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Commissioner with respect to a factual issue affecting the
taxpayer’s liability for tax where the taxpayer introduces
credible evidence with respect to such a factual issue and meets
certain substantiation requirements set forth in section
7491(a)(2)(A) and (B).
Respondent contends that petitioners’ argument as to the
burden of proof was untimely raised and that, even if it had been
timely, it is petitioners’ burden to show that they have met the
requirements of section 7491(a)(2), which they have not done. We
agree with respondent that petitioners’ attempt to raise section
7491 for the first time in their posttrial brief is untimely.
Under section 7491 petitioners must, for example, show that
they cooperated during the audit and that they met substantiation
requirements. Petitioners’ attempt on brief to show that they
met the requirements by the simple expediency of stating that
respondent did not question the substantiation or that they
cooperated will not suffice. Petitioners, by raising those
allegations on brief, do not afford respondent the opportunity to
test the allegations by cross-examination or by producing
evidence to show otherwise. Therefore, we hold that petitioners’
attempt to shift the burden under section 7491 causes prejudice
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Last modified: March 27, 2008