The Micros Systems Inc point of sales system for restaurants seems pretty slick.
MICROS provides comprehensive restaurant point-of-service (POS) solutions that can be scaled to meet the needs of every type and size of restaurant, whether you operate a single restaurant or hundreds. Our modular restaurant POS systems can easily be expanded as required, and can fit the demands of quick-service, fast casual, and full-service restaurants, as well as catering, pubs and bars.
He generally took the cash received home with him each night and placed it in a safe in his residence. During the years at issue petitioner never deposited more than a de minimis amount of Casablanca's cash receipts into the operating account or any other bank account.
Casablanca used Micros Systems Inc. (Micros), an industry-standard point-of-sale system, to fulfill customers' food and drink orders. Casablanca's staff entered customers' orders into computer terminals after entering in a four-digit personal identification number unique to each staff member. The Micros computers then routed each order to the kitchen or bar, as applicable. Additionally, each order was recorded by a central computer in an office below the restaurant.
At the end of an employee's shift the Micros system printed a “checkout report” that totaled the gross receipts from an individual waiter's shift, including bills paid by cash or credit card. The checkout report indicated the amount of tip income due to a waiter, who would then receive an equivalent amount of cash. Any remaining cash and the checkout reports were turned over to management. During 2006 and 2007 petitioner printed daily sales reports from Micros and stapled the credit card receipts to each sales report. For 2008, 2009, and 2010 petitioner generated only monthly sales reports.
After closing the restaurant each night, petitioner stapled together and retained all of the credit card receipts in the event a customer paying by credit card disputed a transaction. Credit card payments were automatically deposited into Casablanca's business operating account, ending in 1909, at U.S. Bank (operating account). Petitioner threw away the cash receipts and checkout reports.
As a result, gross receipts for Casablanca were underreported by $430,442, $412,481, and $463,371 for 2006, 2007, and 2008, respectively, the years for which J&M prepared petitioner's individual income tax returns. J&M has a policy of reviewing tax returns with clients before filing, explaining important items such as gross receipts and cost of goods sold, and allowing clients to correct any errors on the return. Mr. Jobin credibly testified that J&M would have done the same with petitioner, and petitioner never informed anyone at J&M that the Schedules C were inaccurate.
We find petitioner's arguments to be unconvincing for several reasons. First, Mr. Jobin credibly testified that he did not see the Micros reports until after the commencement of audit and further, petitioner failed to disclose all of his bank accounts to Mr. Jobin. Petitioner does not offer any explanation as to why Mr. Jobin or J&M would be motivated to prepare grossly inaccurate returns. Additionally, petitioner cannot escape the duty to file accurate returns by shifting the blame to Mr. Jobin and J&M.
Over the years, courts have developed a nonexclusive list of factors that demonstrate fraudulent intent. These badges of fraud include: (1) understatement of income, (2) inadequate maintenance of records, (3) implausible or inconsistent explanations of behavior, (4) concealment of assets or income, (5) failure to cooperate with tax authorities, (6) engaging in illegal activities, (7) an intent to mislead which may be inferred from a pattern of conduct, (8) lack of credibility of the taxpayer's testimony, (9) failure to file tax returns, (10) filing false documents, (11) failure to make estimated tax payments, and (12) dealing in cash.