Opinion
14-P-1725
12-21-2015
JONATHAN HAAR v. COMMISSIONER OF REVENUE.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The Commissioner of Revenue (commissioner) appeals from a decision of the Appellate Tax Board (board) in favor of Jonathan Haar (taxpayer), which granted an abatement of a $100 penalty levied on the taxpayer for the failure to file a request for an extension and to render payment electronically in compliance with the commissioner's requirements.
The undisputed facts include the following: the taxpayer annually filed requests to extend the due date of his personal income tax return, accompanied by an estimated tax payment as required. Technical information release 04-30 issued by the commissioner in 2004 requires such an estimate to be filed electronically if the amount equals or exceeds $5,000. The taxpayer did not comply for tax year 2005; he filed the extension form by mail and made an estimated payment of $5,000 by check. In a notice dated May 2, 2006, the commissioner warned the taxpayer of the electronic filing and payment requirements and the $100 penalty if he did not comply in the future. The taxpayer was assessed the $100 penalty for failing to comply in tax year 2006, and subsequently complied for tax year 2007. For tax years 2008 and 2009, his estimated personal tax liability did not exceed $5,000, and thus did not invoke the electronic filing requirements. For tax year 2010, the taxpayer's estimated tax liability again exceeded $5,000 yet he again filed the extension request and estimated payment by mail; as a result, the commissioner assessed the $100 penalty.
We note that timely payment is not an issue in this case, only the method of payment.
After his abatement request was denied by the commissioner, the taxpayer petitioned the board asking that the commissioner be overruled and the penalty abated. He testified that he had a profound distrust of online data security and as a result, conducted most of his personal and professional financial transactions offline. The board ruled that this constituted "reasonable cause" within the purview of G. L. c. 62C, § 33(g), the statute that governs penalties for tax filings.
Section 33(g), inserted by St. 2003, c. 143, § 2, provides, in pertinent part, that "if the taxpayer, without reasonable cause, fails to conform any . . . payment with the method prescribed by the commissioner in tax years beginning on or after January 1, 2005, there shall be added . . . a penalty in an amount not greater than $100 . . . for each improper payment."
Upon review of the board's ruling, we defer to its findings of fact if supported by substantial evidence. See G. L. c. 58A, § 13; Commissioner of Rev. v. Wells Yachts S., Inc., 406 Mass. 661, 663 (1990). "We conduct an independent analysis of the board's rulings of law, according 'some deference' to the board's 'expertise in interpreting the tax laws of the Commonwealth.'" Schussel v. Commissioner of Rev., 472 Mass. 83, 87 (2015) (citation omitted). The question of what constitutes "reasonable cause" is a question law. Commissioner of Rev. v. Wells Yachts S., Inc., supra at 664 (1990) ("reasonable cause" under G. L. c. 62C, § 33[f], is question of law).
No court has yet interpreted § 33(g). We look to case law analyzing G. L. c. 62C, 33(f), as § 33(g) states that "[a] penalty imposed by the commissioner for an improper filing or payment shall be subject to subsection 33(f) relative to the waiver of penalties." Furthermore, "[w]hen the meaning of any particular section or clause of a statute is questioned, it is proper, no doubt, to look into the other parts of the statute: otherwise the different sections of the same statute might be so construed as to be repugnant, and the intention of the legislature might be defeated." Saccone v. State Ethics Commn., 395 Mass. 326, 334 (1985), quoting from Holbrook v. Holbrook, 1 Pick. 248, 250 (1823).
"Reasonable cause will be established where, at a minimum, a taxpayer has demonstrated that 'he exercised the degree of care that an ordinary taxpayer in his position would have exercised.'" Geoffrey, Inc. v. Commissioner of Rev., 453 Mass. 17, 25-26 (2009) (citation omitted). In this case, however, we need not define the evidentiary parameters of reasonable cause as the taxpayer failed to establish a basis for his refusal to comply with the statute both before the commissioner and on appeal. Even were we to consider the taxpayer's submissions on appeal, here wholly noncompliant with the Rules of Appellate Procedure, they would not avail him.
After the taxpayer filed a brief in this court, he was notified that it was nonconforming in thirteen different respects, including the lack of (1) a statement of facts, (2) a statement of the issues, (3) a statement of the case, (4) a table of authorities, (5) references to the record, and (6) a certificate of service. He did not file a corrected document in the ensuing eight months before the scheduled hearing in this court. On the basis of his oral representation that he would file a conforming brief he nevertheless was allowed to participate in oral argument with the consent of the Commonwealth. Thereafter he filed a second document that was less conforming than the first.
It is not disputed that the taxpayer was aware of the electronic payment requirement; he received notice from the commissioner for failing to comply as long ago as tax year 2005. It is also clear that he was able to comply with the requirement, as evinced by his compliance during tax year 2007. On this record the commissioner was not required to consider this taxpayer's professed concerns of privacy (irrelevant, as paper filings are scanned electronically) or security (ignored by the taxpayer himself in 2007) to be reasonable.
Conclusion. The decision of the board abating the commissioner's assessment of the $100 penalty is reversed and the matter is remanded to the board with instructions to enter an order affirming the commissioner's denial of the abatement.
So ordered.
By the Court (Grainger, Hanlon & Agnes, JJ.),
The panelists are listed in order of seniority. --------
/s/
Clerk Entered: December 21, 2015.