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the return for each month for which there is a failure to file,
not to exceed 25 percent. Section 6651(a)(2) imposes an addition
to tax of 0.5 percent per month up to 25 percent for failure to
pay the amount shown as tax on the return. A taxpayer may be
subject to both paragraphs (1) and (2) of subsection (a), in
which case the amount of the addition to tax under paragraph (1)
is reduced by the amount of the addition to tax under paragraph
(2) for any month to which an addition to tax applies under both
paragraphs. The combined amounts under paragraphs (1) and (2)
cannot exceed 5 percent per month. Sec. 6651(c)(1).
To avoid the additions to tax under section 6651(a)(1) and
(2), a taxpayer must satisfy the burden of proving that his
failure to timely file returns and pay tax was due to reasonable
cause and not due to willful neglect. See United States v.
Boyle, 469 U.S. 241, 245 (1985); E. Wind Indus., Inc. v. United
States, 196 F.3d 499, 504 (3d Cir. 1999); Higbee v. Commissioner,
116 T.C. 438, 446-447 (2001).1 “Reasonable cause” requires the
taxpayer to demonstrate that he exercised ordinary business care
and prudence, but nevertheless he was unable to file the return
within the prescribed time. United States v. Boyle, supra at
1 Respondent concedes that respondent bears the burden of
production with respect to the additions to tax under sec.
7491(c). The parties have stipulated that petitioner filed his
1996, 1997, and 1998 tax returns in January 2001. Accordingly,
we conclude that respondent has met the burden of production, and
petitioner must come forward with evidence sufficient to persuade
us that respondent’s determinations and assertions are incorrect.
See Higbee v. Commissioner, 116 T.C. 438, 447 (2001).
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