Thursday, November 24, 2011
Reasonable cause where an attorney relied on an attorney
LIFTIN v. U.S., Cite as 108 AFTR 2d 2011-XXXX, 11/08/2011 THE ESTATE OF MORTON LIFTIN, JOHN LIFTIN, EXECUTOR, Plaintiff, v. THE UNITED STATES
In the United States Court of Federal Claims, Docket No.: No. 10-589 T, Date Decided: 11/08/2011.
To avoid a penalty for late filing, the taxpayer must also prove that the late filing was not the result of willful neglect, or “conscious, intentional failure or reckless indifference.” Boyle, 469 U.S. at 245. Conscious or intentional indifference exists “when the taxpayer was aware of his duty to file a return within the due date, but failed to file the return under circumstances that do not justify such failure.” Campbell, 62 T.C.M. (CCH) 1514 [1991 TC Memo ¶91,615]. Reckless indifference is established “when the taxpayer was aware of the duty to file on time, but disregarded a known or obvious risk that the return might not be filed within the due date.” Id.
The Government argues that the Executor is “a prominent attorney and sophisticated businessman [who] should have known that the [E]state's failure to comply with the statutory filing deadline could lead to delinquency penalties.” Reply Br. of U.S. in Supp. of Its Mot. for J. on Pleadings (“Def.'s Reply”) 21 (docket entry 24, Apr. 15, 2011). However, whether the Executor should have known that the Estate's failure to timely file would result in a penalty is a question of fact that “may not be properly decided on a motion for judgment on the pleadings.” Halliday, 7 Cl. Ct. at 321.
The Government has failed to show that the Estate is entitled to no relief under the facts pleaded because the Estate has adequately alleged facts that, if proven, may well demonstrate that its failure to timely file was due to reasonable cause and was not the result of willful neglect. It is also not clear whether the penalty assessed was based solely on late filing.