Court Opinion

ID: 9677740
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:58:24.325412+00
Date Added: 2024-06-11T18:16:58.098614
License: Public Domain

UHLENHOPP, Justice
(concurring specially).
I agree with the result but not with the basis on which the majority arrives at it.
I. The majority holds that delegation of the task of filing a return may constitute a defense to a penalty. The defense of deleg-ability contains two flaws. First, it permits a tax return preparer to commit malpractice without suffering the consequences. The tardy taxpayer shows he placed the task of filing the return in the hands of a reputable tax return preparer and thereby obtains a defense to delinquent filing. I think that if the preparer culpably causes a delinquency, he should be liable to the taxpayer for the amount of the penalty, and the taxpayer should be liable to the department for the penalty. See Cameron v. Montgomery, 225 N.W.2d 154 (Iowa 1975). The delegability doctrine enables the preparer to escape the consequences of his own culpable act. I know of no other situation where delegation permits such a result.
Second, I agree with the department that the delegability doctrine will drive a hole in the tax collection process. The department deals with many thousands of returns filed by numerous preparers. The statutes fix the date for filing returns. If taxpayers can avoid penalties for late filing by the simple expedient of showing they placed the task in the hands of preparers, the filing and collection system will be impaired. The standard defense of delinquent taxpayers will be that they turned the filing over to someone else — and that someone else will be secure against a penalty for negligent delay in the knowledge that the taxpayer has a defense by virtue of the delegation itself.
II. I would treat the delay by an outside preparer the same as delay by an in-house tax preparer, under the basic rule that a principal must respond for the act of his agent. 3 Am.Jur.2d Agency § 261 (1962); 3 C.J.S. Agency § 390 (1973). No penalty is due “if it is shown that the failure [to file on time] was due to reasonable cause and not due to willful neglect. ...” The last words, “willful neglect,” bear upon the meaning of the preceding words, “reasonable cause.” Since we are dealing with an additional penalty, and not merely with the tax and interest, I agree with the majority that we should construe the quoted words liberally in favor of the taxpayer.
Both this taxpayer and its preparer had every intention of complying with the law on filing, by obtaining an extension of time. The ground for asking permission to delay filing was a good one: the tax problem over pensions. On the record, the good faith of the taxpayer and preparer is beyond question. A simple office mistake occurred; a high volume operation cannot function with complete perfection despite internal controls. The General Assembly has created a penalty exception for reasonable cause where willful neglect is. not involved. I would hold on this record, treating the outside tax preparer with the same consequences as an in-house preparer, that reasonable cause for the delay appears and willful neglect does not appear.
I therefore concur in the result.
HARRIS and LARSON, JJ., concur in this special concurrence.