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Respondent next argues that petitioner’s attempts to impede
respondent’s determination of the proper classification of the
workers and the amount of taxes owed should be considered
evidence of petitioner’s fraudulent intent. We find petitioner’s
conduct with respect to the IRS, both before and after the
employment tax examination began, to be less than cooperative,
but there is no evidence that petitioner destroyed any evidence
or attempted to mislead respondent.
Further, respondent offered no evidence to contradict the
testimony of Carmel that the records of petitioner had been
previously produced to a grand jury at the time respondent sought
them. We find that this fact weakens any inference of fraud that
can be drawn from petitioner’s failure to produce its records or
more fully cooperate.
Accordingly, we find that the record lacks clear and
convincing evidence of fraud and conclude that section 6651(f) is
not applicable. Respondent has neither pleaded nor sought the
addition to tax under section 6651(a) in the alternative, and
thus we do not consider it.
V. Conclusion
Because the workers identified in respondent’s notice of
determination were under the direction and control of petitioner
and because several of the other indicia of a common law
employment relationship were present, we conclude that the
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