Deaton Oil Co., LLC v. United States, No. 17-2326 (8th Cir. 2018)Annotate this Case
Under United States v. Boyle, 469 U.S. 241 (1985), an agent's failure to fulfill his duty to his principal to file tax returns and make payments on behalf of the principal does not constitute reasonable cause for the principal's failure to comply with its tax obligations unless that failure actually rendered the principal disabled with regard to its tax obligations. Disability is a high bar that is not satisfied if the errant agent is subject to the control of his principal, whether that principal sufficiently exercised that control or not.
The Eighth Circuit affirmed the district court's dismissal with prejudice of Deaton's suit seeking refund, abatement, and recovery of delinquent tax penalties assessed against it. The court held that the facts set forth in the complaint did not support a finding of reasonable cause. In this case, the facts, whether considered singularly or together, did not excuse Deaton's tax law compliance failures.