No Reasonable Cause to Abate Late Filing Penalty

Post Date: 7/9/18
Last Updated: 7/9/18


Cross References
- Spottiswood, U.S. District Court for Northern California, April 24, 2018

The taxpayer prepared a joint federal income tax return for himself and his wife for the 2012 tax year using Turbo Tax software. On that return, he made a mistake when inputting a dependent's Social Security Number. He transmitted the return to Turbo Tax on or about April 12, 2013 to be electronically submitted to the IRS for electronic filing. On April 12, 2013, the IRS rejected the return because a dependent's Social Security Number and last name did not match IRS records.

Turbo Tax sent an email to the taxpayer notifying him the IRS had rejected the 2012 joint federal income tax return.

Turbo Tax software has a "check e-file status" screen. The taxpayer did not check this screen (or notice the email) until many months later. The taxpayer owed $395,619 in federal income tax on his 2012 return. The taxpayer claimed he failed to notice that $395,619 had not been withdrawn from his checking account because he had an unusually high account balance. On January 7, 2015, he filed a [corrected paper copy of his] 2012 joint federal tax return and paid the $395,619 income tax liability in full. On February 16, 2015, the IRS assessed a late filing penalty of $89,014, a late payment penalty of $41,539, and $26,216 in interest.

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