Christianson v. Commissioner

Decision Date30 March 1999
Docket NumberNo. 14283-97.,14283-97.
Citation77 T.C.M. 1618
PartiesCarlye A. Christianson v. Commissioner.
CourtU.S. Tax Court

Judy E. Hamilton, for the petitioner. Ramon Estrada, for the respondent.



Respondent determined the following additions to petitioner's Federal income tax:

                Additions to Tax
                Year            Sec. 6651(f)   Sec. 6653(b)(1)   Sec. 6653(b)(1)(A)   Sec. 6653(b)(1)(B)   Sec. 6653(b)(2)
                1985 ........        --          $ 3,552                --                    --                  *
                1986 ........        --            --                $11,981                  **                  --
                1987 ........        --            --                  9,218                  ***                 --
                1988 ........        --           12,427                --                    --                  --
                1989 ........     $12,983          --                   --                    --                  --
                1990 ........      29,429          --                   --                    --                  --
                * 50 percent of the interest due on $7,103
                ** 50 percent of the interest due on $15,975
                *** 50 percent of the interest due on $5,791

The issues for decision are:

(1) Have the respective periods of limitations prescribed by section 65011 for the years at issue expired? We hold that they have not.

(2) Is petitioner liable for the additions to tax under section 6653(b) for each of the years 1985, 1986, and 1987 and under section 6651(f) for each of the years 1989 and 19907 We hold that she is.


Some of the facts have been stipulated and are so found.2 Petitioner resided in San Diego, California, at the time the petition was filed.

Petitioner, an attorney, was a sole practitioner and aspired to emulate the amount of money made by similarly situated attorneys. As part of her law practice, petitioner was mindful of due dates for, inter alia, court appearances and filing documents.

Petitioner also served at various times from around the early to mid-1980's until 1990 as a part-time judge of the Small Claims Court, Municipal Court, and Superior Court in and around San Diego, California. As part of her judicial duties, petitioner imposed on litigants due dates for, inter alia, court appearances and filing documents and kept track of those dates.

Petitioner has been aware since her youth of her annual obligation to file a Federal income tax return (return). For years prior to 1981, petitioner signed and filed her returns.

Petitioner married Doug Reynolds (Mr. Reynolds) in 1981, and they divorced in 1985. While they were still married, petitioner and Mr. Reynolds were the subject of an audit by the Internal Revenue Service (Service) with respect to 1981 through 1983. They retained Daryl Golemb (Mr. Golemb), a certified public accountant, to represent them with respect to that audit. Petitioner, Mr. Reynolds, and the Service resolved the audit of 1981 through 1983, as reflected in Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment (1981-1983 Form 870). The 1981-1983 Form 870 listed the names of the taxpayers to which that form pertained as "Douglas R. and Carlye Reynolds". Attached to the 1981-1983 Form 870 was, inter alia, Form 886-A, Explanation of Items, which stated in pertinent part:

You failed to timely file your 1981 and 1982 Federal income tax returns. You arranged to have your returns prepared only upon contact and request by personnel of the IRS. As attorneys, you knew of your obligation to file tax returns, especially with adjusted gross income exceeding [$]100,000 annually.

* * * * * * *

You are reminded that failure to file timely federal income tax returns can result in criminal prosecution and assertion of civil fraud penalties.

Although Mr. Golemb, as the authorized representative of petitioner and Mr. Reynolds, could have signed the 1981-1983 Form 870 on their behalf, it was Mr. Golemb's practice not to sign such a form on behalf of his clients. Instead, Mr. Golemb required the taxpayer to which such a form pertained to sign it. In light of Mr. Golemb's practice regarding the signing of a Form 870, both petitioner and Mr. Reynolds, as the taxpayers to which the 1981-1983 Form 870 pertained, were supposed to have signed that form in order for it to be effective.

As a result of the Service's audit of petitioner and Mr. Reynolds with respect to 1981 through 1983, petitioner was aware that, at a minimum, no return for 1982 was filed during her marriage to Mr. Reynolds. She also had heard rumors that, because of that audit, Mr. Reynolds could have been imprisoned for failure to file a return. Petitioner was fully aware of the possible criminal consequences for failing to file a return.

