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payments. Thereafter Shindel had Modern personnel compile a
summary of all the payments to foreign companies that he could
trace, and presented it to Petzold. Under Shindel's
instructions, Modern also prepared Forms 1042 on behalf of four
petitioners to report payments made between 1980 and 1991 to
Caribbean Films, European Investments, and Petro Land Drilling
& Development. Shindel was unable to secure the signature of a
corporation officer for any of these forms, however. The
unexecuted Forms 1042 were mailed to the IRS on June 4, 1993, but
without authorized signatures they were invalid, and the IRS did
not file them. No Forms 1042 were submitted for the payments to
Fun Films in 1985 by the other eight petitioners. This was
because Shindel had concluded that if these payments constituted
loans, no reporting would have been required. Notices of
deficiency were mailed to petitioners on December 8, 1993.
OPINION
Additions to Tax Under Sections 6651 and 6656
An addition to tax is imposed under section 6651 for failure
to file a return within the prescribed period, unless it is shown
that such failure was due to reasonable cause and not due to
willful neglect. Sec. 6651(a)(1). Form 1042 constitutes a
return for purposes of this section. Secs. 6651(a)(1), 6001;
sec. 1.1461-2(e), Income Tax Regs. The amount of the addition is
5 percent of the amount required to be shown as tax for each
month that the delinquency persists, up to a maximum of
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