Most of the civil penalties that may be assessed against a taxpayer by the IRS for failures relating to the filing of tax returns or payment of taxes contain some form of a "reasonable cause" defense—that is, if the taxpayer can demonstrate that the failure was due to reasonable cause, penalties will generally not be imposed. (Note that for certain penalties there may be additional requirements, such as showing that the taxpayer acted in good faith, in the case of fraud and accuracy related penalties; or showing that the failure was not due to willful neglect, in the case of a failure to file a return or pay the tax owed. Generally, however, the facts that support a finding of reasonable cause will likely support these other requirements as well.) Largely, when a taxpayer acts with "ordinary business care and prudence," any ensuing failure will presumably be the result of reasonable cause.
This rule often leads to taxpayers attempting to defend themselves by pointing the finger at an accountant or other tax professional. If the taxpayer relied on a professional, a taxpayer may argue that the taxpayer cannot be faulted for the professional's failure, and the taxpayer should be entitled to the benefit of the reasonable cause exception.
The success of this defense, however, very much depends on the nature of the professional's alleged failure. The Supreme Court, in United States v. Boyle, 469 U.S. 241 (1985), made an important distinction. Reliance on the technical advice of a professional may be reasonable, since taxpayers cannot be expected to reach correct conclusions on technical tax issues without professional assistance; therefore, it is consistent with ordinary business care and prudence to rely on such advice. However, reliance on a professional to perform a simple task that requires no special expertise, and that the taxpayer could easily have completed, such as the task of placing a return in the mail, will not absolve the taxpayer if the professional fails to complete the task.
The Boyle rule has been consistently applied in cases of failure to file or pay penalties, even in cases where the circumstances leading to the failure were entirely unanticipated by the taxpayer. For example, in Specht v. United States, 661 Fed. Appx. 357 (6th Cir. 2016), the taxpayer was not absolved of the failure to file and pay, even though the failures were the result of his attorney-advisor's undiagnosed brain cancer (which circumstance would likely have been considered reasonable cause had it been the attorney who was the taxpayer). In Vaughn v. United States, 635 Fed. Appx. 216 (6th Cir. 2015), penalties were upheld for failing to file estate tax returns even though the taxpayer's agents had disregarded specific instructions and breached fiduciary duties.
The above cases stand for the general proposition that a taxpayer cannot be absolved from responsibility by delegating a task that is easily within the taxpayer's own power, which has been interpreted to include the act of filing a tax return. (Note – however, in the case of a foreign corporation, the Tax Court has held that their reliance on a U.S. accountant's advice not to file a tax return was considered to be reasonable cause in Grecian Magnesite Mining, 149 T.C. 63 (2017).)
A recent case, however, has raised the question of whether the current electronic filing rules, which were not in place when Boyle was decided, should change the analysis. In Intress v. United States, US DC Middle District Tennessee, Case No. 3:18-cv-00851 (August 2, 2019), the taxpayers had engaged a professional preparer to prepare and file their tax return. The preparer, who was required under the current IRS rules to e-file the return, prepared the return using specialized software, but accidentally neglected to hit the send button. When penalties were ultimately assessed against the taxpayers, they argued that since professional tax preparers are required to e-file the returns they prepare, the task of sending a return is no longer the simple act of placing a return in a mailbox, and the question of reasonable reliance as it applies to filing a return should be revisited. The court however, rejected their argument on the grounds that even if it is true that e-filing is somewhat more complicated than placing a return in the mail, there was still nothing requiring taxpayers to engage a professional preparer in the first place, nor was there anything preventing the taxpayers themselves from using snail mail to send their return after it was prepared by the professional (the e-filing requirement only applies if the professional files the return, not if the professional provides the prepared return to the taxpayer).
The Fifth Circuit had noted a similar issue earlier this year in Haynes v. United States, 760 F.App'x 324 (5th Cir. 2019), stating that it was possible that the Boyle rule would no longer apply to e-filing of returns, but rather than deciding the issue, remanded the case for further fact development as to whether the accountant's actions could rise to a reasonable cause standard.
Taxpayer accordingly are well advised to personally ensure that their tax returns are filed and their taxes paid, by seeking confirmation from the IRS. Otherwise, reliance on third parties, even if reasonable, may not help a taxpayer avoid failure to file or pay penalties.