Dean Strom Karnaze - Page 8

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          absence of evidence that petitioner timely filed his returns, the           
          Court finds that the returns were not timely filed.                         
               Petitioner introduced no evidence or any legally sufficient            
          reason for his failure to file timely returns.  Therefore, the              
          Court finds that petitioner is liable for additions to tax under            
          section 6651(a)(1) for failure to timely file his returns for the           
          years in issue.                                                             
          Additions to Tax Under Section 6651(a)(2)                                   
               Section 6651(a)(2) imposes an addition to tax for failure to           
          pay the amount shown as tax on the return on or before the date             
          prescribed for payment of that tax, unless the failure was due to           
          reasonable cause and not willful neglect.  See sec. 301.6651-               
          1(c)(1), Proced. & Admin. Regs.  Petitioner may demonstrate                 
          reasonable cause for late payment by showing that 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 if he paid on the due date.           
          Sec. 301.6651-1(c), Proced. & Admin. Regs.  The term “undue                 
          hardship” means more than an inconvenience to the taxpayer, and             
          it must appear that substantial financial loss would result to              
          the taxpayer from making payments by the due date.  See sec.                
          1.6161-1(b), Income Tax Regs.                                               
               At the time petitioner filed his returns, he made small                
          payments towards his tax liabilities for 1996, 1997, and 1999,              
          and he made no payment toward his tax liability for 1998.  The              





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