- 30 -
For reasons set forth below, we believe the latter statement more
accurately describes what happened here.
a. The Circumstances Under Which a Taxpayer
May Avoid Liability Under Section 6653(a)(1)
and (2) Because of Reasonable Reliance on
Competent and Fully Informed Professional
Advice
A taxpayer may avoid liability for the additions to tax
under section 6653(a)(1) and (2) if he or she reasonably relied
on competent professional advice. United States v. Boyle, 469
U.S. 241, 250-251 (1985); Freytag v. Commissioner, 89 T.C. 849,
888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S.
868 (1991). Reliance on professional advice, standing alone, is
not an absolute defense to negligence, but rather a factor to be
considered. In order for reliance on professional advice to
excuse a taxpayer from the negligence additions to tax, the
taxpayer must show that such professional had the expertise and
knowledge of the pertinent facts to provide valuable and
dependable advice on the subject matter. Goldman v.
Commissioner, 39 F.3d 402 (2d Cir. 1994), affg. T.C. Memo. 1993-
480; Freytag v. Commissioner, supra; Sacks v. Commissioner, T.C.
Memo. 1994-217, affd. 82 F.3d 918, (9th Cir. 1996); Kozlowski v.
Commissioner, T.C. Memo. 1993-430, affd. without published
opinion 70 F.3d 1279 (9th Cir. 1995); see also Stone v.
Commissioner, T.C. Memo. 1996-230; Reimann v. Commissioner, T.C.
Memo. 1996-84.
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