- 17 - “Negligence” is statutorily defined as “any failure to make a reasonable attempt to comply with the provisions of [the internal revenue laws]”. Sec. 6662(c). “[D]isregard” is defined as “any careless, reckless or intentional disregard” of rules or regulations. Id. Petitioner contends that he was not required to report the income for the 1989 through 1992 tax years because it was constructively received during 1985. We note that, although petitioner contends that the income in question should have been reported for 1985, he has admitted that he fraudulently concealed his espionage income and intentionally did not report it on his 1985 return.8 Petitioner’s conduct was not driven by his attempt at compliance with the internal revenue laws; rather his entire pattern of activity reflects his goal of concealment of income. Petitioner, in that same vein, made the novel argument that his failure to report his unlawful income was due to fraud, not negligence, and that the fraud and negligence penalties are mutually exclusive.9 To the extent that petitioner may not be found liable for both the fraud and the negligence penalties, 8 Petitioner characterized as fraudulent his failure to report the receipts that he contends were constructively received during 1985. 9 Respondent determined the negligence penalty for each of petitioner’s taxable years in the notice of deficiency. Respondent’s motion to amend the answer shortly before trial to allege civil fraud was denied.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011