The opinion is two and a half pages.
It is one of the shortest opinions I have seen. That was
– frankly – what caught my interest.
Francis Kemegue lost his job in 2017. I do not know
details, but he experienced multiple personal and professional setbacks.
He extended his 2017 return.
Gotta be a late file/late payment case. If you are
ever in a situation where you are unable to pay your tax, file the return
nonetheless. Yes, the IRS will eventually contact you, but they are going to
contact you anyway. The penalties for filing a late return are more severe than
for filing but not paying.
Kemegue in fact never filed his 2017 return.
Sounds like that job loss debilitated him.
The IRS prepared a tax return for him. This a called a
“substitute return,” and the IRS assumes that every known receipt (think
computer matching) is taxable and that there are no deductions. The math is
bogus, of course. The IRS is not so much trying to prepare your return as to
catch your attention.
He owed with that substitute return.
Of course.
Now he was late file and late pay.
Great.
Kemegue wanted a break.
Go for it.
More specifically, he wanted abatement of the late
file and pay penalties.
I would do the same. There is a kabuki dance to this,
however. Abating this penalty requires establishment of reasonable cause. The
IRS has for a while been (in my opinion) very unreasonable about reasonable
cause. However, if Kemegue was seeing a counselor or otherwise under
professional care – even if intermittently - he has a decent chance. This would
be a superb time to obtain exculpatory letters from his health professional(s)
and to polish his storytelling chops.
Kemegue did not do any of this.
He did talk about his job search, including traveling
to other states. He even tried to start his own company.
Kemegue, you are missing the plot here.
The Court wanted to know more about his story: shattering setback, evaporating self-confidence, needing help for depression.
He fell behind on his tax return because he – you know – fell behind in all
areas of his life.
Silence.
Not good.
The Court wanted to know: what was going on that he
could travel and search for work but not file that tax return?
Again silence.
You know how this turned out.
Sheesshh.
Our case this time was Francis Kemegue v Commissioner,
T.C. Summary Opinion 2023-5.
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