15 AAC 05.230. Civil fraud

(a) A civil fraud penalty may be assessed in addition to a penalty for failure to file, failure to pay, negligence, or intentional disregard.

(b) If it is determined by the department that a tax deficiency or part of a tax deficiency is due to fraud, then a penalty will be added to the tax. The penalty is 50 percent of the deficiency due or $500, whichever is greater. The penalty is computed on the total amount of the deficiency due, even if the determination of fraud relates to only a part of the deficiency.

(c) Fraud is the intentional misrepresentation of a material fact with the intent to evade payment of tax which the taxpayer believed to be owing. The taxpayer must have had knowledge of its falsity and intended that it be acted upon or accepted as the truth.

(d) To establish civil fraud, the department must prove by clear and convincing evidence that

(1) the tax liability reported was understated; and

(2) the understatement was the result of an intent to evade tax.

(e) An intent to evade tax may be demonstrated by any relevant evidence, including but not limited to the following:

(1) the taxpayer has provided false explanations regarding understated or omitted income;

(2) the taxpayer has provided falsified source documents;

(3) the taxpayer has not justified an omission or an understatement of a significant amount of income; or

(4) the taxpayer has substantially overstated a deduction and has failed to justify the overstatement.

History: Eff. 7/1/81, Register 78

Authority: AS 43.05.080

AS 43.05.220 (c)

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