Wayne Lee v. USA

[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-10793
____________________
WAYNE LEE,
Plaintiff-Appellant,
versus
UNITED STATES OF AMERICA,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Middle District of Florida
D.C. Docket No. 8:21-cv-01579-TPB-AAS
____________________
Before L AGOA , BRASHER , and E D CARNES, Circuit Judges.
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2 Opinion of the Court 22-10793
B RASHER , Circuit Judge:
The IRS penalizes taxpayers for filing late tax returns, unless
the delay “is due to reasonable cause and not . . . willful neglect.”
26 U.S.C. § 6651(a)(1). In United States v. Boyle, the Supreme Court
established the bright line rule that “reliance on an agent,” without
more, does not amount to “reasonable cause” for failure to file a
tax return on time. 469 U.S. 241, 248, 252 (1985).
The question in this appeal is whether Boyle’s bright line rule
applies to e-filed returns. Wayne Lee’s CPA failed to file Lee’s tax
returns for three consecutive years: 2014 through 2016. In 2019, the
IRS assessed Lee with over seventy thousand dollars in penalties
for violating Section 6651(a) of the Internal Revenue Code and
barred him from applying his 2014 overpayment to taxes owed for
2015 and 2016. Lee sued, arguing that his failure to file was due to
reasonable cause. He also sought a refund of the penalties. The dis-
trict court granted summary judgment for the government, con-
cluding that Boyle foreclosed Lee’s claims. Lee appealed.
If Lee’s CPA had failed to file paper tax returns, there would
be no question that Boyle would have precluded a reasonable cause
defense and a refund. Boyle, 469 U.S. at 252. But no circuit court has
yet applied Boyle to e-filed tax returns. See Haynes v. United States,
760 F. App’x 324, 327 (5th Cir. 2019) (noting that this is an open
question).
We must answer this open question and decide whether
Boyle’s bright line rule applies to e-filed returns. We believe it does.
Accordingly, we conclude that Lee’s reliance on his CPA does not
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22-10793 Opinion of the Court 3
constitute “reasonable cause” under Section 6651(a)(1). We do not
address Lee’s claim, which he raises for the first time on appeal,
that the IRS incorrectly assessed failure-to-pay penalties under Sec-
tion 6651(a)(2). We affirm the district court.
I.
We briefly recount the pertinent facts of this case, which are
largely undisputed. Wayne Lee, a Florida surgeon, hired CPA
Kevin Walsh to prepare and file his federal income tax returns for
2014, 2015, and 2016.1 Because Walsh’s firm, ATROX Partners,
prepared and filed more than ten federal tax returns each year,
Treasury Regulations deemed Walsh a “specified tax return pre-
parer,” requiring him to file all prepared returns on magnetic media
(e.g., e-filing).
From 2014 to 2016, Walsh prepared Lee’s tax returns. Each
return claimed roughly one million dollars in gross income and
showed six-figure overpayments, which Lee chose to apply to the
following year’s estimated tax. Every year, Lee reviewed the re-
turns and signed IRS Form 8879, authorizing Walsh to e-file the
returns on his behalf.
But Walsh never filed a single return. According to Lee,
Walsh informed the IRS that ATROX’s tax preparation software
was incapable of preparing Lee’s returns due to their complexity.
1 In his amended complaint, Lee alleged that Walsh prepared and failed to file
his 2017 tax return as well. Lee does not seek a refund of any penalties related
to that return on appeal.
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4 Opinion of the Court 22-10793
Lee claims that Walsh never told him about this problem—he
learned about it after an IRS agent visited his office on December
5, 2018. Lee received no letters from the IRS about the unfiled re-
turns because his mailing address on file with the agency was in-
correct. According to Lee, Walsh agreed to update Lee’s mailing
address with the IRS, but never did so.
Lee submitted the tax returns for 2014 through 2016 in De-
cember 2018. The lookback period for calculating Lee’s credits
therefore began in June 2015. See 26 U.S.C. § 6511(b)(2)(A) (describ-
ing how a taxpayer may claim a credit only for payments made
within the three years and six months preceding the filing of a re-
turn). But Lee made no 2014 tax payments after April 2015, so the
agency disallowed his 2014 overpayment of $288,409. Unable to
benefit from the 2014 overpayment, Lee owed taxes for 2015 and
2016, as well as over seventy thousand dollars in failure-to-file and
failure-to-pay penalties. In August 2019, Lee paid the IRS
$289,183.14, which settled the outstanding tax liability and penal-
ties.
Later, Lee sued ATROX and Walsh to recover damages
caused by Walsh’s negligent failure to file the tax returns at issue.
