T.C. Summary Opinion 2008-30

UNITED STATES TAX COURT

JAY ANDREW REINDL, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8532-06S. Filed March 13, 2008.

Jay Andrew Reindl, pro se.

Steven M. Webster, for respondent.

SWIFT, Judge: This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed. Pursuant to section 7463(b), the

decision to be entered is not reviewable by any other court, and

this opinion shall not be treated as precedent for any other

case. 
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Respondent determined a $3,720 additional tax under section

72(t)(1) relating to petitioner’s Federal income tax for 2004.

Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for 2004.

The sole issue for decision is whether under section 72(t) 

petitioner owes a 10-percent additional tax on an early

distribution from his individual retirement account (IRA).

Background

Some of the facts have been stipulated and are so found. 

At the time the petition was filed, petitioner resided in

North Carolina.

Before 1998, petitioner worked and contributed to an IRA. 

During 1998 through 2004, petitioner was employed at various

temporary jobs and borrowed money from family members to pay

personal expenses. 

In 2004, petitioner received as his only source of taxable

income a $37,200 early distribution from his IRA. At the time of

the distribution, petitioner had not attained age 59-1/2, and

Federal income taxes of $7,440 were withheld from the

distribution to petitioner. 

On his timely filed 2004 individual Federal income tax

return, petitioner reported the entire $37,200 IRA distribution

as taxable income, and he reported a $4,056 Federal income tax
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liability thereon. Petitioner, however, did not report a section

72(t) 10-percent additional tax on his early IRA distribution.

On audit, respondent determined that the section 72(t)

10-percent additional tax applied to petitioner’s taxable

$37,200 IRA distribution. 

Discussion

Generally, a distribution to a taxpayer from an IRA before

the taxpayer attains age 59-1/2 is subject to a 10-percent

additional tax on the taxable amount of the distribution. 

Sec. 72(t)(1). There are only narrow statutory exceptions to

this rule. See, e.g., Duronio v. Commissioner, T.C. Memo. 2007-

90 (exception under section 72(t)(2)(E) for early distribution to

pay qualified higher education expenses). 

Petitioner does not argue that any recognized exception to

the general rule under section 72(t)(1) is applicable herein. 

Petitioner, however, argues that his financial hardship should

except him from the 10-percent additional tax under section

72(t)(1).

While we sympathize with petitioner’s financial hardship, no

statutory or case authority provides an exception from imposition

of the additional tax under section 72(t) for financial
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1 Not applicable to petitioner’s financial hardship (and not

effective before Dec. 21, 2005) is a statutory exception to the

imposition of the additional tax under sec. 72(t) applicable to

certain victims of hurricanes Katrina, Rita, and Wilma. 

Sec. 1400Q(a)(1), (4)(A); Gulf Opportunity Zone Act of 2005,

Pub. L. 109-135, sec. 201(a), 119 Stat. 2596. 

hardship.1 Arnold v. Commissioner, 111 T.C. 250, 255 (1998);

Thompson v. Commissioner, T.C. Memo. 2007-327; Cole v.

Commissioner, T.C. Memo. 2006-44; Gallagher v. Commissioner, T.C.

Memo. 2001-34; Deal v. Commissioner, T.C. Memo. 1999-352; Duffy

v. Commissioner, T.C. Memo. 1996-556; Pulliam v. Commissioner,

T.C. Memo. 1996-354. 

Petitioner also argues that his ignorance of the 10-percent

additional tax should except him from liability to pay it.

However, as a general rule, taxpayers are charged with knowledge

of the tax laws. Harrington v. Commissioner, 93 T.C. 297, 314

(1989).

We conclude that under section 72(t) petitioner is liable

for the 10-percent additional tax with respect to his $37,200

early IRA distribution.

To reflect the foregoing,

Decision will be entered

for respondent.