TAX COURT OPINION

Case: Angelia S. Olsen
Docket Number: 2807-15S
Judge: Goeke
Opinion Type: bench
Filed: 11/21/2016
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 ANGELIA S. OLSEN, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 2807-15S. ) ) ) ) ORDER 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 petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph Robert Goeke at New Orleans, Louisiana on November 4, 2016, containing his oral fmdings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155, Tax Court Rules of Practice and Procedure. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. November 21, 2016 SERVED NOV 2 2 ZUN Capital Reporting Company 3 1 2 Bench Opinion by Judge Joseph Robert Goeke November 4, 2016 3 Angelia S. Olsen v. Commissioner 4 5 6 7 8 Docket No. 2807-15S The Court has decided to render Oral Findings of Fact and Opinion in this case and the following represents the Court's Oral Findings of Fact and Opinion. The Oral Findings of Fact and 9 Opinion shall not be relied upon as precedent in any 10 11 12 13 other case. This opinion is rendered pursuant to Internal Revenue Code Section 7459 (b) and Rule 152 of the Tax Court Rules of Practice and Procedure. Internal Revenue Code section references hereinafter 14 will be simply referred to by section number and they 15 16 17 18 19 20 21 22 23 24 25 refer to the Internal Revenue Code in effect for the year 2012. This is a deficiency case upon which the jurisdiction of this Court is based upon Sections 6213(a) and 6214(a). The IRS issued a notice of deficiency to the Petitioner for the y ar 2012 and asserted an income tax deficiency and an addition to tax under Section 6662(a). The parties entered into a stipulation of facts and stipulated to certain facts and the admission of certain documents into the record and 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 the Petitioner testified. At the time the petition was filed in the case the Petitioner was a resident of Louisiana. The petitioner filed a Form 1040 for the year 2012 in a timely fashion and on that return she reported certain income she had received based upon 7 withdrawals from a retirement account. 8 9 Respondent asserts that under Section 72(t)(1) these withdrawals, which were clearly before 10 the Petitioner reached the age of 59 and a half and 11 which Petitioner has not established were subject to 12 13 14 any of the exceptions contained in Section 72(t), were subject to an additional tax liability based upon ten percent of the portion of the withdrawal 15 which was includable in gross income. 16 17 18 Petitioner did not assert at trial that she was not liable for this additional ten percent tax liability. She did maintain that she presumed the 19 withholding amounts from the party that had her 20 21 retirement account upon her withdrawal !from the retirement account, would have been sufficient to pay 22 all the taxes that were due, based upon the 23 withdrawal. 24 25 However, when she computed her taxes on her income tax return, which she prepared herself, she 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 did not submit the appropriate form and make the appropriate calculation to determine the impact of Section 72(t)(1) upon her tax liability. There's no issue in the case as to whether 5 Petitioner is liable for the deficiency determined by 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Respondent, which deficiency amount exceeds the threshold amount for the application of the addition to tax under Section 6662(a), which is ten percent of the tax required to be shown on the return or $5,000. The deficiency as determined by Respondent is in the amount of $12,971, and the portion of that based upon Respondent's' concessions that remains in dispute is $12,304. This exceeds obviously the threshold amounts for the application of the addition to tax. Thus, Respondent has carried the burden of demonstrating that the addition to tax would be applicable unless the petitioner could establish that she has reasonable cause for the understatement of tax, pursuant to Section 6664(c). Petitioner's only attempt to do that was based upon her argument that the taxes withheld were deemed to be sufficient in her mind to pay the entire tax liability and she did not anticipate that there was any amount of additional tax due on the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 withdrawal. 2 3 4 5 6 7 8 9 10 11 12 13 While we're sympathetic to Petitioner's position, and we believe she was candid in her testimony, she had the obligation to correctly determine her tax liability. The fact that she prepared the return herself did not alleviate her obligation to carefully review the instructions and to seek help if she was confused as to the appropriate manner in which to determine her tax liability. Therefore, we find that Respondent has carried the initial burden of proof with respect to the application of Section 6662(a), and that the 14 Petitioner has failed to demonstrate a reasonable 15 16 17 cause for her failure to properly report the tax liability. Given the parties' concessions on the 18 Respondent's recalculation of Petitioner's 19 20 21 22 23 24 25 deficiency, a Rule 155 computation will be necessary to establish the correct amount of deficiency and to determine the appropriate amount of the addition to tax based upon this Court's opinion. This concludes the Court's Oral Findings of Fact and Opinion in this case. (Whereupon, at 9:11 a.m., the above- 866.488.DEPO www.Capita1ReportingCompany.com 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 Capital Reporting Company entitled matter was concluded.) 7 866.488.DEPO www.CapitalReportingCompany.com