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documents that respondent introduced through the affidavits
provide ample evidentiary support for his determinations.
Respondent has satisfied any burden of production which he may
initially bear under the cases cited above.
Petitioner also contends that respondent, in making his
determinations, arbitrarily relied on the Forms W-2 and 1099 that
the payors submitted without ascertaining whether those entities
submitted Forms W-3 and 1096, signed under penalties of perjury.
Petitioner also suggests that respondent’s determinations are
arbitrary in that he failed to ascertain whether the payors were
on his “Bad Payor List”.16 We disagree and hold that
respondent’s determinations are not per se arbitrary where he
fails to ascertain whether the third-party payors submitted Forms
W-3 and 1096 with the information returns or whether those payors
are on his “Bad Payor List”. In the instant case, there is no
evidence that any of the payors were on respondent’s “Bad Payor
15(...continued)
785, 787 (5th Cir. 1997), affg. an unpublished order of this
Court. Congress, in enacting sec. 6201(d), has also recognized
that in the absence of that Code section’s application, the
burden of proving that determinations of unreported income are
arbitrary or incorrect generally remains on the taxpayer where
the Commissioner relies solely on information returns that third
parties submitted.
16The Commissioner maintains a “Bad Payor List”, which
includes those persons and entities that have previously
submitted false, fraudulent, inaccurate, or mistaken information
to the Social Security Administration or the IRS on Forms W-2 or
1099.
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