Tax Type
Individual Income Tax
Description
Individuals and Fiduciaries;Reliance on CPA's Mistake
Topic
Returns and Payments
Date Issued
04-04-1985
April 4, 1985
Dear ****
This will reply to your letter of February 7, 1985 requesting relief from a late filing penalty assessed in the above referenced case.
FACTS
Taxpayer instructed his CPA to file for an extension if he was unable to complete the return by May 1, 1984. The CPA assured Taxpayer that the extension had been filed. The return was completed and filed with the department accompanied by payment of all tax liability, by May 25, 1984. Taxpayer's CPA eventually admitted that he had inadvertently failed to file for an extension. Late filing penalty and interest were assessed by the Department accordingly. Taxpayer paid the interest assessed, but seeks abatement of the penalty on the grounds that he was not personally at fault in failing to timely file his return.
DETERMINATION
Sec. 58.1-347 of the Virginia Code provides for a penalty of ten percent of the tax due when a return is not timely filed. Sec. 58.1-314 of the Code further provides for a penalty of five percent of the tax due when the tax is not timely paid.
The penalty assessed in this case is mandated since Taxpayer's return and payment were filed beyond the filing deadline of May 1, 1984. Nor was an Extension of time for filing Taxpayer's return ever filed.
Taxpayer's good faith reliance on his CPA in preparing his return, while understandable, does not relieve him of responsibility for ensuring that filing deadlines are met.
The U.S. Supreme Court recently held in the case of U.S. v. Boyle, No. 83-1266, that, "failure to make a timely filing of a tax return is not excused by the taxpayer's reliance on an agent, and such reliance is not "reasonable cause' for a late filing under Internal Revenue Code Sec. 6651(a)(1).' The Court distinguished the case before it from cases where a taxpayer relies on an accountant or an attorney for advice on a matter of tax law, such as whether liability exists. The Court stated, while most taxpayers are not competent to discern error in substantive advice of an accountant or attorney, "it requires no special training or effort to ascertain a deadline and make sure that it is met.'
Therefore, based on all of the above, I find no basis for relief of the penalty assessed, which is hereby due and payable.
Dear ****
This will reply to your letter of February 7, 1985 requesting relief from a late filing penalty assessed in the above referenced case.
FACTS
Taxpayer instructed his CPA to file for an extension if he was unable to complete the return by May 1, 1984. The CPA assured Taxpayer that the extension had been filed. The return was completed and filed with the department accompanied by payment of all tax liability, by May 25, 1984. Taxpayer's CPA eventually admitted that he had inadvertently failed to file for an extension. Late filing penalty and interest were assessed by the Department accordingly. Taxpayer paid the interest assessed, but seeks abatement of the penalty on the grounds that he was not personally at fault in failing to timely file his return.
DETERMINATION
Sec. 58.1-347 of the Virginia Code provides for a penalty of ten percent of the tax due when a return is not timely filed. Sec. 58.1-314 of the Code further provides for a penalty of five percent of the tax due when the tax is not timely paid.
The penalty assessed in this case is mandated since Taxpayer's return and payment were filed beyond the filing deadline of May 1, 1984. Nor was an Extension of time for filing Taxpayer's return ever filed.
Taxpayer's good faith reliance on his CPA in preparing his return, while understandable, does not relieve him of responsibility for ensuring that filing deadlines are met.
The U.S. Supreme Court recently held in the case of U.S. v. Boyle, No. 83-1266, that, "failure to make a timely filing of a tax return is not excused by the taxpayer's reliance on an agent, and such reliance is not "reasonable cause' for a late filing under Internal Revenue Code Sec. 6651(a)(1).' The Court distinguished the case before it from cases where a taxpayer relies on an accountant or an attorney for advice on a matter of tax law, such as whether liability exists. The Court stated, while most taxpayers are not competent to discern error in substantive advice of an accountant or attorney, "it requires no special training or effort to ascertain a deadline and make sure that it is met.'
Therefore, based on all of the above, I find no basis for relief of the penalty assessed, which is hereby due and payable.
Rulings of the Tax Commissioner