Andrew Heisey - Page 6




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                    for payment), 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 shown                 
                    as tax on such return 0.5 percent of the amount of                
                    such tax if the failure is for not more than 1                    
                    month, with an additional 0.5 percent for each                    
                    additional month or fraction thereof during which                 
                    such failure continues, not exceeding 25 percent                  
                    in the aggregate * * *  [Emphasis added.]                         
          On brief, respondent’s only argument with respect to the section            
          6651(a)(2) addition to tax is as follows:                                   
                    I.R.C. � 6651(a)(2) imposes an addition to tax for                
               failure to pay the amount shown as tax on the return.                  
               The addition to tax consists of an addition to the                     
               amount required to be shown as tax on the return of .5%                
               added for each complete month or part of a month in                    
               which the failure to file continues, up to the maximum                 
               of 25%.  Since petitioner did not file federal income                  
               tax returns for the 1996, 1997 and 1998 taxable years                  
               and did not make payment sufficient to pay the amount                  
               of tax that was to be reported on the returns,                         
               petitioner is liable for the addition to tax for                       
               Failure to Pay.  [Fn. ref. omitted.]                                   
          Respondent’s contentions provide an insufficient basis upon which           
          to assert the section 6651(a)(2) addition to tax and misstates              
          the requirements of that section.  Section 6651(a)(2) is imposed            
          on the underpayment of the amount of tax shown on a return.  The            
          parties in this case stipulated that “Petitioner did not file               
          1996, 1997 or 1998 U.S. Individual Income Tax Returns, (Form                
          1040).”  Given this stipulation and the absence of any additional           
          evidence indicating the existence of a “return”,4 we hold that              


               4We are aware of sec. 6651(g), which deals with the effect             
          of a sec. 6020(b) substitute return on sec. 6651(a)(2).  See                
          Smith v. Commissioner, T.C. Memo. 2000-290 (“A return prepared by           
                                                             (continued...)           





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