T.C. Memo. 1999-352
UNITED STATES TAX COURT
LUISA DEAL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12757-98. Filed October 25, 1999.
Luisa Deal, pro se.
Yvonne M. Peters, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GOLDBERG, Special Trial Judge: Respondent determined a
deficiency in petitioner's 1995 Federal income tax in the amount
of $1,050.
- 2 -
The issue for decision is whether petitioner is liable for a
10-percent additional tax under section 72(t)(1)1 on a $10,500
distribution from her individual retirement account (IRA).
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time the petition
was filed, petitioner resided in La Jolla, California.
In 1995, at the age of 52, petitioner received an IRA
distribution from Smith Barney, Inc., of $10,500. Petitioner did
not roll over the IRA distribution into another qualified IRA.
Petitioner reported the $10,500 distribution on her 1995 Federal
income tax return as a taxable IRA distribution but did not
compute the additional 10-percent additional tax due for
premature distribution.
In a notice of deficiency dated December 31, 1995,
respondent determined a deficiency of $1,050. This amount
represented a 10-percent additional tax on IRA distributions
pursuant to section 72.
OPINION
Under section 408(d)(1), a distribution from an IRA is
taxable to the distributee in the year of distribution in the
1
Unless otherwise indicated, section references are to
the Internal Revenue Code in effect for the year in issue.
- 3 -
manner provided under section 72. Section 408(d)(3) provides an
exception to the general rule for certain "rollovers" by the
distributee; namely, where a distribution is paid to the
distributee, and the distributee transfers the entire amount of
the distribution to an IRA or an individual retirement annuity
within 60 days of receipt.
Section 72(t)(1) provides for a 10-percent additional tax on
distributions from qualified retirement plans. Section 72(t)(2)
excludes qualified retirement plan distributions from the 10-
percent additional tax if the distributions are: (1) Made on or
after the date on which the employee attains the age of 59-1/2;
(2) made to a beneficiary (or to the estate of the employee) on
or after the death of the employee; (3) attributable to the
employee's being disabled within the meaning of section 72(m)(7);
(4) part of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life
expectancy) of the employee or joint lives (or joint life
expectancies) of such employee and his designated beneficiary;
(5) made to an employee after separation from service after
attainment of age 55;2 or (6) dividends paid with respect to
stock of a corporation which are described in section 404(k). A
2
This provision, codified at sec. 72(t)(2)(A)(v), is not
applicable to premature IRA distributions. See sec. 72(t)(3)(A).
- 4 -
limited exclusion is also available for distributions made to an
employee for medical care expenses. See sec. 72(t)(2)(B).
Petitioner's IRA was a qualified retirement plan.
Petitioner did not roll over her IRA distribution and does not
claim to fit within any of the statutory exceptions of section
72(t)(2). Petitioner testified that she was aware of the
provisions of section 72(t) when she filed her 1995 income tax
return but claims that she relied on erroneous advice she
received from the Internal Revenue Service (IRS) when she called
for information to prepare her return.
In sum, petitioner contends that the application of section
72(t) in this case is inequitable because she made a good faith
effort to correctly file her 1995 Federal income tax and relied
on IRS advice.
This Court has previously held that the authoritative
sources of Federal tax law are statutes, regulations, and
judicial case law and not informal IRS sources. See Zimmerman v.
Commissioner, 71 T.C. 367, 371 (1978), affd. without published
opinion 614 F.2d 1294 (2d Cir. 1979); Green v. Commissioner, 59
T.C. 456, 458 (1972). Additionally, in order to ensure uniform
enforcement of the tax law, the Commissioner must follow
authoritative sources of Federal tax law and may correct mistakes
of law made by IRS agents or employees. See Dixon v. United
- 5 -
States, 381 U.S. 68, 72 (1965); Massaglia v. Commissioner, 286
F.2d 258, 262 (10th Cir. 1961), affg. 33 T.C. 379 (1959).
Though it is unfortunate that petitioner may have received
unhelpful or incorrect tax advice from IRS employees, that advice
does not have the force of law.
Petitioner contends that her present financial hardship
should relieve her from liability for the additional tax and asks
this Court for relief. There is, however, no financial hardship
exception to section 72(t).
Petitioner has not shown error in respondent's determination
that she is liable for a 10-percent additional tax on her 1995
IRA distribution. Since petitioner fails to qualify for any of
the statutory exceptions under section 72(t)(2), we hold that
petitioner is liable for the 10-percent additional tax on
distributions from a qualified retirement plan for 1995 as
provided in section 72(t)(1). Respondent is sustained on this
issue.
To reflect the foregoing,
Decision will be entered
for respondent.