Child Adult Intervention Servs. v. Comm'r
103 T.C.M. 1494
| Tax Ct. | 2012Background
- Petitioner is a Oregon-domiciled 501(c) organization required to file Form 990s by the 15th day of the 5th month following year-end.
- Dr. King founded petitioner, served as president, and received substantial compensation (roughly 35–66% of petitioner’s revenues) for years 1996–2008.
- Mrs. King, not an officer, performed administrative tasks including Form 990 preparation and has medical issues, including fibromyalgia.
- Petitioner failed to file Forms 990 timely for each year 1996–2008; penalties were assessed for most years but abated for all except 2005 and 2007.
- Respondent assessed late-filing penalties of $10,000 for 2005 and $2,260 for 2007; a Notice of Determination sustained the levy and found no reasonable cause for the late filings.
- Petitioner contested the levy under section 6330(d), arguing reasonable cause due to Mrs. King’s illness and collection concerns, but the SO denied collection alternatives and timing issues were reviewed de novo for underlying liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether penalties under 6652(c)(1) can be abated for reasonable cause. | King/ petitioner argues Mrs. King's illness constitutes reasonable cause. | Respondent argues failure due to willful neglect; reasonable cause not shown. | No, penalties not abated; willful neglect established. |
| Whether Mrs. King’s illness can excuse the late filings. | Petitioner asserts Mrs. King's illness caused the delay. | Illness not an officer; Dr. King remained responsible; no reasonable cause. | No valid reasonable-cause finding; not sufficient to excuse filing failures. |
| Whether the levy is appropriate given collection actions and alternatives. | Petitioner would suffer financial hardship; requested collection alternative. | SO did not abuse discretion; petitioner did not provide information or propose alternatives. | Levy sustained; collection-action determination affirmed. |
Key Cases Cited
- United States v. Boyle, 469 U.S. 241 (U.S. 1985) (reasonable-cause and willful neglect standards apply to penalties)
- Alton OB-Gyn, Ltd. v. United States, 789 F.2d 515 (7th Cir. 1986) (reliance on an agent does not constitute reasonable cause)
- Lunsford v. Commissioner, 117 T.C. 183 (T.C. 2001) (underlying liability reviewed de novo in collection cases)
- Goza v. Commissioner, 114 T.C. 176 (T.C. 2000) (underlying liability review standards in collection context)
- Cox v. Commissioner, 126 T.C. 237 (T.C. 2006) (abuse of discretion in evaluating collection alternatives)