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due of $40,000 on their 1989 Form 4868, Application for Automatic
Extension of Time to File U.S. Individual Income Tax Returns.
The Court questions why petitioners would have reported a $40,000
tax liability if it was indeed their intent to evade taxes.
Fourth, respondent argues that petitioners' failure to file
timely returns, combined with their knowledge of a duty to file,
is evidence of fraud. In essence, respondent argues that
petitioners originally failed to file their 1988 and 1989 tax
returns with fraudulent intent, and that the subsequent
delinquent filing was made only after petitioners became aware of
respondent's investigation. Respondent cites Blackwell v.
Commissioner, T.C. Memo. 1965-252, and Niedringhaus v.
Commissioner, supra at 213, for the proposition that the later
filing of delinquent returns does not absolve a taxpayer of his
antecedent fraud. In Niedringhaus, fraudulent intent was found
where the taxpayers filed their delinquent returns only after
notification of pending civil and criminal investigations.
Although it is true that petitioners failed to file timely
tax returns, this action is consistent with petitioners' prior
actions. Petitioners have historically filed delinquent returns,
opting to satisfy their tax liability with payments that include
interest, additions to tax, and/or penalties. It is also
important that the record shows no affirmative acts of
concealment, such as filing false information. See Zell v.
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