Question

TAX RESEARCH PROBLEMS

Art is named executor of the Estate of Stu STone, his father, who died on Febrauary 3 of the current year. Art hires Larry to be the estate's attorney. Larry advises Art that the estate must file an estate tax return but does not mention the due date. Art, a pharmacist, has no experience ini tax matters other than preparing his own tax returns. Art provides Larry with all the necessary information by June 15 of the current year. On six occasions, Art contacts Larry to check on the progress of the estate tax return. Each time, Larry assures Art that "everything is under control." On November 15, Art contacts Larry for the seventh time. He learns that because of a clerical oversight, the return - due on November 2 of the current year - has not been filed. Larry apologizes and says he will make sure that &75,200, is filed on December 7 of the current year. Your manager requests that you prepare a memorandum addressing whether the estate will owe a failure-to-file penalty. you manger suggests that, at a minimum, you consult

*IRC SEc. 6151(a)

*U.S. v. Robert W. Boyle, 55 AFTR 2d 85-1535, 85-1 USTC P13,602 (USSC, 1985)

Answer 1

This is very important that when return is due to be submitted, then the person who is responsible for submitting such return shall submit the return to the required authority under the statute.

This is not at all required that the person would wait for the notice or the demand from the authorities to submit the return.

In this case Art is required to submit the return on the estate to the Internal Revenue code and he has appointed the attorney to do so, however the return was not filled within the time.

Since the return was not filed within the time this will lead to the penalties on the account of failure to file.

Even if the attorney is appointed to file the return this is ultimately the responsibility of the person that is Art to make sure that the return was filed.

Hiring a attorney does not have any implication in law that will make the attorney guilty for non-submission of the return.

The authorities only knows Art and will held him responsible in case the return was not filed.

This is within the Art and the attorney that how art will held him liable but there relationship has nothing to do when it comes to the filing the tax, Art is only responsible.

In the case of U.S. v. Robert W. Boyle this was held that appointing an attorney will not make the person free from the responsibility of filing the return. Even if the attorney has forgotten to file the return, this is the responsibility of the assesse that the return is filled.

This cannot be accepted to waive the penalties for non submission of the return that the responsibility has been transferred to the attorney and hence the penalty cannot be waived and has to be paid in case of return is not filled.

Conclusion

1. Person who is liable to pay is only responsible to pay the taxes, even if he hire someone to take care of the responsibility.
2. Return should be submitted without demand
3. Hiring of attorney does not transfers the responsibilities
4. This is not acceptable that oversight of the deadline will waive the penalties.
5. Deadlines are to be met in any case and is not met, the principal person will be held responsible.