T.C. Memo. 1999-139
UNITED STATES TAX COURT
PAUL T. & CAROLYN JACKSON, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11724-98. Filed April 26, 1999.
Robert T. Bennett, for respondent.
MEMORANDUM OPINION
FOLEY, Judge: By notice dated April 16, 1998, respondent
determined a $4,355 deficiency and a $3,266 section 6663 penalty
relating to petitioners' 1996 Federal income tax. All section
references are to the Internal Revenue Code in effect for the
year in issue, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
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At trial, petitioners failed to appear, respondent made an
oral motion to dismiss for lack of prosecution the issues upon
which petitioners bore the burden of proof, and the Court granted
respondent's motion. See Rule 149. Respondent concedes that
petitioners are entitled to a $2,000 deduction relating to an
Individual Retirement Account contribution. The remaining issue
for decision is whether petitioners are liable for a fraud
penalty.
Background
Petitioners, husband and wife, resided in Raritan, New
Jersey, at the time their petition was filed. During the year in
issue, Mr. Jackson received taxable income of $1,200 from Seton
Hall University and $2,599 from Berkeley College of New Jersey,
but did not give either school his correct Social Security
number. Petitioners failed to report this income on their 1996
Federal income tax return.
In their petition, petitioners claimed that respondent had
accepted their 1996 return "as filed" and that a refund was due
to them. Petitioners included with their petition a purported
Internal Revenue Service (IRS) letter supporting this claim. The
letter was not written, or sent, by an IRS employee.
Discussion
Respondent determined that petitioners are liable, pursuant
to section 6663, for a fraud penalty. Respondent must establish
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by clear and convincing evidence that, for the year in issue, an
underpayment of tax exists and that some portion of the
underpayment is due to fraud. See Petzoldt v. Commissioner, 92
T.C. 661, 699 (1989). A taxpayer's attempts to conceal income,
mislead the IRS, or prevent the collection of income tax may
establish the requisite fraudulent intent. See Rowlee v.
Commissioner, 80 T.C. 1111, 1123 (1983).
Respondent has established that, for the year in issue, the
underpayment of tax was attributable to Mr. Jackson's fraud. Mr.
Jackson received but failed to report on petitioners' 1996 tax
return, $3,799 of taxable income, resulting in an underpayment of
tax. Mr. Jackson attempted to prevent the IRS from collecting
his income tax liability on this unreported income by providing
incorrect social security numbers to his employers. See Hand v.
Commissioner, T.C. Memo. 1982-457 (holding that the use of false
social security numbers is evidence of fraudulent intent). In
addition, Mr. Jackson persisted in his attempt to conceal income
by submitting to respondent and the Court a counterfeit letter.
Accordingly, Mr. Jackson is liable for the fraud penalty.
Respondent, however, has not established that Mrs. Jackson acted
with fraudulent intent. Accordingly, Mrs. Jackson is not liable
for the fraud penalty. See sec. 6663(c).
To reflect the foregoing,
Decision will be entered
under Rule 155.