Dennis E. Runkle and Debra A. Runkle - Page 22

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               Failure to file income tax returns, even over an extended              
          period of time, does not per se establish fraud.  Grosshandler v.           
          Commissioner, 75 T.C. 1 (1980); Coulter v. Commissioner, T.C.               
          Memo. 1992-224.  An extended pattern of failing to file income              
          tax returns, however, may be persuasive circumstantial evidence             
          of fraud.  Marsellus v. Commissioner, 544 F.2d 883, 885 (5th Cir.           
          1977), affg. T.C. Memo. 1975-368; Stoltzfus v. United States, 398           
          F.2d 1002 (3d Cir. 1968); Grosshandler v. Commissioner, supra;              
          Coulter v. Commissioner, supra.  Further, when a taxpayer’s                 
          failure to file for several years is viewed in light of his or              
          her previous filing of income tax returns for prior years, the              
          taxpayer’s nonfiling weighs heavily against him or her because              
          the taxpayer is aware of the requirement.  Castillo v.                      
          Commissioner, 84 T.C. 405 (1985).                                           
               Petitioners’ asserted “firm belief” that they were not                 
          required to file income tax returns is implausible and                      
          inconsistent with their own actions.  Petitioners had a                     
          consistent history of filing returns and paying taxes yet they              
          failed to file an income tax return for each of the years at                
          issue despite respondent’s numerous requests to file returns.               
          Further, the record establishes that both petitioners knew they             
          were required to file income tax returns.  For example, Mrs.                
          Runkle timely filed a Federal income tax return for her deceased            
          father for 1993 as his personal representative.  Petitioners also           

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