                  T.C. Memo. 2008-283



                UNITED STATES TAX COURT



            NATALYA GUTERMAN, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 5935-07.            Filed December 17, 2008.



     P and her husband jointly filed a 2004 Federal income
tax return in July 2007. R had already determined a
deficiency in P’s Federal income tax for 2004 as well as
additions to tax pursuant to secs. 6651(a)(1) and (2) and
6654(a), I.R.C.

     Held: P is liable for the deficiency and all of the
additions to tax.



Natalya Guterman, pro se.

Brooke S. Laurie, for respondent.
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              MEMORANDUM FINDINGS OF FACT AND OPINION


     WHERRY, Judge:   This case is before the Court on a petition

for redetermination of a deficiency in Federal income tax and

additions to tax that respondent determined for petitioner’s 2004

tax year.   All issues related to the deficiency were stipulated

orally at trial and in a stipulation of settled issues filed at

the start of trial.   In her brief, petitioner concedes that she

is liable for an addition to tax under section 6654(a)1 for

failing to make estimated tax payments.     The issues remaining for

decision are whether petitioner is liable for additions to tax

under section 6651(a)(1) and (2).

                         FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts and accompanying exhibits are hereby incorporated by

reference into our findings.

     Petitioner timely filed a Form 4868, Application for

Automatic Extension of Time To File U.S. Individual Income Tax

Return, for the 2004 tax year.    Respondent granted an extension

until August 15, 2005.   Thereafter, petitioner timely filed a

Form 2688, Application for Additional Extension of Time To File




     1
      All section references are to the Internal Revenue Code of
1986, as amended and in effect for the tax year at issue. The
Rule reference is to the Tax Court Rules of Practice and
Procedure.
                                 - 3 -

U.S. Individual Income Tax Return.       Respondent granted an

additional extension until October 15, 2005.

     Petitioner made a $25,000 tax payment on October 24, 2005,

but she did not file a return.    On December 11, 2006, respondent

issued petitioner a notice of deficiency.       Among other things,

respondent indicated that she was liable for a $2,598.52 addition

to tax under section 6651(a)(1) for failing to file a timely

return and a $1,039.41 addition to tax under section 6651(a)(2)

for failing to make timely tax payments.

     Petitioner filed the petition in this case on March 12,

2007.   She resided in California at that time.      On July 31, 2007,

she submitted with her husband, Mikhail Guterman, a joint Form

1040, U.S. Individual Income Tax Return, for 2004.       Although

respondent’s notice of deficiency had been based solely on

petitioner’s income and deductions, the joint return included her

husband’s income and deductions as well.       Petitioner made

additional tax payments when she filed the return and thereafter.

     After considering petitioner and her husband’s joint return,

respondent filed an amendment to answer on February 25, 2008,

asserting an increased total deficiency.       Respondent also

indicated that the addition to tax under section 6651(a)(1)

should be increased to $14,606.55 and that the addition to tax

under section 6651(a)(2) should be increased “to an amount to be

computed based on the deficiency and the payments made by
                                - 4 -

petitioner and petitioner’s husband.”    A trial was held on March

17, 2008, in San Francisco, California.

                               OPINION

I.    Burden of Production

       Pursuant to section 7491(c), the Commissioner has the burden

of production with respect to a taxpayer’s liability for

additions to tax.    To meet that burden, respondent must come

forward with sufficient evidence indicating that it is

appropriate to impose the relevant addition to tax.    See Higbee

v. Commissioner, 116 T.C. 438, 446 (2001).

II.    Section 6651(a)(1) Addition to Tax

       Section 6651(a)(1) imposes an addition to tax for failure to

file a timely return.    The amount of the addition is equal to 5

percent of the amount of tax required to be shown on the return

for every month or fraction thereof during which such failure

continues, up to a maximum of 25 percent.    Id.   When the

additions to tax under section 6651(a)(1) and (2) are both

applicable in the same month, the amount of the addition to tax

under section 6651(a)(1) is reduced to 4.5 percent, so that the

total addition to tax does not exceed 5 percent.    Sec. 6651(c).

