Estate of David T. Leighton v. United States, US Ct. Fed. Claims, No. 21-840T: Missing Gift Tax Return May Be Reasonable Cause for Late Filing of Estate Tax Return (August 9, 2021)

In the Estate of David T. Leighton v. United States, the US Court of Federal Claims, No. 21-840T held that a missing or unknown gift tax return could constitute a reasonable cause for the late filing of an estate tax return.

The opinion’s synopsis is as follows:

In this tax case, the Executor-Plaintiff, Frank “Tom” Leighton (the “Executor”), seeks to recover a penalty the Internal Revenue Service (“IRS”) collected for failure to timely file an estate tax return and pay the resulting obligations. The belated filing and payment were based on tax information unknown by the Executor at the time the return was due. The issue before the Court is whether that missing information could constitute reasonable cause for delay, thereby entitling the Executor to relief from that penalty.

The United States moves to dismiss this action pursuant to RCFC 12(b)(6) for failure to state a claim upon which relief can be granted. (Def.’s Mot. to Dismiss (Def.’s Mot.”), ECF No. 16). The United States asserts that the Executor cannot establish reasonable cause based on the facts set forth in the Amended Complaint, (Am. Compl., ECF No. 13). The Court disagrees. Finding that the Complaint states a plausible claim upon which relief could be granted, the United States’ Motion is DENIED.

To see the full opinion, click Estate of David T. Leighton v. United States, US Ct. Fed. Claims, No. 21-840T: Missing Gift Tax Return May Be Reasonable Cause for Late Filing of Estate Tax Return (August 9, 2021).

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.