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due process and have ordered that refunded. The cur-
rent transcript shows this has been done recently.
There is no evidence that the taxpayer timely filed a
return for 1999, with or with a signature. The first
return or copy of a return is the one signed May 31,
2001. The recorded extension date expired on August
15, 2000. The Service set up a substitute for a return
in May of 2002. The Service started sending reports of
the 1999 liability in May of 2002. Where there was no
agreement, a Statutory Notice of deficiency was issued
September 5, 2002. The tax, penalty and interest were
assessed on February 24, 2002 when the taxpayer didn’t
petition the Tax Court. The taxpayer had his opportu-
nity to argue the tax, failure to file penalty, failure
to pay penalty and failure to pay estimated tax penalty
in Tax Court.
After the assessment from the statutory notice, the
taxpayer submitted his return with a larger liability.
The account was adjusted to larger amounts on May 5,
2003. It appears the Service received the return
earlier, approximately February of 2003, but the return
didn’t have an original signature. Later this was
rectified and the return was posted so the account
could be posted.
There is no long standing policy for the Service to
waive the failure to file penalty when the taxpayer
doesn’t submit a timely return. There is no evidence
it was ever timely filed, signed or unsigned.
Regarding the failure to pay penalty, it is the tax-
payer’s responsibility to ensure the tax liability it
paid on time. He cannot delegate that responsibility
to a CPA or others. The return submitted in 2003
showed a larger liability than the Service set up
earlier. While you and the taxpayer contend the return
was filed in 2000 and the return has a copy of a signa-
ture in May of 2001, there were no payments towards the
liability except for some withholding that is question-
able.
I saw no evidence of reasonable cause to abate the
penalty. The taxpayer cannot rely on the CPA or others
to pay his liability and we saw no evidence that his
medical condition prevented him from making payments.
He was able to operate one or more corporations and
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Last modified: May 25, 2011