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OPINION
A. Section 7491--Burden of Proof
We first consider the questions raised concerning the burden
of proof under section 7491.4 Petitioners contend that the
burden of proof should be placed on respondent under section
7491. Section 7491(a) generally provides that the burden of
proof shall be on the Commissioner with respect to any factual
issue relevant to the taxpayer’s liability for tax where the
taxpayer introduces credible evidence with respect to any such
issue. The burden is not placed on the Commissioner unless a
taxpayer has complied with requirements to substantiate the item
in issue and has maintained required records and cooperated with
reasonable requests by the Commissioner for documents or
information. Sec. 7491(a)(2)(A) and (B)
Respondent contends that petitioners have not complied with
the substantiation requirements. Petitioners contend that their
maintenance of computer or machine sensible records was
sufficient to meet the section 7491 record requirement.
We find it unnecessary to decide whether the burden of proof
is on respondent because we have decided these issues on a
preponderance of the evidence.
4 Sec. 7491 is effective for Court proceedings arising in
connection with examinations commencing after July 22, 1998. See
Internal Revenue Service Restructuring and Reform Act of 1998,
Pub. L. 105-206, sec. 3001(a), 112 Stat. 726.
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Last modified: May 25, 2011