T.C. Mem o. 2 01 6- 73

UNITED STAT ES TAX COURT

ALLEN B. MILLER, Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 71 26 -1 4L. Fi le d Ap ril 21 , 20 16
.
Alv in S. Bro wn, fo r pe ti ti on er. Mar is saJ. Sav it , forres po nd en t.

MEMORANDUM FINDINGS OF FACT AND OPINION COLVIN, Ju dg e: In t hi s co ll ect io n due pro ces s (C DP) cas e u nd er s ect io n 63 30 (d )(1 ), pe ti ti on er co nt es ts th e d et erm in at io n m ad e b y th e In te rn al Rev enue 1

Unl es s o th erwi se in di cat ed , sec ti on refe ren ces are t o the Int ern al Rev enue 1 Co de in effe ctat a ll rel ev an t t im es . W e ro un d m on et ary am ou nt s t o t he ne ares t do ll ar.- 2 -

[* 2] Serv ic e (IR S) Offi ce o f App eal s (I RS Ap pe al s) to su st ai n ano ti ce o f in te ntto le vy to c ol le cta se ct io n 6 65 1( a)(2 ) ad di ti on to tax forfai lu re t o t im el y pa y tax for ta x year 20 08 . The s ol e is su e fo r de ci si on is whet he r pe ti ti on er i s l iabl e fo r th at ad di ti on to tax . W e h ol d tha t h e is . Som e o f th e fac ts ha ve be enst ip ul at edan d a re so fou nd
. FINDINGS OF FACT Pet it io ne r res id edin Flo rid a whe n h e fi le d t he pe ti ti oninth is cas e. A. Pet it io ne r’s Tax R eturn fo r Tax Year 2 00 8 Pet it io ne r m ad e es ti m at edtax pa y m en ts fortax y ear 2 00 8 o f $1 8,7 50 on Ju ly 2, 20 08 , and$1 8,7 50 on Octo be r 1, 2 00 8. Pe ti ti on er h adin co m e ta x withh ol di ng fortax y ear 2 00 8 o f $6 ,39 0. Th us , as o f Apr il 15 , 20 09 , th e due da te fo r pa ym en t o f pe ti ti on er’s 2 00 8 i nc om e ta x, p et it io ne r ha d m ad e p aym en ts for 20 08 to ta li ng $4 3,8 90
. Pet it io ne r ret ai ne d J am es Barrto pre pare h is Fed eral in co m e ta x re tu rnfor ta x year 20 08 . Befo re Ap ril 15 , 20 09 , Mr. Barr’s acco un ti ng firm ha d p rep areda co m pl et edFed eral in co m e ta x re tu rnfortax y ear 2 00 8 wh ic h s ta te d t ha t pe ti ti on er’s 2 00 8 i nc om e ta x l iabi li ty w as $6 00 ,00 0. Onth e b as is of c on ve rs at io ns with M r. Barr , pet it io ne r be li ev edth e ta x re tu rnwas i nc orrect . Mr. Barrsai d t ha t on e o f hi s emplo y ees ha d p rep aredth e return, tha t M r. Barrals o b el ie ve d t ha t i t- 3 -

[* 3] was wron g, an d t ha t h e wou ldpe rs on al ly revi se th e return. Pe ti ti on er n ev er fil edth atdra ft o f hi s 2 00 8 re tu rn . Pet it io ne r as ke d M r. Barrto reco ns id er the co rrec tn es s o f th e draftreturn. On No ve m

be r 17 , 20 09 , on th e b as is of M r. Barr ’s est im at e th athe wou ldowe a n ad di ti on al $1 00 ,00 0 i n t ax , pet it io ne r m ad e anad di ti on al 20 08 tax pa ym en t o f $1 00 ,00 0. Pet it io ne r an d h is wife cal le d a ndem ai le d M r. Barr rep eat ed ly con cern in g th ei r 20 08 return, b utMr. Barr di d n otres po ndto th ei r in qu iri es , pro vi de pe ti ti on er wi th a m od ifi edtax return, o r fu rth er ex pl ai n the 20 08 return t ha t h is
em pl oyee ha d p rev io us ly prep ared
. InSep te m