That lawsuit settled in early 2020.
Lee also sued for a refund of his taxes and fees in the U.S.
District Court for the Middle District of Florida. Lee claimed that
reasonable cause excused the late filings due to his reliance on
Walsh. The district court granted the government’s summary judg-
ment motion, concluding that Walsh’s failure to file timely returns
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22-10793 Opinion of the Court 5
was not “reasonable cause” under Section 6651(a). Though Boyle
did not mention electronic filing specifically, the district court con-
cluded that Boyle’s bright line rule applied to e-filed returns too.
Lee timely appealed.
II.
We review a district court’s grant of summary judgment de
novo, “viewing all facts and reasonable inferences in the light most
favorable to the nonmoving party.” Jurich v. Compass Marine, Inc.,
764 F.3d 1302, 1304 (11th Cir. 2014); Haynes v. McCalla Raymer, LLC,
793 F.3d 1246, 1248 (11th Cir. 2015). Summary judgment is proper
if there is no genuine dispute about a material fact and the “the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a).
III.
Lee advances three arguments on appeal. First, he contends
that Boyle does not apply to e-filed returns. Second, he argues that,
regardless of Boyle, he demonstrated reasonable cause for the late
filings under Section 6651. Third, he asserts that the IRS incorrectly
assessed the failure-to-pay penalties because he timely paid the
amounts shown on the returns. We take up each argument in turn.
A.
The crux of this appeal is whether Boyle’s bright line rule co-
vers e-filed returns. Taxpayers who fail to file a federal income tax
return by the prescribed deadline must pay a penalty. 26 U.S.C. §
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6 Opinion of the Court 22-10793
6651(a)(1). Failing to pay taxes also results in a penalty. Id.
§ 6651(a)(1)–(3). But Congress excepted from these penalties any
failure “due to reasonable cause and not due to willful neglect.” Id.
§ 6651(a)(1)–(3). “Reasonable cause” means the “the taxpayer exer-
cised ordinary business care and prudence” but was still unable to
file the return on time or to pay the tax. 26 C.F.R. § 301.6651-
1(c)(1). “Willful neglect” denotes “a conscious, intentional failure
or reckless indifference.” Boyle, 469 U.S. at 245.
Boyle is the seminal case on the scope of reasonable cause.
There, taxpayer-Boyle argued that he showed reasonable cause—
relying on his attorney—for failing to file a federal estate tax return
by the deadline. Id. at 245–47. Boyle provided his attorney with all
relevant records and checked on the attorney’s progress several
times throughout the return preparation process. Id. at 242–43.
Still, the attorney missed the filing deadline. Id. at 243.
In resolving the matter, the Supreme Court pronounced a
“bright” line rule, holding that the “failure to make a timely filing
of a tax return is not excused by the taxpayer’s reliance on an agent,
and such reliance is not ‘reasonable cause’ for a late filing under
[Section] 6651(a)(1).” Id. at 248, 252. The Court emphasized that
the Internal Revenue Code imposes “an unambiguous, precisely
defined duty” on taxpayers to file their returns on time. Id. at 250.
Thus, relying on an agent to prepare and file a tax return “cannot
function as a substitute for compliance with” filing deadlines. Id. at
251.
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22-10793 Opinion of the Court 7
Though Boyle involved a failure-to-file dispute, we have
noted that its bright line rule applies in the failure-to-pay context as
well, and other circuits have agreed. See In re Sanford, 979 F.2d 1511,
1514 n.8 (11th Cir. 1992) (noting that Boyle allows “a court [to] find
reasonable cause” under Section 6651(a)(1) or Section 6651(a)(2));
Staff IT, Inc. v. United States, 482 F.3d 792, 798 n.17 (5th Cir. 2007)
(concluding that there is “no reason to treat the [reasonable cause]
language” in Sections 6651(a)(1) and 6651(a)(2) differently); Valen
Mfg. Co. v. United States, 90 F.3d 1190, 1193 n.1 (6th Cir. 1996) (hold-
ing that Boyle addresses failure-to-pay disputes because the reason-
able cause language in Sections 6651(a)(1) and 6652(a)(2) is “identi-
cal and should be given the same construction”).
Lee argues that Boyle does not govern this action for three
reasons: (1) Form 8879 exempts e-filing from the rule in Boyle; (2)
the e-filing burden fell on Walsh, not Lee; and (3) Boyle does not
preclude consideration of factors beyond the taxpayer’s control
when deciding whether reasonable cause exists.
1.
