TAX COURT OPINION

Case: Nanci M. Paulson
Docket Number: 23575-07S
Judge: Colvin
Opinion Type: bench
Filed: 06/10/2008
Pages: 7

UNITED STATES TAX COURT Washington , D .C . 2021 7 NANCI M . PAULSON, Petitioner, v . Docket No . 23575-07S COMMISSIONER OF INTERNAL REVENUE, Respondent . O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s 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 of the above case before Special Trial Judge Lewis R . Carluzzo at St . Louis, Missouri, on May 21, 2008, containing his oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, decision will be under Rule 155 . (Signed) Lewis R. Carluzzo Special Trial Judg e Dated : Washington, D .C . June 10, 2008 SERVED JUN 1 1 2008 2 1 Bench Opinion by Special Trial Judge Lewis R . Carluzzo 2 May 21, 200 8 3 Paulson v . Commissioner Docket No . 23575-07S 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion in this case, an d 6 the following represents the Court's oral findings of 7 fact and opinion . The oral findings of fact an d 8 opinion shall not be relied upon as precedent in any 9 other case . 10 This proceeding for the redetermination of a 11 deficiency is a Small Tax Case conducted pursuant to 12 the provisions of section 7463 of the Internal Revenue 13 Code of 1986, as amended, and Rules 170 through 175 o f 14 the Tax Court Rules of Practice and Procedure . 15 This bench opinion is made pursuant to the 16 authority granted by section 7459(b) of the Internal 17 Revenue Code of 1986, as amended, and Rule 152 of the 18 Tax Court Rules of Practice and Procedure . 19 Hereinafter in this bench opinion, section 20 references are to the Internal Revenue Code of 1986, 21 as amended, in effect for 2003 . Rule references are 22 to the Tax Court Rules of Practice and Procedure . 23 Shine Lin appeared on behalf of petitioner . 24 Michael W . Bitner appeared on behalf of respondent . 25 In a notice of deficiency dated July 10, Heritage Reporting Corporatio n (202) 628-4888 3 1 2007, respondent determined a deficiency in an d 2 several additions to tax with respect to petitioner's 3 2003 Federal income tax . 4 At trial, respondent made a claim for an 5 increased deficiency, see section 6214(a), and it 6 appears that the parties have agreed to the amount of 7 the deficiency, or increased deficiency . 8 The issue for decision is whether petitioner 9 is liable for the various additions to tax . The 10 resolution of the issue depends in part upon whether 11 petitioner's failure to file a 2003 Federal income tax 12 return and her failure to pay her 2003 Federal income 13 tax liability were due to reasonable cause and no t 14 willful neglect . We note at the outset that under the 15 circumstances of this case, there is no reasonabl e 16 cause exception to the imposition of the section 6654 17 addition to tax . See Mendes v . Commissioner , 121 T .C . 18 308, 323 (2003) ("Except in very limited circumstances 19 not applicable to this case, see sec . 6654(e)(3)(B), 20 section 6654 provides no exception for reasonabl e 21 cause for lack of willful neglect ." ) 22 Relying primarily, if not exclusively, upon 23 the advice of her husband, who in turn relied entirely 24 upon advice of an individual alleged to be an attorney 25 whose competence has not only not been established , Heritage Reporting Corporation (202) 628-4888 4 1 but is seriously in question, petitioner, a colleg e 2 graduate, failed timely to file a 2003 Federal income 3 tax return even though she was employed that year and 4 her income would have otherwise obligated her to d o 5 so . See secs . 6012(a), 6072(a) . Petitioner's failure 6 to file continued for a period that by a wide margi n 7 exceeded four months . Based upon the same stream of 8 advice, petitioner failed to make estimated ta x 9 payments during 2003 (apparently there were no income 10 taxes withheld from her wages for that year either) . 11 As a result of her failure to file a return 12 for 2003, respondent, on May 25, 2007, exercised his 13 authority under section 6020(b) and made "such return 14 from his own knowledge and from such information as he 15 can obtain through testimony or otherwise . " 16 Based upon the foregoing, in the above- 17 referenced notice of deficiency respondent impose d 18 additions to --ax under sections 6651(a)(1), 6651(a)(2) 19 and 6654 . Petitioner now challenges the imposition of 20 each of those additions, but only upon the ground that 21 her failures were due to reasonable cause and no t 22 willful neglect . 23 The controlling legal principles an d 24 relevant statutes are well known to the parties and 25 little would be gained by including a general Heritage Reporting Corporatio n (202) 628-4888 5 1 discussion on those matters here . Instead, we turn 2 our attention to the precise dispute we have bee n 3 called upon to resolve . 4 The burden of production with respect to 5 each of the additions to tax here in dispute rest s 6 with respondent . See sec . 7491(c) . The evidence i n 7 this case clearly establishes that respondent's burden 8 has been met, and petitioner does not sugges t 9 otherwise . The burden of production imposed upon 10 respondent pursuant to section 7491(c) does not 11 require respondent to establish that petitioner's 12 failures were due to willful neglect and not due 13 reasonable cause . Higbee v . Commissioner , 116 T .C . 14 438, 447 (2001) . The burden to establish that her 15 failures were due to reasonable cause and not willful 16 neglect rests with petitioner, and this she has failed 17 to do . 18 Although given more than an ampl e 19 opportunity to do so, other than to suggest it had 20 something to do with the Code of Federal Regulations, 21 petitioner's husband was either unable or unwilling to 22 explain the nature of the tax advice he received and 23 passed on to petitioner . Under the circumstance s 24 presented and without knowing precisely what advice 25 petitioner's husband passed on to her, we can hardly Heritage Reporting Corporatio n (202) 628-4888 6 1 conclude that her reliance upon that advice was 2 reasonable . As we view the matter, at best , 3 petitioner's reliance upon her husband's advice was 4 more attributable to her affections and emotion s 5 towards him than it was to reason . At worst , 6 following his advice and failing timely to file a 2003 7 Federal income tax return demonstrates her reckles s 8 indifference regarding her legal obligation to have 9 done so . See United States v . Boyle , 469 U .S . 241, 10 245 (198S) . 11 In closing we think it also appropriate to 12 note that the record does not disclose the content of 13 what "information" was sent to respondent in support 14 of the exemption letter included in evidence and 15 repeatedly referred to in the presentation o f 16 petitioner' s case . Without knowing the content of 17 what "information" was sent, the exemption letter, 18 simply put, provides no support to petitioner' s 19 position . 20 Because petitioner does not otherwis e 21 challenge the imposition of any of the additions to 22 tax here in dispute, she is liable for each of them . 23 To reflect the foregoing and the agreement 24 between the parties on matters not addressed in this 25 bench opinion, decision will be entered under Rul e Heritage Reporting Corporation (202) 628-4888 7 1 155 . 2 This concludes the Court's oral findings of 3 fact and opinion in this case . 4 (Whereupon , at 2 :09 p .m ., the bench opinion 5 in the above -entitled matter was concluded . ) / / / / / / / / / / / / / / / / / / / / / / 6 7 8 9 10 11 12 13 14 15 1 6 1 7 18 19 20 21 2 2 2 3 2 4 25 Heritage Reporting Corporation (202) 628-4888