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Generally, the Court will not look behind the notice of
deficiency to review the information used or the Commissioner’s
motives or procedure involved in making a determination.
Greenberg’s Express, Inc. v. Commissioner, 62 T.C. 324, 327-328
(1974). However, if the taxpayer establishes that the deficiency
notice is arbitrary or without foundation, the burden of going
forward with the evidence shifts to the Commissioner. Dellacroce
v. Commissioner, 83 T.C. 269, 280 (1984).
Although Mr. Murray testified at length as to why he
believed the IRS began investigating Mr. Chavez, he offered no
independent evidence of that at trial. Petitioners introduced
several letters written by petitioners to the Department of
Justice, the IRS criminal investigation chief, and the Attorney
General. The letters discuss petitioners’ belief that an
employee of Mr. Chavez reported him to the IRS after he failed to
answer her demand for “hush money”. Petitioners, however, do not
name this female employee in any of their letters, nor could they
recall her name at trial. Furthermore, petitioners could offer
no witnesses to verify their allegation. They were not
approached by this employee and refused to reveal at trial how
they learned of the attempted blackmail of Mr. Chavez. When
challenged regarding the validity of their claims, Mr. Murray
could only say: “I know it’s true. I just know”.
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Last modified: May 25, 2011