TAX COURT OPINION

Case: Bengt N. & Judy Bengtson
Docket Number: 18945-09
Judge: Gustafson
Opinion Type: bench
Filed: 03/13/2012
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 RMM BENGT N. & JUDY BENGTSON, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 18945-09. ) ) ) ) ) ) ) ) ) ORD E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioners and respondent a copy of the pages of the transcript of the trial in the above case before Judge David Gustafson at Chicago, Illinois, on February 29, 2012, containing his oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, decision will be entered under Rule 155. (Signed) David Gustafson Judge Dated. Washington, D.C. March 13, 2012 SERVEDMar132012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Bench Opinion by Judge David Gustafson February 29, 2012 Bengtson v. Commissioner Docket No. 18945-09 THE COURT: The Court 1 s decided to render oral Findings of Fact and Opinion in this case. The following represents the Court's oral Finding3 of Fact and Opinion, which s all not be relied on as precedent in any other case. This Bench Opinion is m de pursuant to the authori y granted by section 7459 (b of the Internal Revenue Code, ahd Rule 152 of the Tax Court Rules of Practice and Procedure . By a statutory notice o deficiency dated May 8, 2009, tl e Internal Revenue Service i "IRS") determined a deficiency in the Federal income Rax of petitioners Bengt N. and Judy Bengtson for the year 2004, plus an accuracy- related penalty under section 6662 (a) and an addition to tax under section 6651(a) (1) in the amóunt of $7,992.90. The parties have settled the issues ur.derlying the tax deficier cy and the accuracy-related penalty, and the sole issue for decision is the Bengtsons' liability for the addition to tax under section 6651(a) (1) . For the reasons explaine hereafter, we hold the Bengtsons liable for the addition to tax, albeit in a somewhat smaller amount than was dete mined on the notice of defi iency, because the parties' settlement results in a 1 er tax deficiency than was dete mined on the notice of de ciency. The precise Heritage Reporting C po ation (202) 628-4380 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 amount f the addition to tax will be computed by the parties pursuant to Rule 155 . Trial of this case was conducted on February 27, 2012, in Chicago, Illinois . Respo dentS was represented by Julie A Jebe. . The Bengtsons rep:mcented themselves, and Mr. Bengtson was the only witness We find the following facts: Findings of FLct . At the time they filed their petition, the Bengtsons resided in Illinois . Since at least as early at 1995 and through 2003, the Ben tsons obtained extensions of time to file. their Federal income tax returns. They first filed a Form 4868, "Application' for Automatic Extens: or of Time to File U. S. Individual Income Tax Return", wh: cl· gave them a four-month extension from April 15 until Augu t 15. They then filed a Form 2688, "Application for Additi ral Extension of Time to File U.$. Individual Income Tax R ttrn", which, when approved by the IRS, gave them an c ditional two months until O tober 15. In niost years t1ese forms were prepared 'for the Bengtsons by professional eturnvpreparers, but in 2003 Mr Bengtson prepared them hi self . In 2004 Mr. Bengtson prepared a Form 4868 that gave them a four-month extension until August 15. However, he did riot submit a Form 2688 requesting an additional two Heritage Reporting Ccrporation (20 2) 628 -( 888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 months, and therefore the IRS app oved no such extension. The Bengtsons' 2004 income tax re nrn was date-stamped as received by the IRS on October 20 - 2005,- and the parties evidenti.y assume that it was filed October 15 (and that the date stamp was added five days la:er after processing of some so t) 2 The IRS issuèd its statutory notice of deficiency on May , 2009, determ ning, among other things, an addition to tax únder section 6651(a) (1) for the failure to timely file thé return. The Bengtsons t:.mely mailed their petition to this Court on August 4, 2009, alk it was filed August 10, 2009. Opinion Section 6651(a) (1) authorizes the imposition of an addition to tax for failure to fiJe a timely return, unless the tax ayer proves that such fai]ure is due to reasonable cause a id is not due to willful neglect. I. Th IRS carried itis. burden of production. Under section 7491 (c) , t he Commissioner has the burden f production wi!th respect to this addition to tax, and he met that burden:, The parti s stipulate that the Bengtsons did not file their return until October 15, 2005; and the IRS's transcript for the Eengtsons' 2005 income tax account shows that the Bengtsons cbtained an automatic extension until August 15, 2005, and shows no further Heritage Reporting Cocporation (202) 628-4883 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 