TAX COURT OPINION

Case: Wesley A. Bordelon
Docket Number: 6050-08
Judge: Colvin
Opinion Type: bench
Filed: 02/05/2009
Pages: 8

UNITED STATES TAX COURT WASHINGTON , DC 2021 7 WESLEY A . BORDELON , .Petitioner ) Docket No . 6050-0 8 Responden t Pursuant to Rule .152(b),,Tax Court Rules of Practice an d Procedure, it i s ORDERED that the Clerk of the Court shall transmit herewit h to Petitioner and to respondent a copy of the pages of the transcript of the January 12, 2009, trial in the above case before Judge Robert A . Wherry, Jr ., at-Tampa, Florida, on .January !16, 2009, containing the oral findings-of fact and opinion rendered at~.the .conclusion of . .the trial. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent . (Signed) Robert A . Wherry, Jr. Judge SERVED FED Bench Opinion by Judge Robert A . Wherry, Jr . January 16, 200 9 Bordelon v . Commissioner Docket No . 6050-0 8 THE COURT : The Court has decided to rende r oral findings of fact and opinion in this case and th e and opinion . The oral findings of fact and opinio n shall not be relied upon as precedent in any othe r case . This bench opinion is made pursuant . to th e granted by section 7459(b) and Rule 152 . 12 Unless otherwise indicated, all section references are 13 to the Internal Revenue Code of 1986, as . amended and 14 in effect for the years at issue, and all Rul e 15 references are to the Tax Court Rules of Practice and 16 Procedure . This case is before the Court on a 17 petition for redetermination of accuracy-related 18 penalties under section 6662(a) in the amounts o f 19 $1,239, $1,482, and $1,783 that respondent determined 20 for petitioner's 2004, 2005, and 2006 tax years , 21 respectively . The issue for decision is whether 22 petitioner is liable for the penalties . 2 3 2 4 25 FINDINGS OF FAC T Some of the facts have been stipulated, an d the stipulated facts and accompanying exhibits ar e Heritage Reporting Corporatio n (202) 628-4888 hereby incorporated by reference into our findings . At-the-time he filed his petition, petitioner reside d in Florida . On his 2004, . 2005, and 2006 Forms 1040, U .S . Individual Income Tax Return, 'petitioner reported his total tax for each year-in the amounts of $7,912 , $4,959, and $14,376, respectively . Petitioner contends that he did not sign his returns for thos e 9 three years .- Nevertheless,'there-was a pattern o f 10 conduct for at least three years where .the tax returns .11 were prepared by a return preparer named Frank D . 12' -Lighty of Lighty & Associates on petitioner' s 13 instructions and were filed electronically . There is 14 no indication that Mr . Lighty was an attorney or a .15 certified public accountant at the tine he prepare d 16 petitioner's returns . 17 In 2007, petitioner agreed to deficiencies 18 of $6,194, $7, .412, and $8,915, for his 2004, 2005, and 19 2006 tax years, respectively . Those deficiencie s 20 arose from respondent's disallowance of deductions 21 --claimed on Schedule A, Itemized Deductions, o f 22 petitioner's income tax returns for those years . 23 On December 13, 2007, respondent issued to 24 petitioner a notice of deficiency .for his 2004, 2005, 25 and 2006 tax years . The notice reflects accuracy- Heritage Reporting Corporation (202) '628-4888 under section 6662(a) for each o f those tax years . Petitioner filed a timely petitio n with this Court in which he argued that "Frank Light y did all work on my returns and put deductions I wa s not aware of or informed about" and that "Frank Lighty electronically submitted my returns prior to my revie w and signature ."., He further argues that "If there ar e penalties * * * due they need to be paid by the one that falsified the returns . That would be Frank Lighty . A trial was held on January 12, 2009, in Tampa, Florida . At the trial, the Court repeatedl y .explained to petitioner that it could only decide thi s 14 case based on evidence and that petitioner' s 15 statements to the Court would not be evidence in the 16 case unless he was sworn in as a witness and . he made 17 those statements under oath . The Court furthe r 18 explained that, if petitioner was not sworn in, his 19 statements would constitute legal arguments, no t 20 evidence . Petitioner understood the Court' s 21 explanations but nevertheless chose not to be sworn 22 . . in . During his opening statement, he argued that h e 23 did not review his 2004, 2005, and 2006 Federal incom e 24 tax returns before they were filed . OPINION Heritage Reporting Corporatio n (202) 628-4888 Respondent determined that petitioner i s liable for penalties under section 6662(a) . Respondent bears the burden of production with respect to petitioner's liability for those penalties . Se e sec . 