- 14 -
payments for secretarial services on his Schedules C suggests an
intention to conceal the relationship and the employment tax
issue.) Where, as here, common law factors compel a finding that
an employer-employee relationship exists, the parties’ intentions
to the contrary will not be given effect.
8. Conclusion
After considering all of the facts and circumstances in this
case, we conclude that both Smith and Mawson were employees of
petitioner during the years in issue.
Additions to Tax
Under section 6651, a taxpayer who fails to file timely or
fails to pay employment taxes shall be assessed an addition to
tax, unless it is shown that the failure is due to reasonable
cause and not due to willful neglect. See Conklin Bros. of Santa
Rosa, Inc. v. United States, 986 F.2d 315, 317 (9th Cir. 1993);
Charlotte’s Office Boutique v. Commissioner, 121 T.C. ___, ___
(2003) (slip op. at 30). To establish reasonable cause, the
taxpayer must show that ordinary business care and prudence were
exercised in providing for payment of the tax liability. Sec.
301.6651-1(c)(1) and (2), Proced. & Admin. Regs. Willful neglect
means a “conscious, intentional failure or reckless
indifference.” United States v. Boyle, 469 U.S. 241, 245-246
(1985).
Under section 6656, an addition to tax is imposed equal to
10 percent of the portion of an underpayment in tax that is
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011