Matthew C. Elstein ( 2022 )

United States Tax Court
T.C. Summary Opinion 2022-14MATTHEW C. ELSTEIN,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent
—————
Docket No. 18272-17S. Filed July 28, 2022.
—————
Matthew C. Elstein, pro se.
Michael T. Garrett, for respondent.
SUMMARY OPINION
PANUTHOS, 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 reviewable by any other court, and this opinion shall
not be treated as precedent for any other case.
In a notice of deficiency dated May 24, 2017, respondent
determined deficiencies in and additions and penalties in relation to
petitioner’s federal income tax for years 2011, 2012, and 2013 as follows:
1 Unless otherwise indicated, all statutory references are to the Internal
Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all regulation
references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all
relevant times.
Served 07/28/22
2
Year Deficiency I.R.C. § 6651(a)(1) I.R.C. § 6662
2011 $10,575 $2,420.14 $2,115.00
2012 15,753 1,739.33 3,150.60
2013 14,572 1,618.94 2,914.40
After concessions, 2 the issue for decision is whether petitioner is
liable for any additions to tax under section 6651(a)(1).
Background
While a stipulation of facts was not agreed to, respondent offered
proposed exhibits to which petitioner did not object. These exhibits
include copies of the petitioner’s tax returns for years 2011, 2012, and
2013; respondent’s certified account transcripts for 2011, 2012, and
2013; and a notice of deficiency. The record consists of the above-
mentioned exhibits and petitioner’s testimony.
Petitioner resided in California when the Petition was timely
filed.
During 2011, 2012, and 2013 petitioner was a partner at the law
firm of Gordon & Rees LLP. Petitioner continued to practice law until
leaving the firm in 2015. In 2019 petitioner was found by the California
Bar to have an illness requiring him to be placed on involuntary inactive
status. 3
2Petitioner conceded the self-employed health insurance deductions for 2011
and 2012; alimony deductions for 2011, 2012, and 2013; medical and dental expense
deductions claimed on Schedule A, Itemized Deductions, for 2011, 2012, and 2013; and
Schedule A miscellaneous deductions for 2011, 2012, and 2013. Respondent conceded
that petitioner is not liable for the section 6662(a) accuracy-related penalties. As a
result of the mutual concessions, all issues relating to the deficiencies and penalties
have been resolved.
3 The Court held a conference call with the parties after trial to discuss new
information regarding petitioner’s criminal plea agreement in United States v. Elstein,
No. 2:21-CR-00494-MCS (C.D. Cal. filed Oct. 20, 2021). The Court informed the parties
it was considering taking judicial notice of this information under Federal Rule of
Evidence 201(c)(1). Petitioner asserted he had additional information and documents
regarding his withdrawal from the California Bar that supported his position that the
circumstances of the criminal plea agreement were unrelated. The Court suggested
3
In 2012 petitioner timely requested an extension to file his 2011
Form 1040, U.S. Individual Income Tax Return. The extension expired
October 15, 2012. On February 13, 2013, he filed a joint federal income
tax return for 2011.
In 2013 petitioner timely requested an extension to file his 2012
Form 1040. That extension expired October 15, 2013. On December 4,
2013, he filed a joint federal income tax return for 2012.
In 2014 petitioner timely requested an extension to file his 2013
Form 1040. The extension expired October 15, 2014. On November 19,
2014, he filed a joint federal income tax return for 2013.
Discussion
Section 6651(a)(1) imposes an addition to tax for failure to file a
return timely unless it is shown that such failure was due to reasonable
cause and not due to willful neglect. See United States v. Boyle, 469 U.S.
241, 245 (1985). A failure to file a federal income tax return timely is
due to reasonable cause if the taxpayer exercised ordinary business care
and prudence but nevertheless was unable to file the return within the
prescribed time, typically for reasons outside the taxpayer’s control. See
McMahan v. Commissioner, 114 F.3d 366, 368–69 (2d Cir. 1997), aff’g
T.C. Memo. 1995-547; Treas. Reg. § 301.6651-1(c)(1). This Court has
held that the illness of a taxpayer may be reasonable cause for late filing
if the taxpayer demonstrates that he or she could not file a timely return
because of the illness. E.g., Williams v. Commissioner, 16 T.C. 893, 906
(1951); Tabbi v. Commissioner, T.C. Memo. 1995-463; Harris v.
Commissioner, T.C. Memo. 1969-49; Hayes v. Commissioner, T.C. Memo.
1967-80.
The Commissioner bears the burden of production with respect to
an individual taxpayer’s liability for additions to tax. See § 7491(c);
Higbee v. Commissioner, 116 T.C. 438, 446–47 (2001). Once the
Commissioner carries the burden of production, the taxpayer must come
that petitioner provide the additional information and documentation to respondent
and if agreeable, the parties should a file a stipulation of facts. The Court informed
the parties that it would be inclined to reopen the record in this matter if the parties
submitted a stipulation of facts with the attached documents.
In a status report filed April 13, 2022, respondent indicated that petitioner
advised that he had not yet received the requested information. Given these
circumstances and to avoid further delay, the Court has proceeded with the opinion in
this matter.
4
forward with persuasive evidence that the Commissioner’s
determination is incorrect or that the taxpayer has an affirmative
defense. See Higbee, 116 T.C. at 447.
The record clearly reflects that the tax returns for the years in
issue were filed after the extended due dates. Thus, respondent has
satisfied his burden of production.
Petitioner contends that his illness made it difficult to complete
tasks in a timely manner, whether managing his law practice or tending
to personal affairs. Although we are sympathetic, petitioner failed to
introduce 4 any evidence into the record showing that his illness
determined in 2019 could be reasonable cause for filing his 2011, 2012,
and 2013 returns late. Accordingly, we will sustain respondent’s
imposition of the additions to tax under section 6651(a)(1) for 2011,
2012, and 2013.
We have considered all of petitioner’s arguments, and, to the
extent not addressed herein, we conclude that they are moot, irrelevant,
or without merit.
To reflect the foregoing,
Decision will be entered for petitioner with the respect to the section
6662(a) accuracy-related penalties and for respondent with respect to the
deficiencies and the section 6651(a)(1) additions to tax.
4 When asked on cross examination regarding the circumstances of his
involuntary inactive status, petitioner declined to provide further details.