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to tax for failure to timely pay the amount shown as tax on the
return. These additions to tax are applicable unless the
taxpayer establishes that his/her failure to timely file or
timely pay is due to reasonable cause and not due to willful
neglect.
A delay in filing a return is due to a reasonable cause “If
the taxpayer exercised ordinary business care and prudence and
was nevertheless unable to file the return within the prescribed
time”. Sec. 301.6651-1(c)(1), Proced. & Admin. Regs. Petitioner
may demonstrate reasonable cause for his failure to pay taxes by
showing he exercised ordinary business care and prudence in
providing for payment of his tax liability and was nevertheless
either unable to pay the tax or would suffer an undue hardship
(as described in section 1.6161-1(b), Income Tax Regs.) if he
paid on the due date. Sec. 301.6651-1(c), Proced. & Admin. Regs.
Section 1.6161-1(b), Income Tax Regs., defines "undue hardship"
as:
more than an inconvenience to the taxpayer. It must
appear that substantial financial loss, for example,
loss due to the sale of property at a sacrifice price,
will result to the taxpayer from making payment on the
due date of the amount with respect to which the
extension is desired. If a market exists, the sale of
property at the current market price is not ordinarily
considered as resulting in an undue hardship.
In order to avoid the section 6651(a)(1) addition to tax,
petitioner must show both reasonable cause and a lack of willful
neglect. Sec. 6651(a)(1); United States v. Boyle, 469 U.S. 241
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Last modified: May 25, 2011