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petitioner had no reasonable basis for failing to characterize
his workers as employees. Consequently, relief from employment
tax liability is not available to petitioner under Revenue Act
section 530.
III. Additions to Tax
Respondent determined an addition to tax under section
6651(a)(1) for the periods in issue in 2003. Section 6651(a)(1)
provides for an addition to tax of 5 percent of the tax required
to be shown on the return for each month or fraction thereof for
which there is a failure to file, not to exceed 25 percent.
However, the addition to tax for failure to file is not imposed
if it is shown that the failure to file did not result from
willful neglect and was due to reasonable cause. See United
States v. Boyle, 469 U.S. 241, 245 (1985). To prove reasonable
cause, the taxpayer must show that he exercised ordinary business
care and prudence but nevertheless could not file the return when
it was due. See Crocker v. Commissioner, 92 T.C. 899, 913
(1989); sec. 301.6651-1(c)(1), Proced. & Admin. Regs. Respondent
also determined an addition to tax under section 6656 with regard
to petitioner’s tax liability. Section 6656 imposes an addition
to tax equal to 10 percent of the portion of an underpayment in
employment tax that is required to be deposited if the failure to
deposit is more than 15 days. A taxpayer may also avoid the
addition to tax under section 6656 if his failure to deposit was
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