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Section 6651(a)(1) imposes an addition to tax for failure to
file a timely tax return. The addition to tax is equal to 5
percent of the amount of the tax required to be shown on the
return if the failure to file is not for more than 1 month. See
sec. 6651(a)(1). An additional 5 percent is imposed for each
month or fraction thereof in which the failure to file continues,
to a maximum of 25 percent of the tax. See id. The addition to
tax is imposed on the net amount due. See sec. 6651(b).
The addition is applicable unless a taxpayer establishes
that the failure to file was due to reasonable cause and not
willful neglect. See sec. 6651(a). In order to establish
reasonable cause, a taxpayer must show that despite the existence
of ordinary business care and prudence, the taxpayer was unable
to file the required tax return within the prescribed time. See
United States v. Boyle, 469 U.S. 241, 246 (1985); Crocker v.
Commissioner, 92 T.C. 899, 913 (1989). "Willful neglect" means a
"conscious, intentional failure or reckless indifference."
United States v. Boyle, supra at 245.
We find that petitioners have not established that their
failure to timely file their 1995 Federal income tax return was
due to reasonable cause. Therefore, we hold that they are liable
for an addition to tax under section 6651(a)(1) for 1995.
Respondent is sustained on this issue.
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Last modified: May 25, 2011