TAX COURT OPINION

Case: Hanna Bick
Docket Number: 27410-10SL
Judge: Kroupa
Opinion Type: bench
Filed: 12/06/2011
Pages: 10

UNITED T TES TAX COURT WASHINGTON, DC 20217 HANNA BICK, Petitioner, v. . COMMISSIONER OF INTERNAL REVENUE, Re spondent . ) ) ) ) ). ) O R D E- R · Docket No. .27410-10S L Pursuant to Rule 152 (b) Tax Court Rules of Practice and Procedure, ,it is ORDERED that the Clerk o t he Court shaÏl transmit to petitioner arid tc l'espondent d copy of transcript of . the proceedings)of Diane L. Kroupa at Los Angeldá, California on November 17, 2011, containing her bral .findings òf the above case before Judge fact and opinion; the pacjes of the . In accordance with the o al L findings of fact and oþinion, decision will be entered for iespondent. (Signed) Diane L. Kroupa udge Dated: Washingtor, D C. '2011 December 6, . SERVED ÖËC - 7 iÔ 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 3 Bench Décision by Judge Diane L. Kroupa Bick v. Comm1ssloner Docket Number 27410-10S L November 17, 2011 THE COUF T HAS DECIDED TO RENDER ORAL FINDINGS OF FACT AND OPINION IN THIS CASE AND THE FOLLOWING REPRESENTS THE COUE.T ' S ORAL FINi(cid:0)540INGSOF FACT AND OPINION. THESE ORAL FINDINGS OF FAC AND OPINION SHALL NOT BE RELIED UPON AS PRECEDENT IN ANY OTHER CASE . This proceëding was heard as a small tax case pursuant to the provisions of sèction 7463 and Rules 170 through 175. This. bench opinion is made pursuant. to the authority granted by section 7459 (b) and -Rule 152. All section references are to the Internal Revenue Code as amended and in effect for 2006, and all. Rule references are t-o the Tax Court Rules of Practice and Procedure. This is a collection review case involving a proposed levy to collect petitioner's additions to tax under section 6651(a) (1) for failure to file a return timely 'late filing) and section 6651(a) (2) for failure to pay tax (late payment) for 2006. Petitioner does not contest her income tax liability and interest attributable for 2006. Petitioner's pretrial memorandum also contests additions to tax under section 6654 for failure to pay estiinated taxes Heritage Reporting Corporation (202) 628-4888 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 4 (estimated tax addit on) . Petitioner stipulated that only the .lat-e filing and late payment additions are at issue. Petitioner withdrew any request for the Court to address the estimated tax addition at trial. We deem the estimated táx issue conceded. Rule 149 (b) . Cruz Saavedra appeared on behalf of petitioner. Alexandelt DeVitis and Sam Rezvani (specia ly recognized) appeared on behalf of respondent . . FINDINGS OF FACT Some of thé facts have been stipulated and they ará so found. The stipulation of facts .and accompanyïng exhibits are incorporated by this referenäe. Petitioner resided in California at the time she filed the petition with the! Court; Petitioner was married to Dr. Aron Bick for 25 years. Petitioner worked as a part-time teacher yet primarily stayed home and raised their five daughters while Dr. Bick earned income as an oncologist and handled the family'n finances and tax returns. Petitioner and Dr. Bick were legally separated in December .2004. In early 2005, petitioner retained an accountant ·(Mr. Bercutt) to prepare her tax return for 2004. Petitioner sought and received extensions of time to file the 2004 tax return, which was timely Heritage Reporting Corporation (202) 628-4888 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 filed in October 2005. In early 2006, petitioner provided information to Mr. Bërcutt so that he would prepare and file her return for 2005. Despite her requests, Mr. Bercutt never did so. She provided him with whatever financial iàformation she had again in early 2007 so that he would prepare and file her tax return for 200(cid:16)254. Mr. Bercuth again failed, however, to prepare the returns . Petitioner ultimately took the information to a new accountant and filed late returns for 2005 and 2006, b th filed in March 2008. Petitioner failed to report wage income for 2006. . . Petitioner paid a substantial portion of her tax liabilities and interest for 2005 and 2006. Respondent sought to collect the unpaid balances . Respond nt sent to petitioner a Final Notice of Intent to Levy and Notice of Your Right to a Hearing under Section 6330. Petitioner timely requested a hearing. At the collection due process hearing, petitioner's counsel requested that the Settlement of f icer abate the late- f iling . and late-payment additions to tax. He told the Settlement Officer that the additions to ta should be abated because petitio1er had not previously filed individual tax returns, her husband had handled the family tax . Heritage Reporting Corporation (202) 628-4888 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 . returns and she had iven an accountant all the tax information she had o file the returns for 2005 and 2006. She admits she had very little information, as her ex-husband ha most of the information ¿egarding the first ear she needed to file an income tax rettrn. The retu n for 2004 was timely filed. The .Settlement Officer f und no basis for abatement of penalties due to rea onable cause. The Settlement officer did, however agree to abate $1,760.85 of the late-fi]ing addition as a first-time delinquency waiver. Petitioner d d not offer a collection alternative nor rais any spousal defenses. These issues Lre deemed cohceded. Rule 331(b) (4). Respondent subsequently issued a Determination Notice upholding respondent's proposed collection action with respect to petitioner's outstanding additions to tax liabilities for 2006. Petitioner timely filed a petition with this Court. OPINION . Petitioner contests only her liability for the late-filing and late-payment additions to tax