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avoid the additions to tax under section 6651(a)(1) and (2).
Respondent argues that petitioner is liable for the additions
to tax at issue because he failed to follow these rules, and he
failed otherwise to exercise ordinary business care and
prudence.
We hold that petitioner is not liable for the additions to
tax. Again, we start our inquiry with the relevant text:
SEC. 6651. FAILURE TO FILE TAX RETURN OR TO PAY TAX.
(a) Additions to the Tax.--In case of failure--
(1) to file any return required under
authority of subchapter A of chapter 61
(other than part III thereof) * * * on the
date prescribed therefor (determined with
regard to any extension of time for
filing), unless it is shown that such
failure is due to reasonable cause and not
due to willful neglect, there shall be
added to the amount required to be shown as
tax on such return 5 percent of the amount
of such tax if the failure is for not more
than 1 month, with an additional 5 percent
for each additional month or fraction
thereof during which such failure
continues, not exceeding 25 percent in the
aggregate * * *
From this text, we understand that a taxpayer who is
required to file an excise tax return, but who does not do so
timely, is generally liable for a monthly addition to tax equal
to 5 percent of the amount of tax that should have been shown
on the return, up to a maximum charge of 25 percent. See also
Janpol v. Commissioner, 102 T.C. 499, 500 (1994). We also
understand that the addition to tax does not apply where the
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