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petitioners must come forward with evidence sufficient to
persuade the Court that they are not liable for the addition to
tax.
The parties stipulated that petitioners did not pay their
tax liability for 1999 when it was due. Respondent’s Form 4340,
Certificate of Assessments, Payments, and Other Specified
Matters, indicates that, at the time of trial, petitioners still
had an outstanding tax liability for 1999. Further, petitioner
testified that petitioners have not paid their outstanding tax
liability for 1999. We find that, on these facts, respondent has
met his burden of production under section 7491(c).
Petitioners may avoid the addition to tax if they can
establish that their failure to timely pay was due to reasonable
cause and not due to willful neglect. Sec. 6651(a). A showing
of reasonable cause requires a taxpayer to demonstrate that he
exercised ordinary business care and prudence but nevertheless
was unable to pay the tax within the prescribed time. Sec.
301.6651-1(c)(1), Proced. & Admin. Regs. The taxpayer will be
considered to have exercised ordinary business care and prudence
if he made reasonable efforts to conserve sufficient assets in
marketable form to satisfy his tax liability and nevertheless was
unable to pay all or a portion of the tax when it became due.
Id.
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