3.80.110 Civil fraud.
A. A civil fraud penalty may be assessed against a person in addition to a penalty for failure to file or failure to pay.
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 $500.00, whichever is greater. The penalty is computed on the total amount of the deficiency due.
C. Fraud is the intentional misrepresentation of a material fact with the intent to evade payment of tax which the person believed to owe. The person 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 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 person has provided false explanations regarding understated or omitted acquisitions of cigarettes or tobacco products;
2. The person has provided falsified or incomplete source documents;
3. The person has not justified an omission or understatement of a significant amount of acquisitions of cigarettes or tobacco products; or
4. The person has substantially overstated a deduction and has failed to justify the overstatement. [Ord. FY2018-04B §2, 2017; Ord. FY2018-04 §2, 2017. Formerly §3.80.130].