We start with Lee’s argument that Boyle does not apply be-
cause of Form 8879. Lee contends that Form 8879 makes e-filing
fundamentally different from paper filing, rendering Boyle inappo-
site in this case. We disagree.
Before a CPA or tax adviser files a taxpayer’s return electron-
ically, the taxpayer must complete Form 8879. By signing this form,
a taxpayer declares “[u]nder penalties of perjury” that the income
tax return is “to the best of [the taxpayer’s] knowledge and belief .
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8 Opinion of the Court 22-10793
. . true, correct, and complete.” IRS Form 8879, Part II. The form
authorizes the electronic return originator (ERO)—often the tax
preparer—to affix the taxpayer’s signature on the return and to
transmit the return on the taxpayer’s behalf. Id. IRS publications
prescribe detailed procedures for e-filed returns. See IRS Pub. 1345,
Authorized IRS E-File Providers of Individual Income Tax Returns,
19–27 (Nov. 2022). Taxpayers must sign and date Form 8879 with
an approved signature method, and EROs “must originate the elec-
tronic submission of a return as soon as possible” after the taxpayer
completes Form 8879. Id. at 22.
Lee attempts to distinguish his case from Boyle, arguing that
Walsh had already prepared the returns at issue, which Lee author-
ized for electronic submission each year by completing Form 8879.
The taxpayer in Boyle delegated to the agent the tasks of preparing
the return and of informing him “when the return was due.” 469
U.S. at 243. But here, Lee was apprised of all the filing deadlines
and ensured that Walsh prepared the tax returns by those dates. Lee
knew the deadlines, verified that Walsh completed the returns, and
delivered a signed Form 8879 to Walsh every year before the filing
deadline. After signing and sending Form 8879 to Walsh, Lee
claims that there was nothing left for him to do. Thus, he argues
that Walsh’s failure to file the return with the IRS was “beyond his
control.” See Boyle, 469 U.S. at 248 n.6 (acknowledging that certain
circumstances “beyond [the taxpayer’s] control,” like mail delays
and sickness, “exempt late filings from the penalty” under Section
6651(a)(1)).
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22-10793 Opinion of the Court 9
Several obstacles stand in the way of that argument. First,
Form 8879’s title specifies that it is an authorization form. See IRS
Form 8879 (titled “IRS e-file Signature Authorization”). When Lee
completed the form, he authorized ATROX to sign the return with
his PIN and “to send [the] return to the IRS.” Id., Part II. But au-
thorizing a tax preparer to submit a tax return is not the same as
filing the tax return—the act of signing Form 8879 does not trans-
mit the return to the IRS. The form therefore does not relieve the
taxpayer of “exercis[ing] ordinary business care and prudence”
when filing a tax return or paying taxes. 26 C.F.R. § 301.6651-
1(c)(1). Lee still had a duty to supervise Walsh’s tax preparation and
to ensure his tax return had been submitted.
Second, Lee’s argument is based on a misreading of footnote
six in Boyle. In Boyle, the Supreme Court excepted circumstances
“beyond the taxpayer’s control” from IRS penalties, like “postal de-
lays” and “illness.” 469 U.S. at 248 n.6. The Court noted that “[t]his
principle [of exempting factors beyond the taxpayer’s control]
might well cover a filing default by a taxpayer” who suffered from
a disability that rendered the taxpayer “incapable by objective
standards of meeting the criteria of ‘ordinary business care and pru-
dence.’” Id.
Lee does not fit within footnote 6 of Boyle. Lee trusted an
agent to file his taxes; he did not experience a disability or illness
that affected his ability to “exercise[] ordinary business care and
prudence,” 26 C.F.R. § 301.6651-1(c)(1). Just like Boyle, “this case
does not involve the effect of a taxpayer’s disability,” but “the effect
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10 Opinion of the Court 22-10793
of a taxpayer’s reliance on an agent employed by the taxpayer.” 469
U.S. at 248 n.6. After Lee signed and returned Form 8879, he re-
tained the physical capacity for ordinary business care and pru-
dence. Lee’s choice to trust his CPA is not a disability—or circum-
stance outside Lee’s control—that stripped Lee of the ability to en-
sure that his agent filed his taxes.
