- 8 -
portion of the underpayment which is attributable to fraud.”
Section 6663(b) further provides:
If the Secretary establishes that any portion of an
underpayment is attributable to fraud, the entire
underpayment shall be treated as attributable to fraud,
except with respect to any portion of the underpayment
which the taxpayer establishes (by a preponderance of
the evidence) is not attributable to fraud.
To establish the existence of fraud, respondent bears the burden
of proving by clear and convincing evidence that (1) an
underpayment of income tax exists and (2) some portion of that
underpayment is due to fraud. See sec. 7454(a); Rule 142(b);
Clayton v. Commissioner, 102 T.C. 632, 646 (1994); Recklitis v.
Commissioner, 91 T.C. 874, 909 (1988).
Fraud is generally defined as intentional wrongdoing on the
part of the taxpayer, with the specific purpose of evading tax
believed to be owed. See Powell v. Granquist, 252 F.2d 56, 60
(9th Cir. 1958). Respondent must therefore prove 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.” Clayton v. Commissioner, supra at 647; Recklitis
v. Commissioner, supra at 909. Nonetheless, respondent “need not
establish that tax evasion was a primary motive of the taxpayer,
but may satisfy the burden by showing that a tax-evasion motive
played any part in the taxpayer’s conduct”. Clayton v.
Commissioner, supra at 647.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011