ESTATE OF YOUNG v. U.S.
THE ESTATE OF NANCY P. YOUNG
UNITED STATES OF AMERICA
Civil Action No. 11-11829-RWZ.
United States District Court, D. Massachusetts.
December 17, 2012.
MEMORANDUM AND ORDER
RYA W. ZOBEL, District Judge.
Plaintiff, the estate of Nancy P. Young ("the Estate"), filed its estate tax return after the applicable deadline and the IRS assessed a late-filing penalty. The Estate has sued the United States for a refund of that penalty on the ground that it had reasonable cause for its late filing. The United States now moves for summary judgment.
The relevant facts are undisputed. Nancy P. Young died on August 14, 2008, and her son Arthur W. Young, III, became the executor of her estate. The Estate's tax return and tax payment were originally due on May 14, 2009. However, the Estate submitted timely requests for extension of time to file and extension of time to pay; those requests were granted, which made the Estate's tax return due by November 14, 2009, and the Estate's tax payment due by May 14, 2010.
The Estate made a partial payment of $760,000 towards its tax liability on May 14, 2009, before the original payment deadline expired. It made a second payment of $2,200,000 on August 31, 2009, after the original payment deadline but before the extended deadline. That second payment satisfied the balance of the Estate's tax liability as estimated when the request for extension of time to file was made.
Over the summer of 2009, as the Estate was preparing its return, the United States was in the midst of a financial crisis that caused property values to plummet. As a result, it was difficult for the Estate to determine an accurate valuation of its real estate holdings. The Estate obtained appraisals of its properties, but believed that the appraisers' estimated values were substantially higher than the fair market value at the time.