- 80 -
was not negligent and will satisfy the reasonable cause
exception. Sec. 6664(c); sec. 1.6664-4(b), Income Tax Regs.
The general rule is that a taxpayer has a duty to file a
complete and accurate tax return and cannot avoid that duty
merely by placing that responsibility with an agent. United
States v. Boyle, 469 U.S. at 252; Metra Chem Corp. v.
Commissioner, 88 T.C. 654, 662 (1987). In certain limited
situations, the good faith reliance on the advice of an
independent, competent professional in the preparation of the tax
return can satisfy the reasonable cause and good faith exception.
United States v. Boyle, supra at 250-251; Weis v. Commissioner,
94 T.C. 473, 487 (1990). Reliance on the advice of a
professional tax adviser, however, does not automatically
demonstrate reasonable cause and good faith. Sec. 1.6664-
4(b)(1), Income Tax Regs. All of the facts and circumstances
must be taken into account. Sec. 1.6664-4(c)(1), Income Tax
Regs. The advice must be based upon all pertinent facts and the
applicable law. Sec. 1.6664-4(c)(1)(i), Income Tax Regs. The
advice must not be based on unreasonable factual or legal
assumptions. Sec. 1.6664-4(c)(1)(ii), Income Tax Regs. The
advice cannot be based on an assumption that the taxpayer knows,
or has reason to know, is unlikely to be true. Id.
In order to show reasonable reliance the taxpayer must
prove: (1) The adviser was a competent professional who had
sufficient expertise to justify the taxpayer’s reliance on him;
Page: Previous 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 Next
Last modified: March 27, 2008