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tax required to be shown on the tax return if a taxpayer fails to
file a required return due to fraud. Alternatively, respondent
asserts that petitioner is liable for additions to tax under
section 6651(a). Section 6651(a) imposes an addition to tax of
up to 25 percent of the amount required to be shown as tax if a
taxpayer fails to file a timely return.
Petitioner concedes that he received significant income each
year from 1999 through 2003, and he failed to file Federal income
tax returns for those years. Therefore, to determine whether
petitioner is liable for the additions to tax under section
6651(f), we need only to determine whether petitioner possessed
the requisite fraudulent intent.
The Commissioner bears the burden of proving fraud by clear
and convincing evidence. Sec. 7454(a); Rule 142(b). Mere
suspicion of fraud is not sufficient. Petzoldt v. Commissioner,
92 T.C. 661, 700 (1989). Fraud is an intentional wrongdoing
designed to evade taxes believed to be owing. Miller v.
Commissioner, 94 T.C. 316, 332 (1990).2 Therefore, the
Commissioner must show that the taxpayer failed to file a
required return with the intent to evade taxes known or believed
2 We consider the same factors under sec. 6651(f) that are
considered in imposing the fraud penalty under sec. 6663 and
former sec. 6653(b). Clayton v. Commissioner, 102 T.C. 632, 653
(1994); see also Neely v. Commissioner, 116 T.C. 79, 85-86 (2001)
(applying the extensive body of law addressing fraud in the
context of income, estate, and gift taxes to the employment tax
context).
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