Petitioner filed a joint return with Mr. Reynolds for 1984. After their divorce in 1985, petitioner did not file returns for 1985 through 1990. Nor did she timely file California income tax returns for those years.

Petitioner employed a part-time bookkeeper to Assist her, inter alia, in maintaining books and records with respect to her law practice, preparing and filing any required Federal payroll and similar tax returns, and organizing the return-preparation information that petitioner's return preparer, Mr. Golemb, needed to prepare petitioner's Federal income tax returns. Petitioner hired a new bookkeeper around late 1988 or early 1989. After that new bookkeeper started working for petitioner, she became aware that Federal payroll tax returns had not been filed for three quarters. The new bookkeeper filed those delinquent returns, and petitioner paid the Federal payroll taxes and penalties due as a result of such late filing.

Shortly after each of the years at issue, and within sufficient time for Mr. Golemb to prepare timely petitioner's return for each such year, petitioner's bookkeeper sent him the information that he needed to prepare each such return. Mr. Golemb prepared a return for petitioner for each of the years at issue from the information that her bookkeeper sent to him. Mr. Golemb prepared the payment section in petitioner's 1987 return relating to estimated tax payments from information that petitioner provided to him.

After Mr. Golemb prepared petitioner's return for each of the years at issue, he signed each such return in the space designated for the signature of the return preparer but not in the space designated for the signature of the taxpayer and mailed the original of each such return to petitioner with a transmittal letter. The transmittal letter that Mr. Golemb used to send petitioner her return for each of the years at issue contained precise and specific instructions to petitioner that she should, inter alia, verify her name, address, and Social Security number as they appeared in each such return, sign each such return, and mail it and a check for any tax due to the Service (1) at the address set forth in the transmittal letter or (2) in a pre-addressed mailing envelope enclosed with that letter. Mr. Golemb never informed petitioner that he would sign and file her return for any of the years at issue.

Although petitioner received the return that Mr. Golemb prepared for each of the years at issue within sufficient time to file each such return on or before its due date, she did not file any of those returns. Instead, she placed in her desk drawer each of the transmittal packages from Mr. Golemb containing each such return and Mr. Golemb's transmittal letter. As petitioner received the return for each of the years at issue that Mr. Golemb had prepared, she was reminded of her tax liability for each such year.

Petitioner made some estimated tax payments for her taxable year 1987. Mr. Golemb filed on petitioner's behalf requests for extensions of time to file the returns for certain of the years at issue.

At some time during the years at issue, petitioner discussed with Mr. Golemb the fact that she had not received a tax bill from the Service. During that discussion, petitioner and Mr. Golemb speculated that petitioner had not received a tax bill because respondent might have lost track of her records when her surname changed after her divorce from Mr. Reynolds. At no point did petitioner believe that she had a responsibility to contact the Service because she had not received a tax bill for any of the years at issue.

In March 1992, the Service sent petitioner a letter requesting that she telephone a revenue agent of the Service (revenue agent) who was responsible for the examination of petitioner in order to discuss her status as a nonfiler. Petitioner never contacted the revenue agent. Consequently, in April 1992, the revenue agent telephoned petitioner after having obtained her telephone number through the Yellow Pages. During that telephone conversation, the revenue agent told petitioner that the Service had no records of her having filed returns since 1981 and requested that petitioner clarify her filing status. In response, petitioner adamantly maintained that she had filed all her returns. Subsequently, during the same telephone conversation with the revenue agent, petitioner stated that if her returns had not been filed, it was the fault of her return preparer, Mr. Golemb, who was responsible for filing petitioner's returns for her. Petitioner also told the revenue agent at another time that if the Service had no record of petitioner's having filed her returns, the Service must have lost her returns.

On May 21, 1992, the revenue agent met with Mr. Golemb (May 21, 1992 meeting) who was authorized to represent petitioner with respect to the Service's examination of her. At that meeting, the revenue agent and Mr. Golemb agreed that petitioner had filed joint returns under the name Carlye Reynolds with Mr. Reynolds for 1983 a...

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