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Petitioners’ own testimony confirms their having received
this hourly compensation and tip income. Petitioners have not
explained their total failure to report these amounts.
Petitioners’ explanations of why fraud penalties should not be
imposed lack coherence; if anything, these explanations’
implausibility confirms our conclusions as to fraud.
Petitioners acknowledge that they earned the compensation
computed on an hourly rate for the hours they worked, but insist
that these amounts were not “wages”. Petitioners contend that
these amounts were “tips”. When confronted at trial with the
unlikelihood that the amount of patrons’ tips precisely matched
their hourly rate times hours worked, they lapsed into
unresponsiveness. On opening brief and again on answering brief,
petitioners contend that they “should not be subject to any civil
fraud penalties on the tip income received from the casino as
they have reasonable cause for their actions”; yet, they do not
tell us what is this “reasonable cause”.
On opening brief and again on answering brief, petitioners
contend as follows:
With respect to the audit examination involving the
Balots, the IRS has failed to establish--through clear and
convincing evidence--that there is an intentional wrongdoing
on the part of the taxpayer. [Sic.] First, the Balots were
never at any time involved with the managerial operations of
the casino as they worked part-time. Therefore, they were
never in any position to commit any fraudulent acts
pertaining to their work in the casino.
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