Third, Lee’s contention that signing Form 8879 left nothing
else for him to do, distinguishing his situation from that of the tax-
payer in Boyle, does not hold water. Lee’s reliance on Walsh does
not materially differ from Boyle’s reliance on his attorney. In Boyle,
the taxpayer provided his attorney “with all relevant information
and records.” Id. at 242. Though Boyle contacted his attorney sev-
eral times to inquire about the return’s status, the attorney ne-
glected to file the return. Id. at 242–43. Here, Lee signed Form 8879
and delivered it to Walsh, counting on Walsh to e-file the return
with the IRS. In both cases, the taxpayer similarly relied on the
agent. The object of that reliance was different—a paper-filed re-
turn for Boyle versus an e-filed return for Lee. But both situations
were, so to speak, out of the taxpayers’ hands. Boyle’s reliance on
his attorney did not absolve his “unambiguous, precisely defined
duty to file” his returns on time. Id. at 250. So too here with Lee’s
e-filed return.
2.
Lee next argues that e-filing is beyond the ken of the ordi-
nary taxpayer, such that Congress has shifted the e-filing burden to
tax preparers. Lee says that Walsh had a legal duty to transmit Lee’s
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22-10793 Opinion of the Court 11
electronic returns to the IRS, so the IRS cannot penalize Lee for his
agent’s failure to submit an e-filed return. Again, we disagree that
these wrinkles distinguish this case from Boyle.
A “tax return preparer” is any person who prepares tax re-
turns for compensation. 26 C.F.R. § 301.7701-15(a). The Treasury
Department classifies any tax return preparer who “reasonably ex-
pects” to file ten or more “individual income tax returns in a calen-
dar year” as a “specified tax return preparer.” 26 C.F.R. § 301.6011-
7(a)(3). Specified tax return preparers must file returns on “mag-
netic media,” id. § 301.6011-7(b), which includes e-filing, id.
§ 301.6011-2(a)(1). Yet, if the taxpayer delivers to the specified tax
return preparer a signed and dated document stating that “the tax-
payer chooses to file” a paper return “and that the taxpayer, not the
preparer,” will submit the paper return to the IRS, the specified tax
return preparer need not e-file the prepared return. Id. § 301.6011-
7(a)(4)(ii).
An electronic return originator (ERO) is an authorized e-file
provider and “begins the process of electronic submission of a re-
turn to the IRS” after receiving authorization (e.g., Form 8879)
from the taxpayer. IRS Pub. 3112, IRS E-File Application & Partic-
ipation, 15 (Oct. 2022). An ERO may also perform tax preparation
services, but the IRS considers preparation and origination distinct
activities. Id. at 2. For most taxpayers e-filing their returns, “[t]he
ERO is usually the first point of contact.” Id. at 15. An ERO can
originate an e-filed return in several ways, including by “[e]lectron-
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12 Opinion of the Court 22-10793
ically sending the return to a Transmitter that will transmit the re-
turn to the IRS” or by “[d]irectly transmitting the return to the
IRS.” Id. EROs must not “stockpile” returns, which the IRS defines
as “waiting more than three calendar days to submit returns to the
IRS after the [ERO] has all the necessary information for origina-
tion of the electronic return.” IRS Pub. 1345, supra, at 22, 48.
Based on these IRS publications, Lee suggests that Walsh
had a legal obligation to e-file Lee’s returns within three calendar
days of receiving each Form 8879, and he argues that this legal ob-
ligation undermines Boyle’s bright line rule. Not so.
First, despite delegating tax preparation and filing to Walsh,
Lee retained full control over the process and was in no way forced
to work with his agent. In theory, “a person experienced in business
matters can [file a tax return] personally.” Boyle, 469 U.S. at 252.
Nothing prevented Lee, a sophisticated high-income earner, from
preparing and filing the returns himself, which would have avoided
the ERO process altogether. Alternatively, before hiring a CPA, he
could have confirmed that the CPA’s firm had the proper software
to handle his returns. And under 26 C.F.R. § 301.6011-7(a)(4)(ii), he
could have taken the returns prepared by Walsh and filed them in
paper format directly with the IRS.
Second, the IRS publication on which Lee relies underscores
that “[a]n electronically filed return is not considered filed until the
IRS acknowledges acceptance.” IRS Pub. 1345, supra, at 7 (emphasis
added). Thus, Lee’s signing Form 8879 each year did not complete
the filing process—he needed to obtain acknowledgment from the
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22-10793 Opinion of the Court 13
IRS. Even if, arguendo, the publication transposes the filing obliga-
tion to EROs, it cannot trump the Supreme Court’s holding that
taxpayers have “an unambiguous, precisely defined duty to file”
timely tax returns. Boyle, 469 U.S. at 250.
We have explained that unpublished rulings by the IRS may
illustrate an administrative practice, but they “may not be cited or
relied on as precedent.” Am. Ass’n of Christian Schs. Voluntary Emps.
