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TAX MATTERS

taxpayer shows that the failure is due LINE
to reasonable cause and not to willful ITEMS
neglect. To have reasonable cause, a
taxpayer must have exercised ordinary For these full stories plus the latest tax news, visit
business care and prudence (see Boyle, journalofaccountancy.com and thetaxadviser.com.
469 U.S. 241, 246 (1985)). Whether a
taxpayer had reasonable cause is a facts- Growing tax gap shows need for better
and-circumstances determination. If a service, compliance, IRS says
taxpayer asserts to have reasonable cause The estimated amount of unpaid taxes averaged
because he or she reasonably relied in $496 billion annually in tax years 2014 through 2016
good faith on the advice of a professional and will likely reach $540 billion annually for 2017
tax adviser, the taxpayer must show that through 2019.
he or she “actually relied in good faith
on the professional’s advice” (Crimi, T.C. IRS initiates pilot program to thwart
Memo. 2013-51 at 1353). line-jumping on PPS calls
Holding: The Tax Court held that The IRS has begun a pilot program designed to
Schweizer did not have reasonable cause thwart services that let callers jump ahead in the
based on his reliance on his accountant’s IRS Practitioner Priority Service phone queue.
advice. The court found there was no
credible evidence that Schweizer’s Plan approval program expands to
accountant advised him that it was Sec. 403(b) retirement plans
unnecessary to include either a qualified An IRS revenue procedure describes circumstances
appraisal or a fully completed Form under which plan sponsors may submit a determina-
8283 with his 2011 return. Furthermore, tion letter application for Sec. 403(b) individually
if he had given Schweizer that advice, designed plans.
Schweizer could not have reasonably
relied in good faith upon it. Practitioner Perspectives series to continue
With regard to whether Schweizer re- within IRS Appeals
ceived the advice, the Tax Court held that Tax practitioners may share insights and feedback with
in making that determination, it was not IRS Office of Appeals employees through fiscal 2023.
bound to accept Schweizer’s “unverified,
self-serving, and unreliable” testimony
(citing Tokarski, 87 T.C. 74 (1986)). There
being no other credible evidence in the Even if Schweizer had not been famil- preparer (citing Metra Chem Corp., 88
trial record that he received the advice, iar with Form 8283 and its requirements, T.C. 654 (1987), and Magill, 70 T.C. 465
the court concluded he had not. he could not reasonably rely on the ac- (1978), aff’d, 651 F.2d 1233 (6th Cir.
On the issue of whether he relied on countant’s purported advice because “the 1981)). The court stated that it was “most
the advice in good faith, the court noted defects were there in plain view” on his likely that petitioner did not review his
that it had consistently held that “blind return, and if he had reviewed the return 2011 return with any care at all.”
reliance on a return preparer is not a as he testified he had, it would have been
defense.” Given his education, “mind for obvious that the return was defective. The ■ Schweizer, T.C. Memo. 2022-102
business,” and particularly his occupation court found it “wholly implausible that
in the art world and familiarity with a taxpayer as educated as [Schweizer], — John McKinley, CPA, CGMA, J.D.,
Form 8283 from his past deductions, having devoted almost a decade to the LL.M., is a professor of the practice in
the court found that Schweizer knew study of law” would have believed that he accounting and taxation in the SC Johnson
that his return had to include a properly could properly file a tax return that was College of Business, and Matthew Geiszler,
completed Form 8283 with a qualified obviously lacking the required elements. Ph.D., is a lecturer in accounting in the
appraisal attached. Knowing this, the Also, the court noted, taxpayers have College of Human Ecology, both at Cornell
court determined, Schweizer could not a duty to review their returns before University in Ithaca, N.Y. IMAGES BY FONIKUM/GETTY IMAGES
have reasonably relied on contrary advice signing and filing them, and the duty of
from his accountant, because such reli- filing accurate returns cannot be avoided To comment on this column, contact Paul
ance would exemplify “willful blindness.” by placing responsibility on a tax return Bonner, the JofA’s tax editor. ■

36 | Journal of Accountancy January 2023