- 16 -
failing to file a timely income tax return, unless such failure
to file is due to reasonable cause and not due to willful
neglect. The addition to tax is 5 percent of the amount required
to be reported on the return for each month or fraction thereof
during which such failure to file continues, not to exceed 25
percent in the aggregate. See sec. 6651(a)(1); United States v.
Boyle, 469 U.S. 241 (1985).
There is, and we do not understand respondent to argue
otherwise, no evidence indicating that petitioner’s failure to
file was the result of willful neglect. Thus, the question is
whether petitioner has demonstrated reasonable cause for the
failure. The failure to file flows directly from Mr. Braun’s
advice that petitioner incurred no liability from the loan
transactions.
Petitioner argues that its reliance on that advice
constituted reasonable cause. We have held in various situations
that reliance on expert advice constitutes reasonable cause.
See, e.g., Citrus Valley Estates, Inc. v. Commissioner, 99 T.C.
379, 463 (1992); see also United States v. Boyle, supra at 250-
251. Mr. Braun is a lawyer with extensive experience in the area
of retirement plans. He was fully aware of all of the relevant
facts. He researched the issue and advised petitioner that he
believed the loans would not violate any of the provisions of
ERISA or cause any tax liability under section 4975. The ERISA
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011