Beneficiary Ass’n Welfare Plan Tr. v. United States, 850 F.2d 1510, 1515
n.6 (11th Cir. 1988); see also 26 U.S.C. § 6110(k)(3) (noting that
“[u]nless the Secretary otherwise establishes by regulations, a writ-
ten determination [by the IRS] may not be used or cited as prece-
dent”). If unpublished IRS rulings carry no precedential force, we
are confident that an IRS publication cannot supplant conflicting Su-
preme Court precedent. Instead, we agree with the Second Circuit
that “IRS publications do not displace controlling statutes, regula-
tions, and case law.” Gerstenbluth v. Credit Suisse Secs. (USA) LLC,
728 F.3d 139, 147 (2d Cir. 2013). Accordingly, IRS publications that
advise EROs to originate completed electronic returns within three
days cannot abrogate Boyle’s bright line rule.
No doubt, if the facts are as Lee alleges, then Walsh
breached his contractual and ethical obligations to Lee. Walsh may
be liable to reimburse Lee for the damage his negligence has
caused. But Walsh did not assume Lee’s legal duties to file timely
tax returns and to pay taxes. Walsh’s potential liability to Lee
(which they have already litigated and settled) does not extinguish
Lee’s liability to the IRS.
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14 Opinion of the Court 22-10793
3.
In a final salvo, Lee reprises his first argument, positing that
he has demonstrated circumstances beyond his control—the com-
plexity of both his own tax situation and e-filing generally. He again
claims that he exercised ordinary business care and prudence and
believes that he should not be penalized solely because he hired a
third-party tax preparer.
We need not rehash our discussion above. Simply stated, we
agree with Lee that Boyle permits certain circumstances “beyond
the taxpayer’s control” to constitute reasonable cause, which
would exempt the taxpayer from IRS penalties. 469 U.S. at 248 n.6.
But the circumstances about which Lee complains were not be-
yond his control. Complex tax situations and tortuous e-filing pro-
cedures are not disabilities that divest a taxpayer of the faculties
needed for ordinary business care or prudence.
Congress authorized the Secretary to promote e-filing pre-
sumably because it is more accessible, accurate, and administrable
than paper filing. See 26 U.S.C. § 6011(f)(1); Here Are Some Reasons
Taxpayers Should E-File Their Taxes (IRS Tax Tip 2020-25), IRS (Feb.
26, 2020), https://www.irs.gov/newsroom/here-are-some-rea-
sons-taxpayers-should-e-file-their-taxes (observing that e-filing is
secure, often free, easy, and leads to faster refunds)
[https://perma.cc/3W4X-2XES]. In 2021, ninety percent of all in-
dividual tax returns were filed electronically. Returns Filed, Taxes
Collected & Refunds Issued, IRS, https://www.irs.gov/statistics/re-
turns-filed-taxes-collected-and-refunds-issued
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22-10793 Opinion of the Court 15
[https://perma.cc/C4ZX-VG7S] (Apr. 14, 2023). If the alleged
complexity of e-filing is so beyond the taxpayer’s control that it ren-
ders the taxpayer incapable of ordinary business care and prudence,
the overwhelming majority of taxpayers would have reasonable
cause for late filing. That conclusion would raze the tax filing re-
gime and undermine Boyle’s bright line rule.
Because Boyle applies here, Lee cannot establish reasonable
cause for his failure to file or his failure to pay. We agree with Lee
that Boyle did not address e-filing directly. But e-filing “do[es] not
alter or affect a taxpayer’s obligation to file returns under any other
provision of law.” 26 C.F.R. § 301.6011-7(a)(4)(iii). The Supreme
Court’s authoritative construction of Section 6651(a)(1) is Boyle,
which applies to e-filed returns just as much as it applies to paper-
filed returns.
B.
Because we agree with the district court about Boyle’s appli-
cation to e-filed returns, we need not address Lee’s argument that
he acted reasonably and is entitled to relief under Section 6651(a)’s
reasonable cause exception. But even if we ignore Boyle, we cannot
say Lee has demonstrated reasonable cause for his late filings or
late payments.
Taxpayers must file tax returns and pay taxes by the pre-
scribed due date. 26 U.S.C. § 6651(a). The IRS can assess failure-to-
file and failure-to-pay penalties, unless the taxpayer’s failure “is due
to reasonable cause and not due to willful neglect.” Id. § 6651(a)(1)–
(2). Lee argues that he falls within the reasonable cause exception
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16 Opinion of the Court 22-10793
because he exercised ordinary business care and prudence by re-
taining a CPA, reviewing his tax returns, signing Form 8879 each
year, and overpaying his taxes in 2014. We are not persuaded.