       The section 6651(a)(1) addition to tax is not imposed if the

taxpayer proves that the failure to file a timely return is due

to reasonable cause and not willful neglect.    Reasonable cause is

shown if the taxpayer “exercised ordinary business care and
                               - 5 -

prudence and was nevertheless unable to file the return within

the prescribed time”.   Sec. 301.6651-1(c)(1), Proced. & Admin.

Regs.

     Respondent has met the burden of production with respect to

this addition to tax by providing a Form 4340, Certificate of

Assessments, Payments, and Other Specified Matters, reflecting

that petitioner did not file a return for 2004 until July 31,

2007--well beyond the due date.   Petitioner concedes that she did

not file a timely return but argues that her failure to file was

due to reasonable cause, placing most of the blame on Richard Di

Bernardo, petitioner and her husband’s certified public

accountant (C.P.A.), who suffered from an illness and was unable

to complete the 2004 return in a timely manner.    Citing United

States v. Boyle, 469 U.S. 241 (1985), petitioner acknowledges

that reliance on an agent does not constitute reasonable cause.

She asserts nevertheless that she did not merely rely on Mr. Di

Bernardo but, together with her husband, took affirmative steps

to ensure that the 2004 return was timely filed.   That those

steps ultimately proved ineffective, petitioner states, was a

result of circumstances beyond her control.

     The first of petitioner’s affirmative steps was to follow up

with Mr. Di Bernardo--by telephone, e-mail, and in person--about

the status of the anticipated joint return.   Mr. Di Bernardo was

unresponsive, though, causing petitioner at one point to file a
                                - 6 -

missing persons report with the police in an attempt to locate

him.    Her second step was to attempt to work with another C.P.A.,

Robert Kaplan.    Petitioner asserts that this proved difficult, if

not impossible, because her and her husband’s records were in Mr.

Di Bernardo’s possession, had been stolen, or were otherwise

unavailable.

       Petitioner’s third step was to attempt to recreate the

necessary records by using bank and credit card statements and

hiring a bookkeeper to assist her.      It is unclear how successful

these efforts were, but they were ultimately unnecessary because

at some point petitioner reestablished contact with Mr. Di

Bernardo, who completed the 2004 return over a period of months.

Petitioner’s fourth step was to assist Mr. Di Bernardo in

accelerating the completion of the joint return, including

letting him work out of her home so he would not have to commute.

Despite her assistance, Mr. Di Bernardo testified that his

illness caused him to be extremely unproductive.     He stated that

he nevertheless encouraged petitioner and her husband not to

transfer their business to another C.P.A. because of the

experience he had preparing their returns.

       The measures allegedly taken by petitioner appear at first

blush to have been the types of measures that an ordinarily

prudent person might have taken in those circumstances.     But that

is not the end of the matter.    Whenever a deadline is involved,
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timing becomes a critical factor.   If petitioner did not act soon

enough, she cannot be said to have exercised ordinary business

care and prudence.   See, e.g., Robinson’s Dairy, Inc. v.

Commissioner, 302 F.2d 42, 45 (10th Cir. 1962) (sustaining a

penalty under a predecessor to section 6651(a)(1) where the

taxpayer relied on an accountant even though the accountant was

suffering from a medical condition and was not filing the

taxpayer’s returns), affg. 35 T.C. 601 (1961).   The time for

action with respect to section 6651(a)(1) is particularly brief

because the maximum addition to tax is imposed if a taxpayer

files a return more than 4 months after its due date.    See

Missall v. Commissioner, T.C. Memo. 2008-258; Klein v.

Commissioner, T.C. Memo. 2007-325; see also sec. 6651(c).

     There is no indication that petitioner did anything in the

time leading up to the October 15, 2005, filing deadline and in

the 4 months thereafter to ensure that the 2004 return was timely

filed.   She appears to have simply waited for Mr. Di Bernardo,

which she acknowledges does not constitute reasonable cause.    See

United States v. Boyle, supra at 251-252.   Although she argues

that she took affirmative steps to ensure the filing of the 2004

return, her argument is unpersuasive.   E-mails from her to Mr. Di

Bernardo in 2006 suggest that her affirmative steps occurred well
                                   - 8 -

beyond the period during which she could have acted to avoid an

addition to tax under section 6651(a)(1).2

       Accordingly, petitioner has failed to show that her failure

to file was due to reasonable cause.       We will therefore sustain

respondent’s determination that petitioner is liable for the

addition to tax under section 6651(a)(1).

