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noted that many of the records were relinquished in a bankruptcy
proceeding and some of the records were not recovered from their
accountant. The Court determined that the taxpayers were not
liable for the negligence penalty.
Petitioners argue that they "made repeated attempts to
retrieve all records and receipts from their accountant, who died
Dec. 1996." Petitioners' 1992 and 1993 returns were prepared by
Bernadette Henderson of Green's Tax Service, and petitioners'
amended 1993 return was prepared by Lee Green of Green's Tax
Service. Petitioners did not testify on their own behalf to
describe the circumstances in regard to the preparation of the
returns, and they did not call anyone involved with Green's Tax
Service. Instead, in closing arguments, Mr. Bundridge described
their reliance on their accountant Lee Green. However, there is
no evidence in the record to support petitioners' conclusion that
their good faith reliance on the accountant constituted
reasonable cause. Therefore, we sustain respondent's
determinations with respect to the penalties for 1992 and 1993.
To reflect the foregoing,
An order will be issued
granting respondent's motion,
and a decision will be entered
under Rule 155.
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Last modified: May 25, 2011