1.
Reasonable cause for failure to file a tax return on time re-
quires that the taxpayer “exercised ordinary business care and pru-
dence and was nevertheless unable to file the return within the pre-
scribed time.” 26 C.F.R. § 301.6651-1(c)(1). This is a stringent stand-
ard. For instance, even before the Supreme Court decided Boyle,
our predecessor court had held that a taxpayer does not show rea-
sonable cause for a late filing by relying on an accountant. Laney v.
Comm’r, 674 F.2d 342, 350 (11th Cir. 1982) (“Were the taxpayer’s
duty to file on time fulfilled merely because he employed an ac-
countant or lawyer . . . our voluntary system would forthwith
screech to a halt.”); see also Millette & Assocs., Inc. v. Comm’r, 594
F.2d 121, 124 (5th Cir. 1979) (“[R]eliance on tax advisors is not rea-
sonable cause for failure to file a return on time . . . .”). And because
“it is the taxpayers’ gross income, not their tax liability, that triggers
the filing requirement,” overpayment of taxes cannot absolve a fail-
ure to file. Calloway v. Comm’r, 691 F.3d 1315, 1335–36 (11th Cir.
2012).
Though we have never addressed whether e-filing alters the
reasonable cause analysis, we are not convinced that it does. The
statutory obligation to timely file a tax return does not depend on
the filing medium, and we agree with the few lower courts to have
considered the issue. See, e.g., Intress v. United States, 404 F. Supp.
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22-10793 Opinion of the Court 17
3d 1174, 1182 (M.D. Tenn. 2019) (concluding that “reliance on an
agent” is not “reasonable cause in the e-file context”); All Stacked
Up Masonry, Inc. v. United States, 150 Fed. Cl. 540, 549 (2020) (relying
on tax preparation software not reasonable cause for late filing).
To be sure, Lee showed some diligence by reviewing his tax
returns, signing Form 8879, authorizing Walsh to e-file the returns
each year, and overpaying his 2014 taxes. But Lee’s 2014 overpay-
ment cannot cure his failure to file. Calloway, 691 F.3d at 1336. More
importantly, however, Lee never confirmed—either with Walsh or
the IRS—that the returns were filed. The duty to file tax returns on
time lies with the taxpayer, not the agent, and it remains invariable
whether e-filing or paper filing. Unfortunately, Lee blindly relied
on his agent to his detriment. We cannot say that such reliance,
without more, amounts to reasonable cause under Section
6651(a)(1).
2.
Similarly, the IRS cannot impose a failure-to-pay penalty
when the taxpayer shows reasonable cause. 26 U.S.C. § 6651(a)(2).
In the failure-to-pay context, “reasonable cause” means that the
taxpayer “exercised ordinary business care and prudence in provid-
ing for payment of [the] tax liability and was nevertheless either
unable to pay the tax or would suffer an undue hardship” by paying
the tax on the due date. 26 C.F.R. § 301.6651-1(c) (emphasis added).
“Undue hardship” is “more than an inconvenience to the tax-
payer.” Id. § 1.16161-1(b). Rather, the taxpayer must demonstrate
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18 Opinion of the Court 22-10793
that “substantial financial loss . . . will result” from making the pay-
ment on time. Id. Before imposing a failure-to-file penalty, the IRS
should consider “all the facts and circumstances of the taxpayer’s
financial situation.” Id. § 301.6651-1(c).
Lee did not file his 2014 tax return until December 2018. But
he could not claim credits for overpayments made after June 2015.
See 26 U.S.C. § 6511(b)(2)(A). For credit determination purposes,
Lee made the 2014 overpayment on April 15, 2015, before the June
2015 lookback period commenced. See id. § 6513(a) (stating that the
IRS counts tax payments as received on “the last day prescribed for
the payment of the tax”). Thus, he could not benefit from the 2014
overpayment of $288,409, which would have otherwise carried
over to the 2015 and 2016 tax years. Without that credit, Lee owed
tax liability for both years, and the IRS assessed failure-to-pay pen-
alties.
Just like for his failure to file, Lee has not shown reasonable
cause for his failure to pay. He asks, “What more could [he] have
been reasonably expected to do?” Appellant Br. at 16. First, he
could have exercised ordinary business care and prudence by con-
firming that the IRS received his 2014 tax return and overpayment.
All his calculations for estimated tax liability going forward were
based on the filing of that return, but Lee did nothing to ensure it
had been filed. Second, even if we believe that Lee demonstrated
ordinary business care, he must also convince us that he “was . . .
either unable to pay the tax or would [have] suffer[ed] undue hard-
ship” by making timely tax payments. 26 C.F.R. § 301.6651-1(c).