be r 20 10 pe ti ti on er ab an do ne d e ffo rts to reac h M r. Barran d h ire d
an ot he r acc ou nt an t, Ro be rt F . Coh en , to pre pa re h is 20 08 tax return. Aft er h iri ng Mr. Co he n p et it io ne r ret ai ne d a n a tt orne y , Jo hn Fla nn ig an , to sen d alet te r to Mr. Barrreque st in g arefundan d p et it io ne r’s da taan d d oc um en ts so th atMr. Co he n co ul d p rep are t he 20 08 return. OnDecem be r 14 , 20 10 , Mr. Co he n p ro vi de d pe ti ti on er wi th a co m

pl et edtax return fo r 20 08 . On Ja nu ary 20 , 20 11 , pet it io ne r si gn edth e 2 00 8 t ax return t ha t M r. Co he n h adpre pa red . Peti ti on er fi le d t ha t return, wh ic h re sp on de ntrece iv edon Jan ua ry 31 , 20 11 . On th atreturn p et it io ne r- 4 -

[* 4] rep orte d atax li ab il it y of $ 50 9,7 18 . Peti ti on er s ub m it te d apa ym en t o f $3 93 ,84 7 wi th th atreturn. Res po nd en t as se ss edtax of $ 51 0,5 34 for tax y ear 2 00 8. On Feb ru ary 28 , 2 20 11 , res po nd en t al so ass es se d t he fol lo win g a dd it io ns to tax : (1 ) $6 ,02 4 u nd er se ct io n 6 65 4 fo r fai lu re t o m ak e su ffi ci en t es ti m at edtax pa ym en ts ; (2 ) $1 04 ,99 4
un de r se ct io n 6 65 1( a)(1 ) fo r fai lu re t o t im el y fil e; an d (3 ) $4 4,1 35 un de r se ct io n 66 51 (a)( 2) for

fai lu re t o t im el y

pa y tax owed
. Res po nd en t al so ass es se d $ 37 ,42 7

3 of in te res t fo r ta x year 20 08 . Peti ti on er d idno t m ak e fu rth er p aym en ts fortax y ear 20 08 . This cas e was refe rredto th e IRS co ll ect io n u ni t. B. Co ll ect io n o f Unp ai d Tax On J anua ry

28 , 20 13 , res po nd en t i ss ue d p et it io ne r a Let te r 10 58 , Fin al Not ic e o f In te ntto Levy andNot ic e o f You r Ri gh t t o aHeari ng , with re sp ectto pe ti ti on er’s u np ai d l iabi li ty for t ax y ear 2 00 8. Pe ti ti on er’s co un se l t im el y m ai le d a Fo rm 12 15 3, Re qu es t fo r a Co ll ect io n Du e Pro ces s o r Equ iv al en t Hea rin g, t o res po nd en t. Pet it io ne r so ug htanin st al lm en t ag reem en t.

On M arch 28 , 20 11 , res po nd en t ab at edtax of $ 81 6, wh ic h i s t he di ffer en ce 2 be twee n the am ou ntth atres po nd en t as se ss ed , $5 10 ,53 4, an d t he am ou ntth at pe ti ti on er re po rte d, $ 50 9,7 18
. Onl y th e se c. 66 51 (a)( 2) ad di ti on to tax is at i ss ue inth is cas e. 3- 5 -

[* 5] On Ap ril 29 , 20 13 , pet it io ne r’s co un se l s en t a l et te r to th e IRS Bro okha ve n Cen tra li zedOffer i n C om pr om is e Uni t an d s ub m it te d F orm 65 6- L, Offer i n Co m pr om is e, an d F orm

84 3, Cl ai m

forRefu ndan d R eque stforAbat em en t, reque st in g aba te m en t o f in te res t u nd er s ect io n 6 60 1. Subs eque nt ly, on Nov em be r 8, 2 01 3, p et it io ne r wit hd rew the off er-i n- co m pr om is e. On Dec em

be r 12 , 20 13 , IRS Ap pe al s Se tt le m en t Offi cer S te ph anR. Hard in g (S O Hard in g) to ldpe ti ti on er’s
co un se l h e wou ldab at e th e ad di ti on to tax un de r se ct io n 6 65 1( a)(1 ). Pet it io ne r’s
co un se l co nt en de d tha t p et it io ne r ha d re li edon hi s t ax return p rep arer an d t hu s was no t l iabl e fo r ad di ti on s t o t ax un de r se ct io ns 66 51 (a)( 2) an d 6 65 4. Onor ab ou t J anua ry

