LOCATION: United States District Court House
DOCKET NO.: 83-1266
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Seventh Circuit
CITATION: 469 US 241 (1985)
ARGUED: Oct 10, 1984
DECIDED: Jan 09, 1985
Albert G. Lauber, Jr. - on behalf of Petitioner
Thomas E. Davies - on behalf of the Respondent
Facts of the case
Media for United States v. Boyle
Audio Transcription for Oral Argument - October 10, 1984 in United States v. Boyle
Warren E. Burger:
We'll hear arguments next in United States against Boyle.
Mr. Lauber, I think you may proceed whenever you are ready.
Albert G. Lauber, Jr.:
Mr. Chief Justice, may it please the Court:
This case presents a question about the addition to the tax often referred to colloquially as a penalty for failure to file a tax return on time.
Section 6651(a)-1 of the Internal Revenue Code provides that in case of failure to file any return on the date prescribed therefor, there shall be added to the tax an amount up to a total of 25 percent of the total tax due unless it is shown that such failure is due to reasonable cause and is not due to willful neglect.
The question here is whether a taxpayer can demonstrate reasonable cause for a late filed return even though that return's late filing is in fact attributable to negligent by citing the fact that he relied on his attorney or other agent to prepare the return for him.
The facts were not in dispute below and are not very complicated.
The taxpayer here is the executor of an estate.
Among the duties of an executor, imposed both by relevant state law and by the Revenue Code, is the duty to file a federal estate tax return.
Warren E. Burger:
Well, would it be any different in your view if it was for a personal return and he was involved in filing the return, a delinquent return as an individual?
Albert G. Lauber, Jr.:
No, it would not, Your Honor.
We think the same reasoning would apply to an income tax return, a gift tax return, almost any kind of return.
Here the executor hired a lawyer to take care of administering most of the estate's affairs.
The executor met with the lawyer; he was told that the estate would in fact be required to file a federal estate tax return.
The executor was also told that there existed a specific deadline by which the return would have to be filed--
The lawyer in fact knew what that correct deadline was, namely, a date nine months after the date of death, but the lawyer did not recall having informed the executor of the exact due date, only that there was a due date.
As it turned out, the lawyer, through carelessness, forgot all about the return until well after the filing period had elapsed.
As a result, the return was filed three months late.
The Commissioner determined that the executor's late filing was not due to reasonable cause, and accordingly, asserted an addition to the estate tax in the appropriate amount.
The Court of Appeals expunged the penalty.
It recognized that under longstanding Treasury regulations, the determination of reasonable cause is governed by an objective test, that is, whether the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time.
But the Court of Appeals held that here the executor's late filing was due to reasonable cause.
It relied primarily on two facts, the fact that the executor lacked personal knowledge of the filing date, and that he relied on his attorney to prepare the return for him.
The Court of Appeals acknowledged that three other circuits had ruled as a matter of law that reliance on counsel standing alone is not a defense to the late filing penalty in this kind of a case.
We think the Court of Appeals was wrong both for reasons of technical tax law and also for reasons of common sense.
We start from the premise that where, as here, it is clear that a tax return is required to be filed, the taxpayer has a personal and nondelegable duty to file that return on time.
This premise we think follows from a variety of code provisions that state that the taxpayer shall make a return, he shall sign the return under penalties of perjury, and that he shall file it by a specified date.
The personal and nondelegable nature of his timely filing obligation has been recognized by almost every lower federal court to address the question, and we think from this premise two conclusions inevitably follow.
First of all, because the taxpayer's duty to file on time is personal, he has a concomitant duty personally to find out what the filing date is, and that we think is just a matter of common sense.
If a person knows he has a duty to perform and knows it must be performed by a deadline, ordinary business care and prudence require him, plainly require him to find out what that date is.