Peter Knappe v. United States

When can you trust your accountant’s advice about when your taxes are due? That is the question we face today. Appellant Peter Knappe, acting as the executor of an estate, asked his accountant to apply for an extension of the deadline to file the estate-tax return from the Internal Revenue Service (“IRS”). The accountant told Knappe that the deadline had been extended one year, when in fact 'it had been extended only six months. Acting on the bad advice, Knappe filed the tax return several months late, and the IRS assessed significant penalties against the estate. Knappe initiated this action in the Central District of California, seeking a refund of the penalty. The district court granted summary judgment to the Government on the ground that Knappe had not shown “reasonable cause” to excuse the penalty, as that term is used in 26 U.S.C. § 6651 (a)(1). We affirm.

I. Background

Ingborg Pattee died on November 30, 2005, leaving behind a substantial estate. Her will named as the executor of the estate Peter Knappe, a longtime friend and successful businessman. Because Knappe had no prior experience serving as the executor of an estate or preparing an estate-tax return, he…