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petitioner to underreport employment taxes. In each case, the
request to be paid in cash was initiated by the worker.
Petitioner agreed to the workers’ requests because he needed
additional labor to satisfy his exceptionally high volume of
contracts. Furthermore, petitioner conditioned the arrangement
on the understanding that the company would issue a Form 1099
reflecting the cash payments. Petitioner instructed Ms. Gerber
to see that Forms 1099 were in fact issued to the workers. It
was thus petitioner’s intent that the Commissioner be aware of
the cash payments as opposed to the contrary.
Respondent has not established, let alone on a clear and
convincing basis, that petitioner intended to conceal, mislead,
or otherwise prevent the collection of taxes. As a result,
section 6501(c)(1) does not operate to extend the period of
limitations on assessment beyond the 3-year period set out in
section 6501(a). Accordingly, as the period of limitations
expired prior to the issuance of respondent’s notice of
determination, the assessment of any additional employment tax
liability for the taxable periods in issue is barred.
To reflect the foregoing,
Decision will be entered for
petitioner.
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Last modified: May 25, 2011