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7491 is applicable to court proceedings arising in connection
with examinations commenced after July 22, 1998). Under section
7491(a), Congress provided that if a taxpayer presents credible
evidence and meets certain other prerequisites, the Commissioner
shall bear the burden of proof with regard to factual issues
relating to the liability of the taxpayer for a tax imposed under
subtitle A or B. Because petitioners failed to appear and
present credible evidence, the burden of proof is not placed on
respondent under section 7491(a).
As to the accuracy-related penalties imposed by respondent,
Congress provided in section 7491(c) that the Commissioner bears
the burden of production in any court proceeding with regard to
the liability of the taxpayer for such penalties. In Higbee v.
Commissioner, 116 T.C. ___, ___ (2001) (slip op. at 15), we
stated that this provision requires that the Commissioner come
forward with sufficient evidence indicating that it is
appropriate to impose the relevant penalties. However, the
Commissioner does not have the obligation to introduce evidence
regarding elements such as reasonable cause or substantial
authority. See id.
Petitioners failed to appear at trial and submitted only tax
protester type material to the Court. During the litigation,
respondent attempted to obtain informal and formal discovery from
petitioners without success. As noted in our background
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