Attorney-at-Law

TOGETHERNESS

In Uncategorized on 04/06/2017 at 16:38

No, not the recent television show; I’m showing my age, remembering the days, pre-Betty Friedan, when Otis Wiese devised a brilliant advertising slogan: “Togetherness, inspired by McCall’s, of course.”

If you remember McCall’s magazine in that iteration, you probably are eligible for Medicare, but the “togetherness” can be costly at any age if you amend your tax returns.

To tell you how, here’s Bradley A. Ballard and Poncella Ballard, 2017 T. C. Memo. 57, filed 4/6/17. Brad and Poncella have other problems than the one I will discuss, but hopefully your clients don’t have those. Judge Nega nails Brad for tax fraud. Poncella escapes the fraud chop, but the deficiencies are there.

For the year I wish to discuss, Brad and Poncella filed separately.

“Ms. Ballard filed timely, reporting herself as a head of household, independently supporting her three children. Mr. Ballard filed as single with no dependents. Mr. Ballard, however, filed his return nearly five months past due….” 2017 T. C. Memo. 57, at p. 4. Brad apparently never got an extension.

OK, and it was Brad who was the heavy, violating copyright by copying CDs and DVDs and hiding the loot through cash dealings and multiple bank accounts.

But the problem comes up when IRS’ auditor turns up Brad’s delicitons.

Brad and Poncella go to a professional preparer, who files amended returns as MFJ, including one for the year when they’d filed separately.

All of a sudden Poncella finds she filed late, even when she didn’t.

Judge Nega explains. “For purposes of sec. 6651, the Code assigns ‘deemed filed’ dates to the amended joint returns of couples who had previously filed separately. Sec. 6013(b)(3). By virtue of the filing of their amended … return Mr. and Ms. Ballard are deemed to have filed untimely on … the date of Mr. Ballard’s initial individual return. See sec. 6013(b)(3)(i).” 2017 T. C. Memo. 57, at pp. 8-9, footnote 2.

And neither Brad nor Poncella has reasonable cause for why Brad filed late.

Thus the professional preparer who prepared the amended MFJ return (which also understated Brad’s income, but less than Brad had done) landed Poncella with a late filing chop for Brad’s deficiency.

I know, I know…there but for the grace of you-know-Whom go any of us.

But the takeaway: When amending, if changing filing status, have a really good reason, and see if any past late filings could blow up your client. Where togetherness is, there be dragons.

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