-12-
be liable for the accuracy-related penalty because they did not
review their 1990 return, but rather relied on their accountant,
Mr. Arthur.
“The voluntary failure to read a return and blind reliance on
another for the accuracy of a return are not sufficient bases to
avoid liability for negligence additions to tax.” Bollaci v.
Commissioner, T.C. Memo. 1991-108 (citing Bagur v. Commissioner, 66
T.C. 817, 823-824 (1976), remanded on other grounds 603 F.2d 491
(5th Cir. 1979)). Taxpayers have a duty to read a return and make
sure all income items are included. Magill v. Commissioner, 70
T.C. 465, 479-480 (1978), affd. 651 F.2d 1233 (6th Cir. 1981)
(citing Bailey v. Commissioner, 21 T.C. 678, 687 (1954)). The
accuracy-related penalty under section 6662(a) does not apply to
any portion of an underpayment if it is shown that there was
reasonable cause for such portion and if the taxpayer acted in good
faith. Tippin v. Commissioner, 104 T.C. 518, 533-534 (1995).
Petitioners claim that they were completely ignorant of what
appeared on their tax returns, which were prepared by an
accountant. We do not believe them. We observed petitioner while
testifying and found him to be financially astute. Despite
petitioner’s limited formal education, he built a highly successful
nationwide company.5 Obviously, petitioners knew about the
writeoff. In our opinion, both petitioner and his wife possessed
5 Petitioner attempted to portray himself as a “country
bumpkin”, but we believe he was “sly as a fox”.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011