for 2006 in this collection review matter. The late-filing addition to tax is imposed for failure to file a tax return on or before the specified filing date unless Heritage Reporting Corporation (202) 628-4888 *1 it is shown.that such failure is due to reasonable 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 cause and not willful neglect. Sec. 6651(a) (1); United States v. Boyle, 469 U.S. 241, 245 (1985). The Commissioner has the burden of production with respect to additions.to tax. Sec. 7491(c); Higbee v. Commissioner, 116 T.C. 438, 446 (2001). Respondent has met his -burden in this case as petitioner admits that she failed to.file the return timely and failed to pay the additions to tax. In fact, the return for 2006 was not filed until March 2008, at which time he returns for 2005 and 2006 were both filed. We now add ess whether petitioner's failure to file a timely ret rn and to timely pay the tax was due to reasonable cause. The taxpayer bears the burden of proving= that the ate filing was due to reasonable cause ar.d not willful neglect. Id., at 446. Petit1oner[argues that she had reasonable cause because she was unfamiliar with preparing and filing tax returns and she provided whatever financial information she had to an accountant (Mr. Bercutt) to prepare the return. She allowed her accountant to keep her fin2.ncial information for over 24 months. We find petitioner's argument to be unpersuasive. Petitioner introduced no evidence concerning Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 1Ô 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 8 Mr. Bercutt's competénce,_ nor did she .introduce any evidence of any wi-itten correspondence or other demands she made of 1 r. Bercutt to file the return for 2006. We are also unóanvinced that.. petitioner provided all .necessary financial information to her accountant, as she failed to include wage income for 2006 even though 2 W-2 reflect d she received wage income in 2006. Petitioner failed to exercise ordinary business care and prudence . See Bank of. the West v. Commissioner, 93 T.C. 462, 472 (1989) . She merely made vague and uncorroborated statemeïr.ts regarding Mr. Bercutt's failure to file the return. In addition, petitioner failed to call Mr. Bercutt as a witness because he apparently expressed an unwi]lingness to estify due to health issues. The Court fá.ils to under tand why petitioner failed to present other reliable information fi^om Mr.. Bercutt . Respondent argues, and we agree, that the failure of a party to introduce evidence, which, if true, wöuld be favor ble to that party, gives rise to the presumption that that evidence would be unfavorable if produced. Wichita Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946), affd. F.2d 511 (10th Cir. 1947) (cid:16)042 Taxpayers, including petitioner, cannot Heritage Reporting Corporation (202) 628-4888 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 delegate their duty ¼0 file a timely return. United States v . Boyle, supta, at 249-250 . A preparer ' s negligence does not constitute reasonable cause for a failure to timely file. See Laney v. Commissioner, 674 F.2d 342, 350 (5th Cir. 1982) , affg. in part, revg. in part T.C. Mèmo. 1979 491; see also Baclit v. Commissiloner, T.C. .Memo. 1989-576. Moreover, etitioner argues that we should abate the additìons to tax for 2006 because she relied upon her husband to file the returns t for 25 years and she was unfamiliar with her filing requirements. The Court nctes that she was able to filé the return for 2004 tinely, which wás the first year after she became separated from her husband. We place no weight upon this arc ument . We hold th t petitioner has failed to satisfy her burden o proving reasonable cause and that she is liable fbr the late-filiñg addition to tax for 2006 . We also r ject petitioner s argument that Mr. Bercutt's delay ay be considered reasonable cause for petitioner's late payment of the taxes due. This Court and other courts have held that the dete rmination of reasonable cause under the late payment addition shohld receive similar analysis to that under the late-filing addition. See Russell v. . Heritage Reportïng Corporation (202) 628-4888 1. Commiss ..oner, T.C.. Memo. 2011-81. Therefore, for the 10 . 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 reasons we stated for the late-filing addition, we also ho d that petitioner is liable for the late- payment addition to tax. for 2006. Petitioner has failed to advance arguments or present evidence allowing us to conclude that the determination to sustain the proposed collection action was arbitrary capricious, ori without sound basis in fact or otherwise an abuse òf discretion. See, e.g., Giamelli v. Commissioner, 129 T.C. 107, 112, 115 (2007) . Petiti ner did not provide any collect:_on alternatives or present any spousal defensen. The record indicates that the only issue petitioner raised throughout the administrative process in her petition, and at trial was the l'7 . reasonable-cause defense to the late-filing and late- 18 19 20 21 22 23 24 25 payment additions. We therefore conclude that respondànt ' s. determination to proceed with the proposed collection action is not an abuse of discret:.on. To reflect the foregoing, decision will be entered for (cid:0)523espondent,and an appropriate order will be issued sustaining the determinations set forth in the Determination Notice, upon which this case is Heritage Reporting Corporation (202) 628-4888 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 11 based, egarding the unpaid additions to tax liab li ies for 2006. THIS CONCLtJDES THE COURT ' S ORAL FINDINGS OF FACT AN OPINION IN THIS CASE . (Whereupon, at 9f34 a.m., the bench opinion in the bove-entitled matter was concluded.) Heritage Reporting Corporation