- 18 -
Commissioner, 94 T.C. 654, 660 (1990); Recklitis v. Commissioner,
supra at 909. Fraud is never presumed but must be established by
independent evidence. See Beaver v. Commissioner, 55 T.C. 85, 92
(1970); Otsuki v. Commissioner, supra at 105. Fraud may be
proven by circumstantial evidence because direct evidence of the
taxpayer's intent is rarely available. See Recklitis v.
Commissioner, supra at 909; Rowlee v. Commissioner, 80 T.C. 1111,
1123 (1983).
Circumstantial evidence of fraud includes: (1) Consistent
and substantial understatement of income, (2) failure to maintain
adequate records, (3) failure to file tax returns, (4)
inconsistent or implausible explanations of behavior, (5)
concealing assets, and (6) failure to cooperate with tax
authorities. See Bradford v. Commissioner, 796 F.2d 303, 307-308
(9th Cir. 1986), affg. T.C. Memo. 1984-601. Other badges of
fraud include the failure to make estimated tax payments,
extensive dealings in cash, see Recklitis v. Commissioner, supra
at 910; the awareness of the obligation to file returns, report
income and pay taxes, see Schiff v. United States, 919 F.2d 830,
833 (2d Cir. 1990); and failure to provide tax return preparers
with complete and accurate information, see Korecky v.
Commissioner, 781 F.2d 1566, 1569 (11th Cir. 1986), affg. T.C.
Memo. 1985-63.
In this case, petitioner has willfully failed to file timely
tax returns for the 1987, 1988, 1989, and 1990 taxable years;
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011