16 , 20 14 , pet it io ne r’s co un se l s ub m it te d a dd it io na l ca se cit at io ns to SO Hard in g i n s up po rt o f pe ti ti on er’s p os it io n. On M arch 6, 2 01 4, SO Har di ng is su eda no ti ce o f de te rm in at io n c on cern in g co ll ect io n a ct io n s us ta in in g t he is su an ce o f th e n ot ic e o f in te ntto lev y . In the
no ti ce o f de te rm in at io n S O Hard in g d et erm in edth atpe ti ti on er fa il edto est ab li sh
reas on ab le cau se to all ow t he ad di ti on s t o t ax at i ss ue to be ab at ed . SO Hardi ng su st ai ne d t he pro po se d l ev y act io n b ecau se no co ll ect io n a lt ern at iv e was subm it te d du rin g t he CDP h eari ng .- 6 -

[* 6] OPINION The is su e fo r de ci si on is whet he r pe ti ti on er i s l iabl e fo r anad di ti on to tax un de r se ct io n 6 65 1( a)(2 ). Becaus e p et it io ne r’s li ab il it y is pro pe rly at is su e, we wil l re vi ew th e m at te r de no vo . See Gia m el li v. Co m m is si on er, 1 29 T.C. 10 7, 1 11 (2 00 7) ; Se go v. Co m

m is si on er, 1 14 T.C. 60 4, 6 10 (20 00 ). Res po nd en t as se ss edanad di ti on to tax of $ 44 ,13 5.3 8 u nd er s ect io n 66 51 (a)( 2) for

pe ti ti on er’s fai lu re t o t im el y pay hi s 2 00 8 i nc om e ta x l iabi li ty. Sect io n 6 65 1( a)(2 ) im

po se s anad di ti on to tax of up t o 2 5% o f th e ta x s ho wn o n a return fo r fai lu re t o m ak e ti m el y pa ym en t the reo f un le ss itis sh ownth atsu ch fai lu re i s due to reas on ab le cau se an d n otdu e to wil lfu l n eg le ct . Res po nd en t b ears th e b ur de n o f pr oduc ti on with re sp ectto th is ad di ti on to tax . See s ec. 7 49 1( c). In
or de r to carry

th atbu rd en , res po nd en t m us t p ro du ce s uf

fic ie ntev id en ce t o es tabl is h t ha t i t i s ap pr op ria te to im po se th e ad di ti on . See Hig be e v . Co m m is si on er, 1 16 T.C. 43 8, 4 46 -4 47 (20 01 ). Once res po nd en t s at is fie s t ha t bu rd en , pet it io ne r be ars th e b ur de n o f pr ov in g t ha t h e is no t l iabl e fo r th e ad di ti on to tax . See i d. at44 7. Res po nd en t p ro vi de d a n a cco un t tran sc rip t fo r ta x year 20 08 whi ch sh ows th atpe ti ti on er m ad e two pa ym en ts of $ 18 ,75 0 t owa rdin co m e ta x o wedfor 20 08
an d h adin co m e ta x wi th ho ld in g o f $6 ,39 0 fo r 20 08 , whi ch was d eem edpa idon- 7 -

[* 7] Apr il 15 , 20 09 . Befo re the Apri l 1 5, 2 00 9, d ead li ne to pa y hi s 2 00 8 i nc om e ta x, tho se pa ym en ts , to ta li ng $4 3,8 90 , were h is on ly paym en ts to ward s the to ta l in co m e ta x l iabi li ty of $5 09 ,71 8 re po rte d o n t he 20 08 return tha t h e fi le d i n Ja nu ary 20 11 . Res po nd en t h as sat is fie d t he bu rd enof p ro du ct io n u nd er s ect io n 74 91 (c). See McLai ne v. Co m m is si on er, 1 38 T.C. 22 8, 2 45 (20 12 ). Thu s, the bu rd enof p ro of

