Sam and Anna Zhadanov, et al. - Page 27




                                       - 27 -                                         
               Section 6651(a) authorizes the Commissioner to impose an               
          addition to tax whenever a taxpayer fails to file a required                
          return when due (determined with regard to any extension of the             
          filing deadline) unless the taxpayer shows that such failure was            
          due to reasonable cause and was not due to willful neglect.                 
          In this case, the parties agree that Vortex did not file its                
          income tax return for its FYE 1993 by the extended filing                   
          deadline.  Consequently, in order to avoid liability for the                
          section 6651(a) addition to tax, Vortex must show that its                  
          failure to timely file was due to reasonable cause and not due to           
          willful neglect.  AJF Transp. Consultants, Inc., v. Commissioner,           
          T.C. Memo. 1999-16, affd. 85 AFTR 2d 1909, 2000-1 USTC par. 50473           
          (2d Cir. 2000).  The term “reasonable cause” is defined as the              
          exercise of ordinary business care and prudence.  Sec. 301.6651-            
          1(c)(1), Proced. & Admin. Regs.  The term “willful neglect” is              
          defined as a “conscious, intentional failure or reckless                    
          indifference.”  United States v. Boyle, 469 U.S. 241, 246 (1985).           
          At trial, Mrs. Zhadanov recited the difficulties she faced in               
          dealing with the Zhadanovs’ and Vortex’s legal and tax issues               
          while her husband was in jail.  She testified that she hired tax            
          lawyers who did nothing but “calculate numbers, numbers,                    
          numbers,” then withdrew their representation.  She testified                
          about the money problems she and her husband encountered as a               
          result of the forfeiture and the efforts that she and other                 






Page:  Previous  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  Next

Last modified: May 25, 2011