Requirements for Bank Analysis Method

“As understood from Gleckman case, for the government to bring a charge based on bank deposit method of proof, government must fulfill the following yardsticks:

1. The taxpayer was engaged in a business or income-producing activity from which the investigation auditor/ court can infer that the unreported income arose;
2. Periodic and regular deposits of funds were made into accounts in the taxpayer’s name or over which the taxpayer had dominion and control.
3. An adequate and full investigation of those accounts was made in order to distinguish between income and non-income deposits;
4. Unidentified deposits have the inherent appearance of income, e.g., the size of the deposits, odd or even amounts, fluctuations in amounts corresponding to seasonal fluctuations of the business involved, source of checks deposited, dates of deposits, accounts into which deposited, etc.”