is on pe ti ti on er t o s ho w th athe is no t l iabl e fo r th e ad di ti on to tax . Pet it io ne r co nt en ds th athi s fa il ur e to pa y tax was due to reas on ab le cau se an d n otwil lfu l n eg le ctbe cau se he rel ie d o n atax return p rep arerwho m ad e m ul ti pl e err or s wh enpre pa rin g h is tax return. Pe ti ti on er t es ti fie d tha t h e d idno t wis h t o fu ll y

pa y hi s 2 00 8 i nc om e ta x u nt il th e err or s wer e fi xe d. A tax pa y er h as reas on ab le cau se forfai lure t o t im el y pa y tax if “ th e ta xp ay er ha s m ad e a s at is fact ory

sh owi ng th athe ex erci se d o rd in ary bu si ne ss care an d prud en ce i n p ro vi di ng forpa y m en t o f hi s t ax li ab il it y

an d was ne ve rth el es s ei th er un ab le to pa y

th e ta x o r wou ldsu fferanun du e h ard sh ip * * * i f he pa idon th e due da te .” Sec. 3 01 .66 51 -1 (c)( 1) , Pro ced . & Adm in . Reg s.; see als o Do wni ng v. Co m m is si on er, 1 18 T.C. 22 , 28 (20 02 ). Pet it io ne r arg ue s t ha t h e sa ti sf ie d t he reas on ab le cau se st an da rdinsec ti on 30 1.6 65 1- 1( c)(1 ), Pro ced . & Adm in . Reg s., b ecau se he ex erci se d o rd in ary bu si ne ss care an d p ru de nc e b y refu si ng to fil e anin co rrec tl y pre paredtax return- 8 -

[* 8] “ba se d o n a n e rro ne ou s m etho d o f acc ou nt in g.” Pet it io ne r po in ts ou t tha t bo th he an d h is wife rep eat ed ly atte m pt edto co nt actMr. Barr to ha ve hi m fix th e return b utth athe was unr es po ns iv e to th ei r reque st s. In Sep te m be r 20 10 pe ti ti on er h ire d an a tt orne y to he lp hi m

ob ta in hi s t ax da tafro m

Mr. Barr. Pet it io ne r ackno wled ge s tha t as earl y as Ap ril 20 09 he be li ev edth e return pr ep aredby Mr. Barr t o b e in accu rat e, y ethe wait edalm os t 1 8 m on th s b efo re hi rin g M r. Co he n t o p rep are a no th er return u si ng th e p ro pe r m etho d o f acc ou nt in g. Whi le we un de rs ta ndth e d iff ic ul ty pet it io ne r expe rie nc edtrying to sec ur e co op erat io n fr om

th e in it ia l re turnpre pa rer, p et it io ne r’s de lay of 1 8 m on th s b efo re hi rin g alawyer to sec ur e th e return o f hi s t ax da taan d asec on d re tu rnpre pa rer t o pr ep are aco rrec t re turnwas u nr eas on ab le an d re pr es en te d afai lu re t o e xe rci se or di na ry bu si ne ss care an d p ru de nc e. Pet it io ne r al so co nt en ds hi s fa il ur e to ti m el y pa y hi s 2 00 8 i nc om e ta x was du e to hi s re li an ce o n h is tax return p rep arer . Howev er, p et it io ne r’s rel ianc e o n hi s t ax return p rep areris no t s uf fic ie ntto sh ow h is fai lu re t o t im el y pa y hi s 2 00 8 in co m e ta x was du e to reas on ab le cau se . The Supr em e Co urt h as sai d t ha t

“ [w]henanacco un ta ntor a tt orne y advi se s a t ax pa y er o n am at te r of tax law, s uc h
as whet he r a l iabi li ty exi st s, i t i s re as on ab le forth e ta xp ay er t o re ly on t ha t advi ce.” Un it edSta te s v . Boyle, 4 69 U.S. 24 1, 2 51 (19 85 ). Howev er, the- 9 -

