- 7 - OPINION To establish fraud, respondent has the burden of proving by clear and convincing evidence that the taxpayer made an underpayment of Federal income taxes and that the taxpayer's underpayment was due to fraudulent intent. Sec. 7454(a); Rule 142(b); Douge v. Commissioner, 899 F.2d 164, 168 (2d Cir. 1990), affg. in part, revg. in part, and remanding an Order of this Court; Schaffer v. Commissioner, 779 F.2d 849, 857 (2d Cir. 1985), affg. in part and remanding Mandina v. Commissioner, T.C. Memo. 1982-34; Clayton v. Commissioner, 102 T.C. 632, 646 (1994); Recklitis v. Commissioner, 91 T.C. 874, 909 (1988). Because there is rarely direct proof of fraudulent intent, respondent may sustain his burden utilizing circumstantial evidence. Douge v. Commissioner, supra; Schaffer v. Commissioner, supra; Clayton v. Commissioner, supra at 647; Rowlee v. Commissioner, 80 T.C. 1111, 1123 (1983). Courts have developed certain indicia of fraud, including the following: (1) Understatements of income; (2) inadequate books and records; (3) failure to file income tax returns; (4) implausible or inconsistent explanations of behavior; (5) concealed assets; (6) failure to cooperate with tax authorities; (7) dealing in cash; (8) filing false documents; and (9) false statements. United States v. Klausner, 80 F.3d 55, 62 (2d Cir. 1996); Douge v. Commissioner, supra (citing Bradford v. Commissioner, 796 F.2d 303,Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011