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party if the third party complied with the summons. For example,
Mr. Runkle threatened to sue Mr. Bills of R&D if Mr. Bills
provided documents of the Elknur Family Limited Partnership
pursuant to the third-party summons issued to R&D.
Respondent argues, and we agree, that petitioners’ actions
demonstrate that petitioners intended to impede respondent’s
examination and investigation. We find that petitioners refused
to cooperate with respondent’s agents, and their efforts to quash
summonses and otherwise hamper his investigation are further
indicia of fraudulent intent.
6. Asserting Frivolous Arguments
Petitioners also relied on frivolous and meritless arguments
to impede or otherwise hinder respondent’s ability to determine
the correct amount of tax liability. Petitioners included these
arguments in correspondence to respondent9 as well as in support
of their numerous petitions to quash respondent’s summonses and
in their motion to dismiss this case, filed February 17, 2004.
For example, petitioners asserted in their submissions that the
9The Court of Appeals for the Third Circuit takes the
minority view that merely notifying the Commissioner that the
taxpayer will not comply with filing and payment obligations is
inconsistent with an intent to defraud. See Granado v.
Commissioner, 792 F.2d 91 (7th Cir. 1986), affg. T.C. Memo. 1985-
237; Raley v. Commissioner, 676 F.2d 980 (3d Cir. 1982), revg.
T.C. Memo. 1980-571; Price v. Commissioner, T.C. Memo 1996-204.
This minority view has not been followed in other circuits
including the Seventh Circuit, to which this case is appealable.
See Granado v. Commissioner, supra.
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