- 17 - 6653(b)(2). The fraud penalty may be applied against a spouse only where some part of the underpayment is due to the fraud of the spouse. Sec. 6653(b)(3). A. Underpayment of Tax Mr. Ford has acknowledged under oath and while represented by counsel that petitioners’ 1986 return does not report all of their income for 1986 and that this unreported income was subject to significant Federal income tax. This testimony conclusively establishes the existence of a knowing underpayment by petitioners. See Considine v. United States, 683 F.2d 1285, 1287 (9th Cir. 1982). B. Intent To Evade Tax Fraudulent intent may be proven by circumstantial evidence because direct proof of a taxpayer’s intent is rarely available. Reasonable inferences may be drawn from the relevant facts. Spies v. United States, 317 U.S. 492, 499 (1943); Stephenson v. Commissioner, 79 T.C. 995 (1982), affd. 748 F.2d 331 (6th Cir. 1984). Fraud requires a clear and convincing showing that the taxpayer intended to evade a tax known or believed to be owing by conduct intended to conceal, mislead, or otherwise prevent the collection of tax. Stoltzfus v. United States, 398 F.2d 1002, 1004 (3d Cir. 1968). While a conviction under section 7206(1) does not, in and of itself, establish fraudulent intent, it is a factor from which we “may properly infer fraud” where it isPage: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
Last modified: May 25, 2011