Peterson v. United States, Civ. A. No. 8910.
Decision Date | 29 May 1956 |
Docket Number | Civ. A. No. 8910. |
Citation | 141 F. Supp. 382 |
Parties | Lynn K. PETERSON and Eleanor A. Peterson, Plaintiffs, v. UNITED STATES of America, Defendant. |
Court | U.S. District Court — Southern District of Texas |
Merrill & Scott, William H. Scott, Jr., Houston, Tex., for plaintiffs.
Charles K. Rice, Asst. Atty. Gen., Andrew D. Sharpe and M. Carr Ferguson, Attys., Dept. of Justice, Washington, D. C., Malcolm R. Wilkey, U. S. Atty., and Willard I. Boss, Asst. U. S. Atty., Houston, Tex, for defendant.
This case is submitted to the court upon an agreed statement of facts, as follows:
Based on the foregoing facts, the sole issue of law for determination is whether the Commissioner of Internal Revenue is entitled to assess an additional amount under the provisions of both Section 294 (d) (1) (A) and Section 294(d) (2) of the Internal Revenue Code of 1939.
Section 58 of the Internal Revenue Code of 1939 provides:
Plaintiffs failed to file Declaration of Estimated Tax for the year 1951. No claim is made by them that their failure was due to reasonable cause and not to willful neglect. The following sections of the code are cited by plaintiffs:
Section 294(d) (1) (A) provides in part as follows:
Section 294(d) (2) provides in part as follows:
"If 80 per centum of the tax (determined without regard to the credits under sections 32 and 35), in the case of individuals * * * exceeds the estimated tax (increased by such credits), there shall be added to the tax an amount equal to such excess, or equal to 6 per centum of the amount by which such tax so determined exceeds the estimated tax so increased, whichever is the lesser. * * *"
Plaintiffs, having filed no tax estimate, made no estimate within the required percentages. Plaintiffs claim that, where they made no estimate at all, they should not be subject to the addition to their tax for substantial underestimation. The imposition of the addition to tax under Section 294(d) (2) of the code is automatic and mandatory, wherever its arithmetic requirements are not met. Smith v. Commissioner, 20 T.C. 663; Hartley v. Commissioner, 23 T.C. 353, 360. Therefore, in order for plaintiffs to recover in this action, they must prove they complied with the requirements of Section 294(d) (2) and did, in fact, estimate the necessary percentage of their tax.
Plaintiffs claim that where no Declaration of Estimated Tax is made, there can be no underestimate of tax and no declaration of a zero estimated tax can be presumed. Sec. 29.294-1 of Treasury Regulation 111 reads in part as follows:
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