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Internal Revenue Service (IRS) as a tax auditor. Mr. Rudolph
told petitioner that he, i.e., Mr. Rudolph, could either prepare
correct returns and petitioner could then pay tax, interest, and
applicable penalties, or he could prepare returns that would
generate refunds, but only if petitioner agreed to split the
refunds with him. Petitioner opted for the second alternative
and agreed to file false returns. Petitioner knew that if he
filed false returns, he would be acting illegally.
Acting pursuant to the foregoing arrangement, petitioner
filed returns with the IRS, fraudulently claiming, among other
things: Head of household filing status; the earned income
credit; a dependency exemption for an individual who was not his
dependent; dependent care expenses that were not paid by
petitioner; a net loss from a nonexistent “Schedule C business”;
and a net loss from farming a nonexistent strawberry farm. As a
result, petitioner received fraudulent refunds totaling
$9,924.36.
Petitioner underpaid his taxes for the years at issue by a
total of $9,918. The underpayment of tax for each of the years
in issue was due to fraud with the intent to evade tax.2
In June 1995, petitioner gave Mr. Rudolph approximately
$2,116 from one of his refund checks. Despite receiving
2 So stipulated. But even without that stipulation, we
would so conclude based on the overwhelming weight of the
evidence.
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