TAX COURT OPINION

Case: Leon Vince & Marilyn Meadows Johnson
Docket Number: 18217-11
Judge: Halpern
Opinion Type: bench
Filed: 07/23/2012
Pages: 5

UNITED STATES TAX COURT WASHINGTON, DC 20217 SEC LEON VINCE & MARILYN MEADOWS JOHNSON, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 18217-11. 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 petitioners and to respondent a copy of the pages of the transcript of the trial in the above case before Judge James S. Halpern at Chicago, Illinois on June 13, 2012, containing his oral findings of fact and opinion rendered at the conclusion of trial. In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155. (Signed) James S. Halpern Judge Dated: Washington, D.C. July 23, 2012 SERVED Jul 24 2012 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 Opinion by Judge James S. Halpern June 13, 2012 Johnson v. Commissioner Docket No. 18217-11 THE COURT: 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 opinion shall not be relied upon as precedent in any other case. 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 Tax Court Rules of Practice and Procedure. Unless otherwise indicated, all section references are in the Internal Revenue Code in effect for the year in issue, and all Rule.references are to the Tax Court Rules of Practice and Procedure. Respondent has determined a deficiency of $6,624 in petitioners' Federal income tax for 2007, in addition to tax of $80.40 under Section 6651(a) (1), and an accuracy-related penalty of $1,324.80 under B'ection 6662(a). The parties have entered into a stipulation of settled issues, the only issue remaining is petitioners' claim that no penalty should be imposed under Section 6662(a) because, with respect to the underpayment in tax, petitioners acted with reasonable cause and in good faith. See secpée 6664 (c) (1). The parties have stipulated certain facts, the 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 stipulation of facts with attached exhibits is incorporated herein by this reference. The determination of whether a taxpayer acted with reasonable cause and in good faith depends on the pertinent facts and circumstances, including the taxpayer's efforts to assess his or her proper tax liability, the knowledge and experience of the taxpayer, and the taxpayer's reliance on the advice of a professional. Sec. 1.6664-4(b) (1), Income Tax Regs. The taxpayer bears the burden of proof with respect to the reasonable cause and good faith defense. Section 7491(c); Rule 142(a); Higbee v. Commissioner, 116 T.C. 438, 446 (2011). Petitioners ask that we not sustain that accuracy-related penalty because they had a tax professional prepare their return for 2007. We have found that reliance on a tax professional demonstrates reasonable cause when a taxpayer selects a competent tax adviser, supplies the adviser with all the relevant information, and consistent with ordinary business care and prudence, relies on the adviser's professional judgment as to the taxpayer's tax obligation. Sec. 6664 (c) (1), Estate of Young v. Commissioner, 110 T.C. 297(1998); Am. Props. Inc. v. Commissioner, 28 T.C. 1100 (1957), aff'd, 262 F.2d 150 (9th Cir. 1958). All facts Heritage Reporting Corporation (202) 628-4888 5 1 2 3 4 5 6 7 8 and circumstances are considered in determining whether a . taxpayer reasonably relied in good faith on professional advice, including the taxpayer's education, sophistication and business experience. Sec. 1.6664-4 (a) and (b), Income Tax Regs. Petitioners have not established that their reliance on their return preparer was reasonable and in good faith. The sum and substance of petitioners' 9 · testimony was that they relied on their tax return 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 preparer, and the errors giving rise from the deficiency resulted from human error. Petitioners did not demonstrate that they provided all the necessary and accurate information to the return preparer. They did not demonstrate that their return preparer was competent. Indeed, neither petitioner reviewed the return before they filed it. We cannot turn a blind eye to these oversights and simply accept petitioners' assertion alone that they relied upon the return preparer as a defense against the accuracy-related penalty. See Peacock v. Commissioner, T.C. Memo. 2002-122. We sustain respondent's determination that petitioners are liable for the accuracy-related penalty under section 6662(a) for 2007. That concludes the Court's oral findings of fact and opinion in this case. Decision will be entered under 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 Rule 155. (Whereupon, at 10:08 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // // // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888