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that the amounts claimed were not substantiated by any
documentary evidence. They knew the amounts claimed were false.
They knew that Mr. Beltran arrived at the amounts claimed based
on a formula, which Mr. Beltran claimed was "allowed" by the
Internal Revenue Service. Since Mr. Beltran based his tax
preparation fees on the amounts claimed as refunds, the Court
questioned petitioner at trial as to whether he had any concerns
about such a practice. Petitioner admitted he had concerns but
never pursued the matter further.
Petitioners made no effort to ascertain the professional
background and qualifications of their return preparer. They
knew that the items at issue were false. Petitioner knew that
the practice of basing tax preparation fees on the percentage of
the refund could and did in fact invite the preparer to claim
inflated deductions on the returns. Such knowledge and
reservations by petitioners should have prompted them to look
beyond Mr. Beltran to have their returns accurately prepared and
whether or not Mr. Beltran's use of a "formula" was a correct
application of the tax law, particularly with regard to certain
expenses that are only deductible if strict substantiation
requirements are followed. Petitioners did not do that and,
therefore, made no effort to accurately assess their tax
liability for the 2 years in question. On this record, the Court
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Last modified: May 25, 2011