- 12 - examination of petitioners’ returns commenced after July 22, 1998; (2) Mr. Sowards introduced credible evidence as to all contested issues; (3) he complied with all substantiation requirements; and (4) he cooperated with respondent’s reasonable requests. Respondent argues that with regard to petitioners’ 1995 return, section 7491 is inapplicable since the examination commenced prior to the effective date. Respondent relies upon Agent Daleiden’s testimony that the first contact letter was sent to petitioners in April of 1998. With respect to 1996 and 1997, respondent argues that petitioners have failed to comply with the requirements of section 7491(a)(2)(A) and (B). For the reasons detailed below, we find the burden of proof does not shift to respondent. Generally, a determination made by the Commissioner in a notice of deficiency issued to the taxpayer is presumed correct, and the taxpayer bears the burden of proving that determination incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). However, section 7491(a)(1) provides that if the taxpayer introduces credible evidence with respect to any factual issue relevant to ascertaining the tax liability of the taxpayer, the burden of proof shifts to the Commissioner with respect to that issue. Section 7491(a) was added to the Code by the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206, sec. 3001, 112 Stat. 726.Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011