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22-10793 Opinion of the Court 19
But Lee has never contended that financial hardship prevented him
from paying his taxes by the deadline. Instead, he premises his en-
tire argument on the assumption that he did not have to pay be-
cause of previous overpayments. That assumption was not only in-
correct but also does not grapple with the conjunctive elements re-
quired for reasonable cause under 26 C.F.R. § 301.6651-1(c).
Accordingly, even if we disregard Boyle, Lee does not have
reasonable cause for his failure to file or his failure to pay.
C.
Lee briefly argues, for the first time on appeal, that Section
6651(a)(2) penalties do not apply if the IRS disallows a credit after a
return is filed. We do not confront that argument—Lee waived the
issue by not raising it in the district court, and “it is not properly
before us.” See Lovett v. Ray, 327 F.3d 1181, 1183 (11th Cir. 2003);
Ramirez v. Sec’y, U.S. Dep’t of Transp., 686 F.3d 1239, 1249 (11th Cir.
2012).
When the district court converted the government’s motion
to dismiss into a motion for summary judgment, Lee objected, ar-
guing that (1) Boyle does not apply to e-filed returns and (2) reason-
able cause excused his failure to file and failure to pay. Lee never
suggested that the IRS incorrectly calculated the assessed penalties.
He raises this argument for the first time on appeal, and we refuse
to consider it.
IV.
The district court is AFFIRMED.
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22-10798 L AGOA , J., Specially Concurring 1
L AGOA , Circuit Judge, specially concurring:
I concur with the majority opinion that we are bound by the
bright line rule articulated in United States v. Boyle, 469 U.S. 241
(1985). And I also concur that this bright line rule applies to elec-
tronically filed (or e-filed) tax returns and that the duty to file taxes
on time is nondelegable. But in light of Boyle’s application to the
circumstances of this case, I write separately to highlight the risks
facing taxpayers who rely on their accountants to e-file their re-
turns.
I begin with the facts of this case. From 2014 to 2016, Wayne
Lee hired a certified public account (“CPA”), Kevin Walsh, to pre-
pare and file his taxes with the Internal Revenue Service (“IRS”).
Each year, Lee reviewed his returns prepared by Walsh and signed
IRS Form 8879, authorizing Walsh to file his returns electronically.
He also sent regular payments to the IRS, attempting to avoid an
underpayment penalty. In fact, in 2014, 2015, and 2016, his total
payments were $635,490, $484,572, $539,956, respectively, all of
which were overpayments of the amounts owed. Because Lee’s
accountant failed to file his tax returns, however, the IRS did not
apply his 2014 overpayment toward subsequent years, resulting in
tax liabilities for 2015 and 2016 and both failure-to-file and failure-
to-pay penalties.
In many ways, Lee acted prudently. He hired an accountant
to prepare his tax returns, sent large amounts of money to the IRS
each year to avoid underpayment penalties, and reviewed all of his
returns before telling his accountant to file them electronically.
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2 L AGOA , J., Specially Concurring 22-10793
The fact that Lee nonetheless owes additional monies to the IRS is
reflective of the current e-filing system and the precarious situation
in which it places taxpayers who rely on accountants.
Every year, millions of Americans turn to tax professionals
to ensure that their taxes are properly prepared and filed. See Inter-
nal Revenue Service Databook, 2022, at 2 (2022),
http://irs.gov/pub/irs-pdf/p55b.pdf (noting that, for fiscal year
2022, nearly 85.9 million individual tax returns were filed by paid
preparers). Although hiring a “tax return preparer”—i.e., “any per-
son who prepares for compensation, or who employs one or more
persons to prepare for compensation, all or a substantial portion of
any return of tax,” 26 C.F.R. § 301.7701-15(a)—is not required to
pay taxes properly, such decisions make sense for many taxpayers
seeking to comply with the law given the complexity and length of
the Internal Revenue Code. And if a taxpayer’s tax return preparer
reasonably expects to file more than ten individual tax returns in a
calendar year, then that return preparer is a “specified tax return
preparer.” Id. §§ 301.6111-7(a)(3), 301.6111-2(c)(1). A specified tax
return preparer must file returns on “magnetic media,” which in-
cludes electronic filing. Id. §§ 301.6011-7(b), 301.6111-2(a)(1). If the
taxpayer wishes, he can proactively choose to file a paper return on
his own, and the specified tax return preparer need not e-file the
prepared return. See id. § 301.6011-7(a)(4)(ii). Pursuant to the IRS’s
regulations, however, the default filing mechanism for taxpayers
who use specified tax return preparers is electronic, and the IRS
strongly promotes the benefits of the e-filing system. See 26 U.S.C.