extension to excuse the additional two-month delay in the filing of their return. That transcript is presumptive proof of the administrative event (and non-events) that it reflects. See Davis v. CommissiO Er, 115 T.C. 35, 40-41 (2000) It was therefore incumbent on the Bengtsons to prove he :contrary, i.e., that tFëy did request and obtain an add tional.two-month extensior,) but they did not do so. The Bengtsons did producie a years-long string of dual re uests, one on Form 4868 f r an automatic four-month extensión, and one on Ëorm 2688 for a second additional two- month e tension, for the years lea .ng up to 2004. However, they were unable to show for 2004 Form 2688; and they were unable to explain why such a form if it had been submitted, would be missing from their records for the one year in which t e IRS's records sim11arly show no such document. In finding against the Lengtsons, we do not conclude that Mr. Bengtson's testimony was deliberately false. On the contrary, we conclude he was sincere. However, Mr. Bengtson did not testiff that the IRS ever sent him an aþproval of a request for an additional extension. Nor did he testify that he actually ::emembered submitting a Form 2688 making such a request; h testified only to the effect t at he believed that he muat have done so, and that his belief is consisten with his :ecord of conscientious, timely filings in prior and subsequer.t years. However, in Heritage Reporting C 1poration (202) 628-4(cid:16)254:88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 many of those years, hired return preparers had handled the extensions for. him, and from their conduct it is difficult to imput e to him a habit of remember ing to f ile a second extension request. In 2003, the y r immediately prior to the yea at- issue, Mr. Bengtson him elf did file both a Form 4868 and a second extension re uest on Form 2688; but this fa t does not lea us to the onclusion that he probably did the same the next ye2 r. The much more plausib e explanation is that he E imply forgot to do so, and that the IRS' s record is correct . e hold that the Bengtso s did not carry their bur n to prove the requesting p_r the pproving of a t o-month e>te sion from August 15 to October 15, 2005. II. Th Bengtsons did not show re sonable cause. The addition to tax app] es "unless it is shown that sudh failure is due to reasor ble cause and not due to willful neglect", and o this poirt! the Bengtsons have the burden of proof . The iinplementinc regulation provides, "If the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file he return within the prescribed time, then the delay is d2e to a reasonable cause." 26 C.F.R. sec. 301.6651-1(c). The Supreme Court endorsed this standard in its opinio 2 in United States v. Boyle, 469 U.S. 241 (19 5), which repeats that the taxpayer must sh he was "unabl to file", ii. at 245, and is Heritage Reporting Cocporation (202) 628-4883 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 8 explici that "carelessness" does not constitute "reasonable cause", id. at 247. Únfortunately, ''carelesonE ss" is an apt characterization of Mr. Bengtson'n Error in· failing to obtain the jadditional t wo-month entension. In so saying, we do not mean to criticize his mistnke unduly, or to suggest that it nis extraordinary. On the acntrary, his lapse is one that inSpires the feeli!ng, "There, £ut for the grace of God, go I." However, the error was not "reasonable", it.was not the result of an error of reason or a miscalculation. He just fo got. His commendable consåientiousness in the prior and succeeding· years may well tend a!gainst any suggestion that he willfully disregarded his iling obligation, but it does .not undermine the fact that, in 2004, Mr. Bengtson was careles . In Boyle the Supreme Cot rt concluded that " [t] he failure to make a timely filing of a tax return is not excused by the taxpayer s reliance on an agent, and such reliance is not 'reasonable cause' f r a late filing under section 6651(a) (1) . " Id. at 252. Th t is, even a taxpayer who gave an explicit filing instrtation to his preparer will still o e the addition to tax if tl e preparer forgets. That I being s , the taxpayer ho himself does the forgetting must certainl be liable for the addit:ion to tax. // I Heritage Reporting o cporation (202) 628-4883 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Conclusion The Bengtsons are liable for the addition to tax under sèction 6651(a) (1) for the ear 2004. To give effect to this 1holding and the parties' åncessions on the tax deficiericy issues, decision will be entered under Rule 155. This concludes the Court e oral Findings of Fact and Opiñion in this case . (Whe reupon, a t 12 : 0 9 p . r , the bench opinion in the abo e-entitled matter was con( ltded. ) // // // // / / // // // // / / // // // // // Heritage Reporting < rporation (202) 628-48n8