III.       Section 6651(a)(2) Addition to Tax

       Section 6651(a)(2) imposes an addition to tax for failure to

timely pay the amount of tax shown on a return.      The amount of

the addition is equal to 0.5 percent of the amount of tax shown

on the return for every month or fraction thereof during which

such failure continues, up to a maximum of 25 percent.      Sec.

6651(a)(2), (c).       “The Commissioner’s burden of production with

respect to the section 6651(a)(2) addition to tax requires that

the Commissioner introduce evidence that a return showing the

taxpayer’s tax liability was filed for the year in question.”




       2
      In a Mar. 27, 2006, e-mail, petitioner indicated that her
husband wanted to start working on the return with Mr. Di
Bernardo on Apr. 17, 2006. E-mails in September 2006 reminded
Mr. Di Bernardo that petitioner needed him to begin working on
her and her husband’s 2003 return and also informed him that she
had received a letter from the Internal Revenue Service
concerning estimated tax payment penalties related to her 2004
tax year. On Oct. 6, 2006, petitioner suggested that Mr. Di
Bernardo might start working on the 2003 and 2004 returns as
early as Oct. 9, 2006. Finally, in a Nov. 13, 2006, e-mail she
expressed frustration with Mr. Di Bernardo’s unresponsiveness and
threatened to hire another C.P.A. if he did not respond by Nov.
15, 2006.
                                 - 9 -

Wheeler v. Commissioner, 127 T.C. 200, 210 (2006), affd. 521

F.3d 1289 (10th Cir. 2008).

     The section 6651(a)(2) addition to tax is not imposed if the

taxpayer proves that the failure to pay is due to reasonable

cause and not willful neglect.    Reasonable cause for failing to

pay is shown if the taxpayer “exercised ordinary business care

and prudence in providing for payment of his tax liability and

was nevertheless either unable to pay the tax or would suffer an

undue hardship * * * if he paid on the due date.”     Sec. 301.6651-

1(c)(1), Proced. & Admin. Regs.

     Respondent has met the burden of production with respect to

the section 6651(a)(2) addition to tax by presenting a Form 4340

reflecting that petitioner filed a return showing her tax

liability for 2004 and that petitioner did not timely pay the

amount of tax shown on that return.3     Petitioner does not dispute

this but argues that the failure to pay was due to reasonable

cause.   Specifically, she asserts that she did not know how much

tax was owed at the time payment was due and believed that her

$25,000 payment on October 24, 2005, was sufficient to cover the

liability.



     3
      Although petitioner and her husband filed the 2004 joint
return after respondent issued the notice of deficiency for that
year, we will not disregard the return in this case. See Wolcott
v. Commissioner, T.C. Memo. 2007-315 n.6 (distinguishing Mendes
v. Commissioner, 121 T.C. 308, 324-325 (2003), under similar
circumstances).
                               - 10 -

       Petitioner’s argument is not persuasive.   Petitioner did not

know how much tax was owed because she failed to complete the

return in a timely manner.    As noted above, that failure was not

due to reasonable cause but rather to her own lack of diligence.

Petitioner’s lack of diligence in completing the return cannot

constitute reasonable cause for failing to timely pay the tax

due.    In addition, petitioner has not alleged that she was unable

to pay the tax ultimately shown on her late-filed joint return or

that she would have suffered undue hardship if she had paid that

amount on the due date.    Accordingly, we will sustain

respondent’s determination that petitioner is liable for the

section 6651(a)(2) addition to tax.

       The Court has considered all of petitioner’s contentions,

arguments, requests, and statements.    To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

       To reflect the foregoing,


                                           Decision will be entered

                                      under Rule 155.
