- 9 - that there was reasonable cause for the underpayment, and the taxpayer acted in good faith. Even though the burden of production is on the Commissioner under section 7491(c) as to penalties, that does not mean that the burden of proof shifts to the Commissioner. Where the Commissioner introduces sufficient evidence to show that the taxpayer is liable for the penalty, the taxpayer has the burden of proving that he is not liable for the penalty. Higbee v. Commissioner, 116 T.C. 438, 446-447 (2001). The Court is satisfied that respondent has met the burden of production in this case. Petitioners claimed deductions for a nonexistent activity. The actions of petitioners, as described above, represented a blatant attempt to circumvent the Internal Revenue Code, which, unfortunately, they were able to get away with for several prior years. Petitioners have no reasonable cause for the underpayments for the 2 years at issue in this case in which their nonexistent activity was brought to light. The accuracy- related penalties are sustained. Reviewed and adopted as the report of the Small Tax Case Division. Decision will be entered for respondent.Page: Previous 1 2 3 4 5 6 7 8 9 10
Last modified: May 25, 2011