In Uncategorized on 01/13/2021 at 16:05

Has No Place in Tax Court

Theoretical physicist Werner Heisenberg (1901 – 1976) is known for his uncertainty principle, the proof of which “ascends to such rarefied heights of pure mathematics that it is said that there was no man in the scientific press capable of criticizing it, ” as a much better writer than I put it. But Judge David Gustafson has no need of Heisenberg’s groundbreaking quantum mechanical aptitude; Brian Heberling, Docket No. 2846-17, filed 1/13/21 (link to text unavailable; direct your complaints to the Genius Baristas), though uncertain of his offsetting loss to his phantom income, cannot escape a Section 6651(a)(1) add-on for late filing.

Brian was a real estater who got auction-hammered in the Black ’08. He and IRS stiped out two (count ’em, two) years, but left only the late filing add-on for one year for Judge Gustafson to decide in this off-the-bencher.

“Mr. Heberling argues that he delayed filing his tax return because of the uncertainty of his financial situation and his lack of accurate information.  At trial he stated that he knew he had an obligation to file a return for [year at issue]. He acknowledged that in [year at issue] he actually received more than $33,000 in rental income–an amount well above the ‘exemption amount * * * plus the basic standard deduction’–and that he agreed to a [year at issue] allocation of $540,000 from a partnership in which he was a member.  However, he stated that he wanted to wait until the ‘dust settled’ in order to file his returns with more accurate information.  But uncertainty about the precise amounts to be reported does not excuse late filing.”  Order, Transcript, at pp. 10-11. (Citations omitted).

The rule is file with whatever you had, and amend as soon as you have better. When Brian finally filed, he says he still didn’t have final numbers. Judge Gustafson says if you’d done that to begin with, there wouldn’t be any add-ons. And reliance on his accountant doesn’t help. He knew he had income above exemption plus standard deduction. Brian claims he had to spend $30K when IRS committed “malpractice” by slugging him for one year when he was insolvent.

That year isn’t the year at issue, nor does what happened at Appeals excuse late-filing in a different year. Brian can still seek Section 7430 legals within thirty (count ’em, thirty) days of getting this transcript. Hop to it, Brian.

But don’t hold your breath; in the words of an Authority much more exalted even than Tax Court Judges, speaking of another tax collector, “I tell you this man went down justified.”


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