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LTD’s failure to file withholding tax returns for calendar years
1985 and 1986 were due to reasonable cause and not due to willful
neglect.
Petitioners seek to establish reasonable cause by showing
their reliance on the opinion of their tax counsel. Petitioners
cite Haywood Lumber & Mining Co. v. Commissioner, 178 F.2d 769,
771 (2d Cir. 1950), modifying 12 T.C. 735 (1949) in which the
court stated that "When a corporate taxpayer selects a competent
tax expert, supplies him with all necessary information, and
requests him to prepare proper tax returns, we think the taxpayer
has done all that ordinary business care and prudence can
reasonably demand." Petitioners contend that LTD and INC
provided full disclosure of all relevant facts to their
accountants and tax lawyers, and the returns prepared by such
professionals in accordance with such facts constitute tax advice
upon which LTD and INC may, in good faith, reasonably rely and
not be subjected to additions to tax for failure to file a
return.
We conclude that petitioners have not met their burden of
proof. Petitioners have presented no evidence of receiving
advice from either an accountant or an attorney that filing a
return was unnecessary. The record contains one letter, dated
December 18, 1984, in which Mr. Bricker writes "in response" to
Deloitte's questions as to whether LTD "is subject to United
States income tax." Mr. Bricker concludes that LTD "is not
subject to United States tax other than on any 'fixed or
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