                         T.C. Summary Opinion 2014-111



                         UNITED STATES TAX COURT



               EDWARD RIPLEY-DUGGAN, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 30155-12S.                         Filed December 23, 2014.



      Deborah S. Kearns, for petitioner.

      William C. Bogardus, for respondent.



                              SUMMARY OPINION


      CARLUZZO, Special Trial Judge: This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect when the

petition was filed.1 Pursuant to section 7463(b), the decision to be entered is not


      1
       Unless otherwise indicated, subsequent section references are to the
Internal Revenue Code of 1986, as amended, in effect for the relevant period.
                                                                     (continued...)
                                         -2-

reviewable by any other court, and this opinion shall not be treated as precedent

for any other case.

      In a notice of deficiency dated September 17, 2012 (notice), respondent

determined a deficiency in, and imposed additions to tax under sections 6651(a)(1)

and (2) and 6654 with respect to, petitioner’s 2008 Federal income tax liability.

Because the parties have now agreed to the deficiency, we consider only

petitioner’s liability for the above-referenced additions to tax.

                                     Background

      Some of the facts have been stipulated and are so found. At the time the

petition was filed, petitioner resided in New York.

      As of the close of 2008 petitioner and Carol Maltby (Ms. Maltby) had been

married to each other for almost 40 years. For many of those years Ms. Maltby

assumed the responsibility to prepare and submit for filing the couple’s joint or

separate Federal income tax returns. Petitioner agrees that his income during 2008

obligated him to file a Federal income tax return for that year, but his 2008 return

was not filed until well beyond the date it was due. See secs. 6011(a), 6072(a).

Petitioner also agrees that he made no estimated tax payments and had no Federal


      1
       (...continued)
Rule references are to the Tax Court Rules of Practice and Procedure.
                                         -3-

income tax withheld with respect to the income tax liability shown on that return.

As of the date of trial petitioner’s 2007 Federal income tax return, if he was

obligated to file one, had not been filed.

      Petitioner has a keen interest in rare books, which he describes as “the

driving passion of * * * [his] life”. He is a longstanding, dues-paying member of

the Antiquarian Booksellers Association of America, a status that continued at

least through the date of trial. At all times relevant petitioner owned and operated

Wilsey Rare Books (Wilsey), a sole proprietorship engaged in the business of

selling rare books.2

      At all times relevant petitioner was also employed as a consultant to Doyle’s

Auction House of New York. As such, he typically worked “nine hours a day,

generally five days a week”, occasionally working six or seven days a week, in

addition to a roughly 5.5-hour daily commute.

      Over the years Ms. Maltby has suffered from chronic rheumatoid arthritis.

During 2008 her arthritis caused pain centered in the joints in her hands, making it

difficult for her to handle papers. Her condition extended into 2009 as well.




      2
        Income and deductions attributable to Wilsey are shown on a Schedule C,
Profit or Loss From Business, included with petitioner’s untimely 2008 Federal
income tax return.
                                        -4-

                                     Discussion

      Section 6651(a)(1) provides for an addition to tax in the event a taxpayer

fails to file a timely return (determined with regard to any extension of time for

filing), unless it is shown that such failure is due to reasonable cause and not due

to willful neglect. The amount of the addition is equal to 5% of the amount

required to be shown as tax on the delinquent return for each month or fraction

thereof during which the return remains delinquent, up to a maximum addition of

25% for returns more than four months delinquent.

      Section 6651(a)(2) provides for an addition to tax for failure to timely pay

“the amount shown as tax on any return specified in paragraph (1)” unless the

taxpayer establishes that the failure was due to reasonable cause and not willful

neglect. The addition is calculated as 0.5% of the amount shown as tax on the

return but not paid, with an additional 0.5% for each month or fraction thereof

during which the failure to pay continues, up to a maximum of 25%. Id. The

amount of the addition to tax under section 6651(a)(2) reduces the addition to tax

under section 6651(a)(1) for any month for which both additions to tax apply. See

sec. 6651(c)(1).

      Section 6654(a) and (b) provides for an addition to tax in the event of an

underpayment of a required installment of individual estimated tax. Each required
                                           -5-

installment of estimated tax is equal to 25% of the “required annual payment”,

which, in turn, is equal to the lesser of (1) “90 percent of the tax shown on the

return for the taxable year (or, if no return is filed, 90 percent of the tax for such

year)”, or (2) if the individual filed a return for the immediately preceding year,

100% of the tax shown on that return. Sec. 6654(d)(1)(A) and (B).

      According to respondent, petitioner is liable for the above-referenced

additions to tax as now applied to the Federal income tax liability shown on

petitioner’s untimely 2008 Federal income tax return. The burden of production

with respect to the imposition of the additions to tax here in dispute rests with

respondent. See sec. 7491(c). It is undisputed that petitioner failed to (1) timely

file his 2008 return, (2) discharge his tax liability, or (3) pay any estimated tax for

the year in issue. That being so, respondent’s burden has been satisfied with

respect to each of the additions to tax.

