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Section 7491(a) shifts the burden of proof to the
Commissioner when the taxpayer has satisfied certain
requirements. Section 7491 is effective with respect to court
proceedings arising in connection with examinations commencing
after July 22, 1998. Internal Revenue Service Restructuring and
Reform Act of 1998, Pub. L. 105-206, sec. 3001(c)(1), 112 Stat.
727. Respondent concedes that the examination in these cases
began after July 22, 1998.
Specifically, section 7491(a)(1) provides:
If, in any court proceeding, a taxpayer introduces
credible evidence with respect to any factual issue
relevant to ascertaining the liability of the taxpayer
for any tax imposed by subtitle A or B, the Secretary
shall have the burden of proof with respect to such
issue.
Section 7491(a)(2) further provides that the burden of proof
shifts to the Commissioner only when the taxpayer has: (1)
“complied with the requirements under this title to substantiate
any item”, and (2) “maintained all records required under this
title and has cooperated with reasonable requests by the
Secretary for witnesses, information, documents, meetings, and
interviews”.
Petitioner failed to maintain books and records relating to
his farming business. Furthermore, the parties have stipulated
that petitioner did not submit any books or records to
respondent’s agents during the examination of his 1990, 1991, and
1992 income tax returns. Because petitioner failed to satisfy
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