Juan Ramirez - Page 13

                                       - 13 -                                         
          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            

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next 

Last modified: March 27, 2008