. Welker - Page 7

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          payments from Brockland Pontiac as income.  Mr. Welker also                  
          admitted that he did not believe that his tax returns for the                
          years in issue, as well as 1983, were true and correct as to                 
          every material matter.  On December 14, 1990, as a result of Mr.             
          Welker's plea of guilty in the criminal tax case, the United                 
          States District Court for the Southern District of Illinois found            
          Mr. Welker guilty of violating section 7206(1) for 1984 and 1986.            
          Addition to Tax for 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).  Fraud is                   
          intentional wrongdoing on the part of the taxpayer with the                  
          specific purpose to evade a tax believed to be owing.  McGee v.              
          Commissioner, 61 T.C. 249, 256 (1973), affd. 519 F.2d 1121 (5th              
          Cir. 1975).                                                                  
               The Commissioner has the burden of proving fraud by clear               
          and convincing evidence.  Sec. 7454(a); Rule 142(b).  To satisfy             
          the burden of proof, the Commissioner must show:  (1) An                     
          underpayment exists; and (2) the taxpayer intended to evade taxes            
          known to be owing by conduct intended to conceal, mislead, or                

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