In Uncategorized on 02/10/2021 at 16:33

This is the fourth time I’m quoting Richard Lovelace’s classic “To Althea: From Prison.” In the past it’s usually been that “stone walls do not a prison make, nor iron bars a cage” when one is either filing late or not at all because one is behind the stone walls and iron bars. Tax Court Judges rarely allow that being in the slammer is a good excuse for late or non filing.

Today, though, Judge Vasquez lets Alan Dexter Wenk, 2021 T. C. Sum. Op. 6, filed 2/10/21, off the hook for the Section 6651(a)(1) late filing add-on. Alan Dexter went down in USDCDKS and did some time. When he pled out, he had to pay restitution to his former employer, so he drew down his retirement plan (either ESOP or 401(k), Judge Vasquez isn’t sure) to fork over.

While out of circulation, Alan Dexter tries to get the numbers for his tax return, but cannot, despite diligent efforts (not enumerated, but Judge Vasquez does his signature number, “distilling truth from the testimony of witnesses, whose demeanor we observe and whose credibility we evaluate, is the ‘daily grist of judicial life.’”). 2021 T. C. Sum. Op. 6, at p. 11. (Citation omitted).

As soon as Alan Dexter got out, he got a wage and tax statement and filed a return, but it didn’t mention the ESOP/IRA draw because that wasn’t on the wage-and-tax statement.

If there was a 1099-R from the ESOP/IRA trustee, that isn’t mentioned, but at some later date Alan Dexter did let IRS know. For which he got a SNOD, with the Section 72(t) 10-percenter, the Section 6662(a) accuracy (which IRS later conceded), ands the Section 6651(a)(1) late addition, all at no extra charge.

IRS claims Alan Dexter was a CPA and should have known what to do. He filed nothing and didn’t ask for an extension.

Judge Vasquez finds Alan Dexter’s difficulties credible, and credits Alan Dexter with doing what he could as soon as he could.

Now there’s caselaw that says merely being in stir doesn’t excuse late filing.

“In this case, however, petitioner does not argue that the mere fact of his incarceration supplies reasonable cause. Rather, he argues that his efforts to timely file were thwarted despite his knowledge of the due date and his diligence in trying to comply with that deadline. As explained above, we found petitioner’s testimony credible in the light of his postrelease conduct. Respondent has offered no evidence to rebut petitioner’s credible testimony.” 2021 T. C. Sum. Op. 6, at p. 11.

Alan Dexter is off the chop and addition.



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