Relying on a CPA to e-File Returns Doesn’t Excuse Taxpayer Penalties

The failure to file a return can result in late filing penalties that can be excused with a showing of reasonable cause. Does relying on a CPA to e-file returns constitute reasonable cause? An appellate court said no, holding a surgeon liable for over $289,000 in unpaid taxes and penalties for returns for 3 years when his CPA failed to e-file the returns. The fact that the doctor authorized his CPA to e-file does not amount to exercising ordinary business care and prudence (the standard for reasonable cause). The U.S. Supreme Court bright line rule that reliance on agents without more does not amount to reasonable cause and the appellate court said the same rule that the Court set for paper returns also applies to e-filed returns. #IdeaoftheDay