      According to petitioner, he should not be held liable for any of the additions

to tax because the failures that gave rise to each of those additions were due to

reasonable cause and not willful neglect. Respondent’s burden does not require

him to refute petitioner’s claim in this regard. See Higbee v. Commissioner, 116

T.C. 438, 446-447 (2001).
                                         -6-

Section 6651(a)(1) Reasonable Cause

      According to petitioner, the addition to tax that would otherwise result from

his failure to file a timely return is not applicable because the failure was due to

reasonable cause, namely the poor health of Ms. Maltby, and not due to willful

neglect. More specifically, petitioner points out that Ms. Maltby was responsible

for the financial aspects of their marriage, including the preparation of their joint

Federal income tax returns, and that for 2008 she was unable to prepare his

individual Federal income tax return or their joint Federal income tax return

because of the symptoms related to her rheumatoid arthritis.

      We are sympathetic to Ms. Maltby’s health problem during the relevant time

and recognize that serious illness of the taxpayer or a member of the taxpayer’s

family can constitute reasonable cause for failure to file a timely return. See, e.g.,

Tabbi v. Commissioner, T.C. Memo. 1995-463 (finding reasonable cause where

the taxpayers’ son had heart surgery and the taxpayers spent four months

continuously in the hospital with him and filed their return two months after their

son’s death); Harris v. Commissioner, T.C. Memo. 1969-49 (finding reasonable

cause where the taxpayer’s activities were severely restricted and the taxpayer was

in and out of hospitals because of various severe medical ailments, including

stroke, paralysis, heart attack, bladder trouble, and breast cancer). However,
                                        -7-

petitioner was not sick or injured, and nothing in the record suggests that he acted

as Ms. Maltby’s caregiver during the relevant period.

      Whether a taxpayer has “reasonable cause” within the meaning of section

6651(a)(1) depends upon whether the taxpayer exercised “ordinary business care

and prudence” but was nevertheless unable to file the return within the prescribed

time. United States v. Boyle, 469 U.S. 241, 246 (1985); sec. 301.6651-1(c)(1),

Proced. & Admin. Regs. Ordinary business care and prudence would suggest that

petitioner, in good health and otherwise able to fulfill his employment obligations

and obviously aware of Ms. Maltby’s infirmities, would have made the appropriate

arrangements to ensure that his 2008 Federal income tax return was timely

prepared and submitted for filing. Under the circumstances, it was not reasonably

prudent for him to rely upon Ms. Maltby to satisfy his Federal tax-related

obligations. Accordingly, respondent’s imposition of the addition to tax under

section 6651(a)(1) is sustained.

Section 6651(a)(2) Reasonable Cause

      The section 6651(a)(2) addition to tax for failure to pay is applicable unless

the taxpayer shows that he exercised ordinary business care and prudence in

providing for payment of the liability and was nevertheless either unable to pay

the tax or would suffer an undue hardship. Sec. 301.6651-1(c)(1), Proced. &
                                          -8-

Admin. Regs. There is no evidence that petitioner was unable to pay the tax that

was due or would suffer undue hardship from making payment. Furthermore, we

have already found that Ms. Maltby’s health problem did not provide reasonable

cause for petitioner’s failure to file, and we maintain that position with respect to

the even simpler task of paying. See Taylor v. Commissioner, T.C. Memo. 2009-

27. Accordingly, respondent’s imposition of the addition to tax under section

6651(a)(2) is sustained.

Section 6654 Reasonable Cause

      Except in very limited circumstances not applicable in this case, see sec.

6654(e)(3)(B), section 6654 provides no exception for reasonable cause, Mendes

v. Commissioner, 121 T.C. 308, 323 (2003). Instead, the section 6654 addition to

tax is mandatory unless the taxpayer establishes that one of the exceptions in

section 6654(e) applies. Recklitis v. Commissioner, 91 T.C. 874, 913 (1988).

      There are two mechanical exceptions to the applicability of the section 6654

addition to tax. First, the addition is not applicable if the tax shown on the

individual’s return for the year in question (or, if no return is filed, the individual’s

tax for that year), reduced for these purposes by any allowable credit for wage

withholding, is less than $1,000. Sec. 6654(e)(1). Second, the addition is not

applicable if the individual’s tax for the preceding taxable year was zero. Sec.
                                        -9-

6654(e)(2). Petitioner has not shown that either of the mechanical exceptions

under section 6654(e) applies. Accordingly, we find that petitioner is liable for the

addition to tax under section 6654.

      To reflect the foregoing,


                                              Decision will be entered

                                       under Rule 155.
