Shafmaster v. United States, No. 12-1726 (1st Cir. 2013)Annotate this Case
This dispute about the payment of a penalty imposed on them by the IRS arose out of Plaintiffs' underlying joint personal income tax liability for the tax year 1994. After the IRS audited Plaintiffs for that year, the tax court imposed a penalty on Plaintiffs for failing to timely file a return. Plaintiffs completed payment of their agreed 1994 tax liability under a payment plan. Plaintiffs subsequently filed an administrative claims for refused of the 1994 failure-to-pay penalty and the interest they paid on that penalty. The IRS denied the claim. Plaintiffs filed suit in the district court, and the court granted summary judgment in favor of the government. Plaintiffs appealed, arguing there was at least a dispute of material fact as to whether (1) the IRS was equitably estopped from assessing this fee, (2) they had reasonable cause not to pay the relevant taxes with the time provided by statute, and (3) the IRS had ever provided them with proper notice and demand for payment. The First Circuit Court of Appeals affirmed, holding that Plaintiffs failed to raise a genuine issue of material fact as to any of their claims.