[* 9] Supr em e Co urt h as als o s ai d t ha t “ on e d oe s n otha ve to be a ta x e xp ertto kn ow t ha t * * * tax es m

us t b e p ai d wh enth ey

are due .” Id . Tho ug h B oyle in vo lv eda se ct io n 6 65 1( a)(1 ) ad di ti on to tax forfai lu re t o t im el y fil e, co urts co ns id eri ng th e is su e h av e h el d t ha t the de te rm in at io n o f “ reas on ab le cau se ” u nd er pa rag rap h (2 ) sh ou ldrece iv e an al y si s s im il ar t o t ha t u nd er p arag rap h (1 ). See E. W in d In du s., In c. v. Un it edSta te s, 1 96 F.3d49 9, 5 04 n.5 (3dCir . 19 99 ); F ran Co rp . v. Un it edSta te s, 1 64 F.3d81 4, 8 16 n.2 (2dCir . 19 99 ); Va le n M fg . Co. v
. Uni te d S ta te s, 9 0 F .3d11 90 , 11 93 n.1 (6t h C ir. 1 99 6)
. Pet it io ne r’s rel ia nc e o n h is tax return p rep areris no t a r eas on ab le cau se for fai lu re t o t im el y

pa y hi s i nc om e ta x. Se ct io n 6 15 1( a) p ro vi de s t ha t p aym en t o f ta x is du e atth e ti m e fi xe d fo r fi li ng th e co rres po nd in g t ax return d et erm in edwitho ut reg ardto an y

ex te ns io n o f ti m e fo r fi li ng th e return. Se ct io n 6 07 2( a) p ro vi de s t ha t fo r in di vi du al s t ax returns sh al l b e fi le d o n o r be fo re the 15 thda y of Ap ril fo ll owi ng th e cl os e o f th e cal en da r y ear. Th us , pet it io ne r’s 20 08 tax was due on Apr il 15 , 20 09 . The t ax pa y er’s dut y to ti m el y fil e a return a ndpa y

tax is
no nd el eg ab le . See Bo y le , 46 9 U.S. at25 1- 25 2; see als o M cGee v . Comm is si on er, 97 9 F .2d66 , 71 (5t h C ir. 1 99 2) (ho ld in g t ha t the du ty to t im el y fil e a t ax return i s a n on de le gabl e dut y

th atis no t ex cu se d b y

rel ia nc e o n a n a ge nt , andsu ch rel ia nc e is no t a r eas on ab le cau se forlat e fi li ng un de r se ct io n 6 65 1( a)(1 )), aff ’g T.C.- 10 -

[* 10 ] Mem o. 1 99 1- 51 0; Co ru m v. Un it edSta te s, No . 80 -0 38 7- CV-W-7, 1 98 2 WL 16 34 (W .D. Mo. J an . 12 , 19 82 ) (rejec ti ng ex ecu to r’s arg um en t tha t h e rel ie d o n a n at to rn ey to pre pa re an d fi le th e es ta te tax return a s re as on ab le cau se forhi s fa il ur e to ti m el y pa y ); Th om

v. Un it edSta te s, No . 80 -1 76 , 19 80 W L 16 90 , at * 2 (D. Or. Oct. 2 3, 1 98 0) (“ As a g en eral rul e, th e dut y to fil e returns an d d ep os itan d p ay ta xe s i s p ers on al to th e ta xp ay er an d c an no t b e ex cu se d b y de le ga ti on to othe rs .”); Meyco Pro ds . Inc . v. Un it edSta te s, No . 76 C 1 33 9, 1 97 9 WL 14 13 (E.D.N.Y. Ju ly 21 , 19 79 ) (rejec ti ng th e ta xp ay er’s arg um en t tha t i t re li edonit s at to rn ey s an d
acco un ta nt s t o c om

pl y with i ts leg al ob li ga ti on s t o re qu es t an ex te ns io n o f ti m e to fil e an d h ol di ng th atitwas n otreas on ab le cau se un de r se ct io n 6 65 1( a)(1 ) be cau se a ta xp ay er m ay

no t d el eg at e it s dut y

to co m pl y with the law) . W e h ol d p et it io ne r ha s n otest ab li sh edth athi s fa il ur e to ti m el y pa y hi s 2 00 8 i nc om e ta x l iabi li ty w as du e to reas on ab le cau se . W e su st ai n re sp on de nt ’s det erm in at io n o f anad di ti on to tax un de r se ct io n 66 51 (a)( 2) for

pe ti ti on er’s fai lu re t o t im el y pay hi s 2 00 8 i nc om e ta x.

Deci si on wil l b e en te red fo r res po nd en t.