- 25 -
This Court has held that when taxpayers fail to
fulfill their duty of inquiry, they are ordinarily
charged with constructive knowledge of any understate-
ments on their returns. Demirjian v. Commissioner,
T.C. Memo. 2004-22; Cohen v. Commissioner, T.C. Memo.
1987-537 * * *. Accordingly, having failed her duty of
inquiry, petitioner is charged with constructive knowl-
edge of the tax due on the return. See Castle v.
Commissioner, T.C. Memo. 2002-142 n.7; * * *.
* * * * * * *
Plaintiff [sic] presented no evidence to the IRS
on this factor [knowledge or reason to know positive
factor] because she claimed that she was unaware that
tax was due when the return was filed. Due to the
absence of evidence at the administrative level, this
factor does not favor relief. As argued above, peti-
tioner is held to have constructive knowledge of the
tax due per return.
In further support of respondent’s argument that the knowledge or
reason to know positive factor is not present in the instant
case, respondent asserts on brief:
Petitioner argues that the determination is arbi-
trary because the IRS did not consider whether peti-
tioner knew the tax would not be paid. The argument is
hollow because petitioner’s alleged ignorance of the
tax is factually and logically divergent from alleging
knowledge that the tax would not be paid. It is illog-
ical to allege that one was ignorant that tax was due
but one had knowledge that the tax would not be paid.
Petitioner’s argument is flawed because it relies
on the supposed failure of the IRS to consider these
divergent factual allegations. Petitioner alleged to
be ignorant of the tax, which the IRS rejected. Peti-
tioner cannot bemoan that the determination was arbi-
trary because the IRS did not consider a factual issue
that was factually divergent and could not be raised,
ie., knowledge regarding payment of the tax.
* * * * * * *
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011