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forth the following indicia or "badges" of fraud: (1)
Understatement of income; (2) maintenance of inadequate records;
(3) failure to file tax returns; (4) implausible or inconsistent
explanations of behavior; (5) concealment of assets; and (6)
failure to cooperate with tax authorities. The Court of Appeals
also stated that the existence of the following facts
additionally supported a finding of fraudulent intent: (1)
Dealing in cash to avoid scrutiny of finances; and (2) failing to
make estimated tax payments. See Bradford v. Commissioner at
308.
1. Evidence of Fraud--Failure to File Tax Returns
The parties have stipulated that petitioner did not file
income tax returns for any of the years in issue (1989-94). The
parties have also stipulated that petitioner did not file returns
for any of the years 1978-88.
Although the failure to file a return is evidence of fraud,
we have often said that without more it is insufficient to prove
fraud. This is because a finding of fraud requires proof of some
convincing affirmative act or indication of the taxpayer's
fraudulent intent. See Bagby v. Commissioner, 102 T.C. 596, 607-
608 (1994); Kotmair v. Commissioner, 86 T.C. 1253, 1261 (1986).
Other courts have stated the law similarly. See, e.g., Zell v.
Commissioner, 763 F.2d 1139, 1143 (10th Cir. 1985), affg. T.C.
Memo. 1984-152. However, the failure to file numerous returns
over an extended period of time is, under certain circumstances,
persuasive evidence of fraud. See Stoltzfus v. United States,
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