United States v. Boyle

Justice Brennan, with whom Justice Marshall, Justice Powell, and Justice O’Connor join,

concurring.

I concur that the judgment must be reversed. Although the standard of taxpayer liability found in 26 U. S. C. § 6651(a)(1) might plausibly be characterized as ambiguous,1 courts and the Internal Revenue Service have for almost 70 years interpreted the statute as imposing a standard of “ordinary business care and prudence.” Ante, at 245-246. I agree with the Court that we should defer to this longstanding construction. Ante, at 246, n. 4. I also agree that taxpayers in the exercise of ordinary business care and prudence must ascertain relevant filing deadlines and ensure that those deadlines are met. As the Court correctly holds, a taxpayer cannot avoid the reach of § 6651(a)(1) merely *253by delegating this duty to an attorney, accountant, or other individual. Ante, at 250, 252.2

I write separately, however, to underscore the importance of an issue that the Court expressly leaves open. Specifically, I believe there is a substantial argument that the “ordinary business care and prudence” standard is applicable only to the “ordinary person” — namely, one who is physically and mentally capable of knowing, remembering, and complying with a filing deadline. In the instant case, there is no question that the respondent not only failed to exercise ordinary business care in monitoring the progress of his mother’s estate, but also made no showing that he was unable to exercise the usual care and diligence required of an executor. The outcome could be different if a taxpayer were able to demonstrate that, for reasons of incompetence or infirmity, he understandably was unable to meet the standard of ordinary business care and prudence. In such circumstances, there might well be no good reason for imposing the harsh penalty of § 6651(a)(1) over and above the prescribed statutory interest penalty. See 26 U. S. C. §§ 6601(a), 6621(b).

The Court proclaims the need “for a rule with as ‘bright’ a line as can be drawn,” and it stresses that the Government “should not have to assume the burden of unnecessary ad hoc determinations.” Ante, at 248, 249. On the other hand, it notes that the “bright line” might not cover a taxpayer who is “incapable by objective standards of meeting the criteria of ‘ordinary business care and prudence,’” reasoning that “the disability alone could well be an acceptable excuse for a late filing.” Ante, at 248, n. 6.

I share the Court’s reservations about the sweep of its “bright line” rule. If the Government were determined to *254draw a “bright line” and to avoid the “burden” of “ad hoc determinations,” it would not provide for any exemptions from the penalty provision. Congress has emphasized, however, that exemptions must be made where a taxpayer demonstrates “reasonable cause.” 26 U. S. C. § 6651(a)(1). Accordingly, the IRS already allows dispensations where, for example, a taxpayer or a member of his family has been seriously ill, the taxpayer has been unavoidably absent, or the taxpayer’s records have been destroyed. Internal Revenue Manual (CCH) §4350, (24) ¶22.2(2) (Mar. 20, 1980) (Audit Technique Manual for Estate Tax Examiners). Thus the Government itself has eschewed a bright-line rule and committed itself to necessarily case-by-case decisionmaking. The gravamen of the IRS’s exemptions seems to be that a taxpayer will not be penalized where he reasonably was unable to exercise ordinary business care and prudence. The IRS does not appear to interpret its enumerated exemptions as being exclusive, see id., ¶ 22.2(3), and it might well act arbitrarily if it purported to do otherwise.3 Thus a substantial argument can be made that the draconian penalty provision should not apply where a taxpayer convincingly demonstrates that, for whatever reason, he reasonably was unable to exercise ordinary business care.

Many executors are widows or widowers well along in years, and a penalty against the “estate” usually will be a penalty against their inheritance. Moreover, the principles we announce today will apply with full force to the personal income tax returns required of every individual who receives an annual gross income of $1,000 or more. See 26 U. S. C. § 6651(a)(1); see also §6012. Although the overwhelming *255majority of taxpayers are fully capable of understanding and complying with the prescribed filing deadlines, exceptional cases necessarily will arise where taxpayers, by virtue of senility, mental retardation, or other causes, are understandably unable to attain society’s norm. The Court today properly emphasizes the need for efficient tax collection and stern incentives. Ante, at 248-249. But it seems to me that Congress and the IRS already have made the decision that efficiency should yield to other values in appropriate circumstances.

Because the respondent here was fully capable of meeting the required standard of ordinary business care and prudence, we need not decide the issue of whether and under what circumstances a taxpayer who presents evidence that he was unable to adhere to the required standard might be entitled to relief from the penalty. As the Court has expressly left this issue open for another day, I join the Court’s opinion.

For each month or fraction of a month that a tax return is overdue, 26 U. S. C. § 6651(a)(1) provides for a mandatory penalty of 5% of the tax (up to a maximum of 25%) “unless it is shown that [the failure to file on time] is due to reasonable cause and not due to willful neglect.” As Judge Posner observed in his dissent below, “in making ‘willful neglect’ the opposite of ‘reasonable cause’ the statute might seem to have modified the ordinary meaning of ‘reasonable’. . . .” 710 F. 2d 1251, 1256 (CA7 1983).

As the Court emphasizes, this principle of nondelegation does not extend to situations in which a taxpayer reasonably relies on expert advice concerning substantive questions of tax law, such as whether a liability exists in the first instance. Ante, at 250-251.

It is difficult to perceive a material distinction, for example, between a filing delay that results from a serious illness in the taxpayer’s immediate family or a taxpayer’s unavoidable absence — situations in which the IRS excuses the delay — and a filing delay that comes about because the taxpayer is infirm or incompetent. The common thread running through all these unfortunate situations is that the taxpayer, for reasons beyond his control, has been unable to exercise ordinary business care and prudence.