Disclaimer: The following is for informational purposes only. It is not intended to constitute legal advice, or to recommend a course of action, and does not create an attorney-client relationship between the reader and Renuka Somers, or Somers Tax Law, PLLC.

In the U.S. Tax Court cases of Chernomordikov et al. v. Commissioner, docket numbers 35205-21 and 35297-21, the IRS told the U.S. Tax Court that the Petitioners, Mark and Jessica Chernomordikov, could not avoid failure-to-file and failure-to-pay penalties by blaming their tax preparer. The court had found that Mark used his company’s cash as personal income and that the couple failed to file and pay taxes between 2012 and 2014.

The Chernomordikovs had argued that their lack of sophistication and reliance on a “bad actor” accountant should excuse the penalties, noting the court previously relied on those facts to reject fraud. The IRS countered that reliance on a preparer does not excuse willful neglect, and that the Chernomordikovs could not hide behind the bad advice and the tax preparer’s absence from trial to establish reasonable cause.

The Tax Court assessed more than $12 million in deficiencies and over $10 million in penalties, which were later reduced through settlement to $7.5 million in deficiencies.

Renuka Somers.