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At trial, petitioners failed to appear, respondent made an
oral motion to dismiss for lack of prosecution the issues upon
which petitioners bore the burden of proof, and the Court granted
respondent's motion. See Rule 149. Respondent concedes that
petitioners are entitled to a $2,000 deduction relating to an
Individual Retirement Account contribution. The remaining issue
for decision is whether petitioners are liable for a fraud
penalty.
Background
Petitioners, husband and wife, resided in Raritan, New
Jersey, at the time their petition was filed. During the year in
issue, Mr. Jackson received taxable income of $1,200 from Seton
Hall University and $2,599 from Berkeley College of New Jersey,
but did not give either school his correct Social Security
number. Petitioners failed to report this income on their 1996
Federal income tax return.
In their petition, petitioners claimed that respondent had
accepted their 1996 return "as filed" and that a refund was due
to them. Petitioners included with their petition a purported
Internal Revenue Service (IRS) letter supporting this claim. The
letter was not written, or sent, by an IRS employee.
Discussion
Respondent determined that petitioners are liable, pursuant
to section 6663, for a fraud penalty. Respondent must establish
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Last modified: May 25, 2011