In Peter Knappe v. U.S., 713 F3d 1164 (9th Cir., April 4, 2013), the United States Court of Appeals for the Ninth Circuit was presented with the question whether reliance upon a tax professional may excuse the late filing of a tax return.
Peter Knappe was the personal representative of the Estate of Ingborg Pattee. He was also trustee of her testamentary trust.
Mrs. Pattee died in 2005, leaving a large estate. Mr. Knappe was her long-time friend. Although he had business experience, Mr. Knappe had no experience serving as a personal representative or preparing estate tax returns. So, he engaged the services of Mr. Francis Burns, CPA. Burns had been his company’s outside accountant for several years. Mr. Knapp was always satisfied with his work.
Burns told Knappe that a Form 706 for the estate of would need to be filed by August 30, 2006. Knappe had trouble obtaining the needed appraisals on or before the filing deadline. Burns advised Knappe that he could obtain an extension of one (1) year for both the filing and the payment of the taxes due.
Burns filed a Form 4786, seeking both an extension for filing and for payment of the taxes due. The extension sought was one year.
As we know, the filing extension, unless the personal representative is out of the country, is only six (6) months. The payment extension, however, in the discretion of the Service, may be up to one year. Burns, however, believed both extensions were automatically one (1) year. OOPS!
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Larry J. Brant
Editor
Larry J. Brant is a Shareholder and the Chair of the Tax & Benefits practice group at Foster Garvey, a law firm based out of the Pacific Northwest, with offices in Seattle, Washington; Portland, Oregon; Washington, D.C.; New York, New York, Spokane, Washington; Tulsa, Oklahoma; and Beijing, China. Mr. Brant is licensed to practice in Oregon and Washington. His practice focuses on tax, tax controversy and transactions. Mr. Brant is a past Chair of the Oregon State Bar Taxation Section. He was the long-term Chair of the Oregon Tax Institute, and is currently a member of the Board of Directors of the Portland Tax Forum. Mr. Brant has served as an adjunct professor, teaching corporate taxation, at Northwestern School of Law, Lewis and Clark College. He is an Expert Contributor to Thomson Reuters Checkpoint Catalyst. Mr. Brant is a Fellow in the American College of Tax Counsel. He publishes articles on numerous income tax issues, including Taxation of S Corporations, Reasonable Compensation, Circular 230, Worker Classification, IRC § 1031 Exchanges, Choice of Entity, Entity Tax Classification, and State and Local Taxation. Mr. Brant is a frequent lecturer at local, regional and national tax and business conferences for CPAs and attorneys. He was the 2015 Recipient of the Oregon State Bar Tax Section Award of Merit.
