On Monday, the Tax Court in Lam v. Commissioner, T.C. Memo. 2010-82 (Apr. 19, 2010) rejected a taxpayer’s use of the “Geithner defense” (called this because during his confirmation hearings, Tim Geithner blamed some of his tax issues on problems with tax-preparation software) and held that blaming TurboTax for errors on her return did not excuse her from penalties.
The Court stated:
At trial Ms. Lam repeatedly argued that petitioners consistently filled out their tax returns using TurboTax and that she consistently confused capital gains and losses with ordinary income and expenses. Although the Court concludes the errors in petitioners’ tax preparation were made in good faith, petitioners have not established that they behaved in a manner consistent with that of a prudent person. Before the trial petitioners stipulated that they did not consult a tax professional or visit the IRS’ Web site for instructions on filing the Schedule C.
At trial Ms. Lam did not attempt to show a reasonable cause for petitioners’ underpayment of taxes. Instead she analogized her situation to that of the Secretary of the Treasury, Timothy Geithner. Citing a Wikipedia article, Ms. Lam essentially argues that, like Secretary Geithner, she used Turbo Tax, resulting in mistakes on her taxes.
Ms. Lam was not represented by counsel at this proceeding. Enjoy the video.
See also Wall Street Journal Blog