TAX COURT OPINION

Case: Joseph John Gioeli
Docket Number: 12002-15S
Judge: Guy
Opinion Type: bench
Filed: 06/13/2016
Pages: 7

JOSEPH JOHN GIOELI, Petitioner, v. UNITED STATES TAX COURT WASHINGTON, DC 20217 PA ) ) ) ) Docket No. 12002-15S. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) 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 abovecaptioned case before Special Trial Judge Daniel A. Guy, Jr., at Los Angeles, California, on May 23, 2016, containing his oral findings 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, an order and decision will be entered for respondent. Dated: Washington, D.C. June 13, 2016 (Signed) Daniel A. Guy, Jr. Special Trial Judge SERVED Jun 13 2016 Capital Reporting Company 3 1 2 3 4 5 Bench Opinion by S.T. Judge Daniel Guy, Jr. May 23, 2016 Joseph John Gioeli v. Commissioner Docket No. 120.02-15S THE COURT: The Court has decided to render 6 Oral Findings of Fact and Opinion in this case, and 7 8 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 14 15 16 17 18 19 other case. This proceeding for the redetermination of a deficiency is a small tax case conducted pursuant to the provisions of Section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 174 of the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by Section 7459(b) of the Internal Revenue Code of 1986 as amended, and Rule 152 of the 20 Tax Court Rules of Practice and Procedure. 21 Hereinafter in this bench opinion, section references 22 23 24 25 are to the Internal Revenue Code of 1986, as amended, in effect for 2012, and rule references are to the Tax Codrt Rules of Practice and Procedure. Petitioner resided in California at the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 time the petition was filed, and he appeared at trial pro se. Mark A. Nelson appeared on behalf of Respondent. On March 18, 2016, the parties filed with the Court a Stipulation of Settled Issues in which 6 Petitioner conceded that he failed to include in his 7 8 9 10 11 12 13 14 15 16 taxable income for 2012 rents or royalties of $173 and income from a partnership/trust/small business of $92,713. He further conceded that he is liable for an accuracy-related penalty under Section 6662(a) as determined by Respondent. At trial, the parties filed with the Court a Stipulation of Facts with accompanying exhibits that is incorporated herein by this reference. The sole issue remaining in dispute is 17 whether Petitioner is liable for an addition to tax 18 19 20 21 22 23 24 of $4,325 imposed under Section 6651(a)(1) for the taxable year 2012. In 2012, Petitioner was a member/partner of Voicegenix, LLC. Although Petitioner prepared and filed his personal Form 1040 U.S. individual to CcVT tax D.6 return for 2012, he and other Voicegenix partners relied on an accounting firm to prepare and file 25 Voicegenix's tax return for 2012. 866,488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 Petitioner testified credibly that the accounting firm had filed requests to extend the filing date for his individual federal income tax returns in years past, and that he was assured by a partner at the accounting firm that an extension request would be filed on his behalf for the taxable year 2012. Petitioner filed his federal income tax return on October 15th, 2013, six months after the expiration of the normal filing deadline. The Internal Revenue Service has no record of receiving a request of filing extension in respect of 13 Petitioner's individual income tax return for 2012. 14 Respondent issued a Notice of Deficiency to 15 Petitioner for 2012, determining in pertinent part 16 17 18 19 20 21 22 23 24 25 that he is liable for an addition to tax under Section 6651(a)(1) because he was delinquent in filing his income tax return. Petitioner maintains that he reasonably relied on the accounting firm to submit to the IRS a request for a filing extension on his behalf. Section 6651(a)(1) imposes an addition to tax if a taxpayer fails to timely file an income tax return, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 12 13 To avoid the addition to tax, the taxpayer must establish both (1), that the failure to file ás due to reasonable cause; and (2), that the failure did not result from willful neglect. Sec. 6651(a); United States v. Boyle, 469 U.S. 241, 245 (1985). It is well-settled that a taxpayer who files his return after the filing deadline cannot establish reasonable cause by proving that he relied on his attorney or accountant to timely file his return or a request.for a filing extension. See McMahon v. Commissioner, T.C. Memo 1995-547, aff'd, 114 F.3d 366 (2d Cir. 1997). In McMahon, this Court reviewed the Supreme 14 Court's holding in United States v. Boyle, the 15 16 17 18 19 leading case on whether reliance on an agent constitutes reasonable cause for filing a late tax return. In Boyle, the executor of an estate relied on an attorney to file the estate's tax return. 20 Although the executor's attorney assured him that the 21 22 23 24 25 return would be timely filed, it was not leading the executor to argue that his reliance on the attorney constituted reasonable cause. The Supreme Court rejected this argument, and in holding for the United States, established the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 13 following bright line rule. "The 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 for a late filing under 6651(a)(1).." United States v. Boyle, 469 U.S. at 251. Consistent with the preceding discussion, we conclude the Petitioner has not shown reasonable cause and is liable for the addition to tax under Section 6651(a)(1). Accordingly, a decision will be entered for Respondent. At the trial of this matter, the Court inquired whether Respondent had considered whether 14 Petitioner might be eligible for a so-called 15 16 17 18 19 20 21 22 23 24 25 "First-time abatement relief" under the administrative provisions outlined in Internal Revenue Manual Part 20.1.1.3.6.1 (August 5, 2014). Although it appears that first-time abatement relief was not considered before the trial of this case, it is unclear whether Petitioner would qualify for such relief in any event. The parties are encouraged to discuss whether Petitioner is eligible for abatement of the addition to tax after the addition to tax has been assessed. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company This concludes the Court's Oral Findings of 8 Fact and Opinion in this case. (Whereupon, at 8:58 a.m., the above- entitled matter was concluded.) | 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com