§ 6011(f) (authorizing the Secretary “to promote the benefits of and
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22-10798 L AGOA , J., Specially Concurring 3
encourage the use of electronic tax administration programs, as
they become available,” and to “implement procedures to provide
for the payment of appropriate incentives for electronically filed re-
turns”); see, e.g., IRS Pub. 3112, at 2 (rev. Oct. 2022); see also Internal
Revenue Service Databook, 2022, at 2 (noting that, for fiscal year 2022,
93.8 percent of individual tax returns were filed electronically).
As such, if the taxpayer does not request to file a paper re-
turn on his own, his accountant will request that the taxpayer fill
out Form 8879 so that the accountant can complete the e-filing pro-
cess. See IRS Pub. 1345, at 18 (rev. Nov. 2022). Form 8879 is a
signature authorization for an e-filed return and lists the responsi-
bilities of the taxpayer, which includes verifying the accuracy of the
prepared income tax return. Form 8879, at 2 (rev. Jan. 2021). A tax
preparer who has been authorized to e-file on behalf of a client is
known as an Electronic Return Originator (“ERO”). IRS Pub. 3112,
at 15. After receiving authorization from the client, an ERO “be-
gins the electronic submission of a return.” Id. The ERO has the
responsibility to begin the electronic submission in a timely man-
ner and “must originate the electronic submission of a return as
soon as possible.” IRS Pub. 1345, at 22 (rev. Nov. 2022).
After signing the Form 8879, a taxpayer reasonably would
expect that the simple act of filing the tax return would be com-
pleted quickly and without issue. But this is where the filing of
Lee’s taxes went awry. His accountant, despite preparing Lee’s tax
returns and requesting authorization for e-filing, never submitted
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4 L AGOA , J., Specially Concurring 22-10793
the returns to the IRS and never notified Lee of this failure. Be-
cause his accountant also failed to notify the IRS of Lee’s address
change, Lee never received messages from the IRS informing him
of his failure to file. Despite all this, under Boyle, Lee is still on the
hook to the IRS for the penalties relating to his failure to file and
failure to pay.
Taxpayers therefore must understand (and likely may not)
that, under current law, even if they sign the Form 8879 and have
an accountant’s assurances of filing, they can still be liable for an
accountant’s failure to file. In other words, under Boyle’s bright line
rule, the responsibility lies with the individual taxpayer to confirm
the submission of their tax return to the IRS. And under Boyle’s
bright line rule, it is not clear whether Lee would be excused from
penalties even if his accountant affirmatively misrepresented to
him that his returns were filed on time. When it comes to return
filing deadlines, the taxpayer is essentially alone.
What then can a taxpayer do to avoid the risk that a negli-
gent, or possibly fraudulent, agent might saddle him with failure-
to-file penalties and ensuing failure-to-pay penalties? First, taxpay-
ers can confirm independently with the IRS on the phone or its
website that the IRS received their return. Second, taxpayers can
affirmatively choose to file the return independently on paper,
which requires the taxpayer to give a “hand-signed and dated state-
ment” to the tax return preparer who prepared the return, stating
that “the taxpayer chooses to file the individual income tax report
in paper format, and that the taxpayer, and not the preparer, will
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22-10798 L AGOA , J., Specially Concurring 5
submit the paper individual income tax return to the IRS.” See 26
C.F.R. § 301.6011-7(a)(4)(ii). This ensures that a taxpayer con-
cerned about whether his tax return preparer will timely file his tax
return will have control over the return’s submission to the IRS.
But it defeats the efficiency and convenience that the e-filing sys-
tem was designed to promote.
And it is compounded by the fact that any taxpayer using an
accountant who files more than ten individual tax returns in a tax
year—i.e., the vast majority of accountants—is defaulted into the
e-filing system leaving the taxpayer on the hook for any failure to
do so. As the majority notes, the legal obligation on taxpayers here
is a heavy burden that can lead to unintended financial conse-
quences for a taxpayer if not complied with, even if the taxpayer
assumes that their tax professional will timely file their tax returns.
Taxpayers need to fully understand both the hidden dangers and
available protections when relying on an agent to file their tax re-
turns, and accountants and other professional tax preparers should
advise their clients of taxpayers’ responsibilities to ensure the sub-
mission of their returns regardless of their reliance on an agent.
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