In Uncategorized on 03/08/2017 at 16:41

The classic words from the pages of Herman Melville’s 1853 Wall-Street short-story masterpiece echo in another law office story: William Henry Paynter and Elizabeth A. Paynter, 2017 T. C. Sum. Op. 12, filed 3/8/17.

Eschewing his former modesty, CSTJ Panuthos has the story for us.

Bill claims he paid his 2006 tax. IRS says he didn’t, although he timely filed. IRS sent him a notice of balance due in 2007, but waited until 2014 to hit him with another one.

Meantime, IRS did nothing else until 2015, when IRS hit Bill with a NITL, from which Bill petitions.

Bill continued in his usual way between 2006 and 2014. He’d pay no estimateds (though he was a self-employed lawyer). Although he’d file, generally late, he’d send in nothing with the return, and when he got the notice of balance due from IRS, pay.

Bill claims he shredded his copy of his old return and his bank statement for that year after the three-year SOL ran out. Moreover, his old bank was taken over by FDIC so he couldn’t get records from the new bank.

Bill’s CDP defense fails, whether de novo review or abuse of discretion is in play. He has no proof of payment, but he does have the burden of proof.

IRS hits Bill with a Section 6651 willful disregard chop.

“Petitioner asserted at trial that he does not make estimated tax payments because of his dislike of the process, and petitioners usually do not pay their tax for a given year until after they receive a notice of balance due.” 2017 T. C. Sum. Op. 12, at p. 18.

This doesn’t fly.

“Petitioners’ failure to make estimated tax payments because petitioner dislikes the process is not an exercise of ordinary business care and prudence in complying with the requirement to pay their tax due on or before the due date for their return; instead this conscious failure is willful neglect.  Further, petitioners have not asserted that they could not pay their tax or would suffer undue hardship if they paid their income tax at the time of filing their 2006 return.” 2017 T. C. Sum. Op. 12, at p. 18. (Citation omitted).

But IRS doesn’t walk away unscathed, either.

“We do not condone respondent’s failure to pursue collection action between November 2007 and August 2014.  Congress has made clear by statute that the IRS has 10 years from the date of assessment to collect a tax, and this collection is within that timeframe.  Sec. 6502(a)(1).  However, respondent did not provide any explanation for the failure to pursue collection during this intervening time. Without doubt this delay has created certain hardships for petitioners.” 20-17 T. C. Sum. Op. 12, at pp. 23-24. (Footnote omitted, but CSTJ Panuthos does mention that Bill never asked for abatement of interest).

Takeaway 1- Maybe three years is too short to start shredding records, especially if you’re somewhat casual about when you pay what you owe.

Takeaway 2- The Bartleby gambit landed Bartleby in the Tombs, the infamous New York City prison. It didn’t help Bill, either.


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