This is one of those geeky tax court issues that I usually don’t report on, except this is sort of a big deal for normal people, so I figured I should write about it.

 

The quick scoop of the case is that Robert and his wife Diolinda filed their 2007 tax return with lots of mistakes.  To be brutally honest, I think they were trying to pull a fast one and got caught, but the court document refers to the tax underreporting as “errors” so I will too.

 

Anyway, these “errors” amounted to Robert and Diolinda owing an additional $44,643 in taxes.  That’s a lot of money.  And if the IRS finds that you’ve under reported the tax you owe by over 10%, they add additional penalties.  In this case, the penalties amounted to an additional $8,179.

 

So why is any of this relevant to the rest of us?  It’s because of those penalties.  Robert argued in his case that he shouldn’t have to pay the penalties because he suffered from various health ailments including depression, cardiac disorders and memory loss.  He had suffered from those ailments since 1997.  He also claimed that he used the tax software Turbo Tax and that other people who used Turbo Tax did not get assessed penalties due to computer errors.

 

The response from Tax Court?  Well I’m paraphrasing here but basically they said, “Garbage in, garbage out.”  You see, if you use Turbo Tax and you follow the directions and prepare your return the way Turbo Tax tells you to—well then you should get a proper tax return.  If you input your numbers correctly and Turbo Tax messes up your return, then Turbo Tax would be to blame.  But if you go and input a bunch of crazy crap—then it’s your own fault your taxes are wrong and you can’t blame the errors on Turbo Tax.  The court basically decided that Robert and Diolinda input a bunch of crap (like I said, paraphrasing.)

 

What about the argument that Robert’s poor health, confusion and memory loss was an excuse for the errors?  The Tax Court held that since he failed to get competent help for preparing the return that it counted as negligence—so bam—penalties.

 

So what does this mean?  If you are mentally or physically unable to prepare your own taxes properly, then you need to get competent help to assist you.

 

The case is Robert L. Bernard and Diolinda B. Abilheira v. Commissioner of Internal Revenue.  It was filed on August 1, 2012.  Here’s a link if you want to read the whole case:  http://www.ustaxcourt.gov/InOpHistoric/bernardmemo.TCM.WPD.pdf