7491(c) . This means that respondent "must come forward with . sufficient evidence indicating that it is appropriate to . impose the relevant penalty ." Higbee . v .-Commissioner , 116 T .C . 438, 446 (2001) . Section 6662(a) imposes an accuracy-related . 1 0 penalty of 20 percent of any underpayment that i s 11 attributable to one of'the causes listed in subsectio n .12 (b) . One such cause is any substantial understatement 13 of income tax, defined for individuals' as a n 14 understatement (with certain exceptions under sectio n 15 6662(d)(2)(B) not applicable here) that exceeds th e 16 greater of (1) 10 percent of the tax required to be 17 shown on the return for the taxable year or (2 ) 18 $5,000 . Sec . 6662(b)(2), (d)(1)(A) . There is an exception to the section 6662(a) 2 0 penalty when a taxpayer can demonstrate (1) reasonabl e 21 cause for the underpayment and (2) that the taxpayer 22 acted in good faith with respect to the underpayment . 23 Sec . 6664(c)(1) . Regulations promulgated unde r section 6664 (c) provide further that the-determination of reasonable cause and good faith " is made on a case- Heritage Reporting Corporatio n (202) 628-4888 by-case basis, taking into account all pertinent fact s and circumstances ." Sec . 1 .6664-4(b)(1), Income Tax Regs . Reliance on the advice of a tax professiona l may establish reasonable cause and good faith for th e purpose of avoiding a section 6662(a) penalty. Se e United States v . Boyle , 469 U .S . 241, 251 (1985) . Such reliance, however, does not serve as an "absolute defense" ; it i s merely a "factor to be considered . " 10 Freytag v . Commissioner , 89 T .C . 849, 888 (1987) , 11 affd . 904 F .2d 101 1 (5th Cir . 1990), affd . 501 U .S . 12 868 (1991) In order to avoid a section 6662(a ) 13 penalty based on reliance , a taxpayer must prove tha t 14 15 (1) the adviser was a competent professional who ha d sufficient expertise to justify reliance, (2) th e 16 taxpayer provided necessary and accurate informatio n and (3) the taxpayer actually on the adviser' s advice . Se e Neonatology Associates, P .A . v . Commissioner , 115 T .C . affd . 299 F .3d 221 (3d Cir . 2002) . n addition, the duty to file an accurat e generally cannot be avoided by shifting return preparer . See, e .g . , Commissioner , 63 T .C . 149, 174 (1974) . 25 taxpayer using a return preparer still has a duty t o Heritage Reporting Corporatio n (202) 628-4888 s review the return for accuracy . In that regard, we have held that reliance on a . return preparer does not 'constitute reasonable . cause and good faith if the taxpayer-fails to review the-return before filing it . .See MetraChem Corp v . Commissioner , 88 T .C . 654 , 662=663 (1987) ; Pratt v . Commissioner , T .C . Memo . .2002-279 . n this case , respondent has satisfied th e 9 burden of production with respect to-the sectio n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6662 ( a)-penalties . Petitioner ' s understatements o f tax for his 2004, 2005 ,' and 2006 tax years ar e .substantial under section6662 ( d)(1)(A) because they exceed $ 5,000 and are greater than 1.0 percent of th e amount - required to be shown on his returns . The burden is therefore on petitioner to prove that h e acted with reasonable cause and in good faith . Petitioner - has not met that burden and ha s not shown that he actedwith reasonable cause or i n good faith . He 'did not provide an y testimony and di d not otherwise- submit evidence to satisfy th e requirements of Neonatology Associates, P .A . v . Commissioner , supra . Moreover , he concedes that he failed to review his returns before they were filed . Had he-reviewed his returns , he most likely would have .discovered at least some of the inaccurate entrie s Heritage Reporting Corporation (202) 628-4888 4111 reported on them . Under these circumstances , relianc e on Mr . Lighty does not excuse petitioner from liability under section .6662 (a) . We will therefor e sustain respondent' s determination that petitione r accuracy-related penalties for hi s 2004,2005i 2006 tax years . The Court has considered all of petitioner's contentions , arguments, requests, and statements . the extent not discussed herein, we conclude that the y are meritless, moot, or irrelevant . To reflect the foregoing , Decision will be entered for respondent . 13 Thi s concludes the Court' s oral finding s 14 fact and . opinion in this case . 3 :05 p .m ., .the bench opinio n concluded .)