TAX COURT OPINION

Case: Pauline Coppee Girvin
Docket Number: 16728-13L
Judge: Holmes
Opinion Type: bench
Filed: 12/02/2015
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 PAULINE COPPEE GIRVIN, Petitioner, v. ) ) ) ) ) Docket No. 16728-13L. ' 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 above case before Judge Mark V. Holmes at San Francisco, California on October 21, 2015, 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, a decision will be entered under Rule 155. (Signed) Mark V. Holmes Judge Dated: Washington, D.C. December 2, 2015 SERVED DEC - 4 2015 Capital Reporting Company 3 1 Bench Opinion by Judge Mark V. Holmes 2 October 21, 2015 3 4 5 6 Pauline Coppee Girvin v. Commissioner Docket No. 16728-13L THE COURT: In the case of Pauline Coppee 7 Girvin v. Commissioner, Docket No. 16728-13L, the 8 9 10 11 12 13 14 15 16 17 18 19 20 Court has decided to render oral findings of fact and opinion, and the following represents the Court's oral findings of fact and opinion. 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's Rules of Practice & Procedure. This case is an appeal from a collection action to collect Ms. Girvin's 2000 through 2006 and 2009 tax years. The parties settled all the issues except for penalties for the 2003 through two -- I'm sorry, except for penalties for the years 2000 through 2003, 2005 and 2009. These penalties are, 21 more accurately, additions to tax under 6651(a)(1), 22 23 24 Section 6651(a)(2) and Section 6654, and in the last case, only for some of the years. Ms. Girvin's defense to all these years and 25 all these additions to tax was that she was suffering 866.488.DEPO . www.CapitalReportingCompany.com Capital Reporting Company 4 from post-traumatic stress disorder from an incident in 2004 where federal agents, including agents, she alleged, from the IRS, raided her office and the office of her partner in life, seeking some kind of records. This was allegedly at gunpoint. It was very traumatic to her, and she began a period of psychotherapy that, at least, she says, included treatment for post-traumatic stress disorder. That was not confirmed until this case began. The PTSD that she suffere from, according to her medical records, nc1d n s during a traumatic childhood. Nevertheless, the Court accepts that the PTSD was, at least, in part due to the traumatic effects of this police raid. Now, the defenses to these additions to tax under 6651(a)(1) and -(a)(2) include or are limited to reasonable cause and not willful neglect. Reasonable cause is, however, not a defense under 6654, although disability in the year in which estimated tax payments were not made is a defense. So I will in some respects roll my discussion of this potential defense under 6654 into my discussion of the defense under 6651(a)(1) and -(a)(2). The key to this defense is set out in the regulations. 26 CFR, Section 1.301.6651-1(c)(1) 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 Capital Reporting Company 5 1 2 3 4 5 6 7 requires the exercise of ordinary business care and prudence, and delay due to reasonable cause. This is a facts-and-circumstances test. And one of the few illustrations in the regulation itself says, "Thus, for example, a taxpayer who incurs lavish or extravagant living expenses in an amount such that the remainder of his assets and anticipated income 8 will be insufficient to pay his tax has not exercised 9 ordinary business care and prudence in providing for 10 11 12 13 14 15 16 17 18 19 20 21 22 the payment of his tax liability." So although we use this phrase, ordinary care and not due to willful neglect, there is some distinction to be made between the two parts of the test. In Boyle, United States v. Boyle, 469 US 241 (1985), the Supreme Court itself said, "Like willful neglect, the term 'reasonable cause' is not defined by the code, but the relevant Treasury regulation calls on the taxpayer to demonstrate that he exercised 'ordinary business care and prudence' but nevertheless was 'unable to file the return within the prescribed time.'" Id. at 246. Similarly, the Supreme Court defined 23 willful neglect, saying that 70 years of precedent 24 25 allows us to read willful neglect to mean "a conscious, intentional failure or reckless 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 indifference." Disabling disease is, in fact, one of the recognized reasonable causes under these sections of the code. As the Ninth Circuit, the circuit to which this case would ordinarily be appealable because Ms. Girvin was a resident of California when she filed her petition, Van Camp v. United States, 251 F.3d 862 (9th Cir. 2001), that court said, "It is clear that a taxpayer's serious illness can constitute reasonable cause under Section 301.651- 1(c)(1), see Boyle, 469 US at 243-44, note 1 ('the IRS has articulated eight reasons for a late filing that it considers to constitute reasonable cause; these reasons include the death or serious illness of the taxpayer or member of his immediate family')lcitation omitted)," Indeed, the Ninth Circuit went on to note that the IRS has established per se circumstances that include disabling disease or serious disease. It is, again, a facts-or-circumstances test. However, it is not a test that depends on the diagnosis of a disease or condition, but rather the effects of that disease or condition in the real 24 world. 25 So it is not simply the diagnosis of post- 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 traumatic stress disorder that ualifies as reasonable cause, but rather t effects on a person's ability to manage his or her own affairs. The closest case that I was able to find is a Tax 5 Court case from just a few years ago called Hardin v. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Commissioner, 103 TCM 1861 (2012). In Hardin, as in this case, the taxpayer alleged that his condition included post-traumatic stress disorder. Mr. Hardin as well was suffering from ADHD and bipolar disorder. Nevertheless, we said, "Although Mr. Hardin says that his late filing was due to reasonable cause because he suffers from ADHD, bipolar disorder, and post-traumatic stress disorder, reasonable cause for a failure to file may exist if the taxpayer's or family member's illness or incapacity prevents the taxpayer from filing his or her tax return, but not if the taxpayer is able to continue his or her business affairs despite the illness or incapacity," id. at 1862. Moreover, as in Hardin, there was a pre- existing pattern of non-filing or late filing here. Ms. Girvin had not filed her tax returns for 2000 to 2003; this disabling raid occurred in May of 2004, so, again, this pattern of not filing or paying her taxes on time diminishes the probability that she has 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 reasonable cause for all the other years that she did not file or pay her taxes on time or make estimated payments. So the focus here is on whether Ms. Girvin was able to conduct her ordinary business affairs. Here I note that the facts and circumstances include her high degree of education. She's a Berkeley college graduate, a Columbia law school graduate, very successful in her chosen field of Native American law. She did, however, say that she had a paralytic fear of taxes, and yet she was able to conduct her law practice with a great deal of success. In 2003, before the disabling raid, she grossed 80,000 in billings. In 2004, the year of the disabling raid, she grossed $170,000; in 2005, $126,000; in 2006, $94,000. So she was clearly able to function very 19 well and very competently in her law practice. She, 20 21 22 23 24 25 by her own testimony, was able to pay mortgages on two homes that she shared with her partner. She was able to pay the utility bills, make it to meetings on time, send out bills to her clients, get payments from her clients, and make deposits into her bank account. She was able to organize and take trips to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 Paris, Hawaii, and other pleasant spots, all while paying the resulting charge bills using credit cards in an ordinary and reasonable and prudent way. In other words, she certainly was able to continue to conduct her business affairs despite her 6 disability. 7 8 9 10 11 Because of the various concessions by the parties and agreements on other aspects of this case, I'll enter decision on this one under Rule 155. This concludes the Court's oral findings of fact and opinion in this case, and concludes the 12 Court's San Francisco calendar. See you in February. The record is closed. (Whereupon, at 5:26 p.m., the above- entitled matter was concluded.) 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com .. . -