as executor, maintained its principal office in Woodbury, New Jersey, with three branch banks located in that general area; its officers consist of a president and three vice-presidents, and that he is one of the vice-presidents and the trust officer in charge of the plaintiff's trust department; and additionally, there is another trust officer, and six clerks with no accounting training or background. He further testified that the trust department administers some 351 trust accounts with a total book value of approximately $13,000,000.00; that each year it prepares between 160 and 180 fiduciary tax returns, entailing tax information letters to all beneficiaries reporting the federal tax treatment of these accounts; that the trust department administers pension and profit sharing plans and furnishes analyses of trust securities; that he is responsible for the acquisition of new trust business which requires him to spend considerable time out of his office; and that the department encountered difficulty in maintaining its work load in 1965 and 1966, even with its officers working overtime. He further testified that the activities in compiling inventory and securities information for tax purposes for the estate in question, particularly in regard to the gifts made by the testator in 1964, consumed a considerable amount of time. He stressed particularly that the plaintiff-bank was busily engaged in August of 1965 in assembling voluminous data for the preparation of an estimate for the New Jersey Transfer Inheritance Tax liability of this estate so that timely filing could be made in order to avoid a 10% per annum interest charge. The trust officer admitted that inasmuch as the penalty period had already commenced on April 15, 1965, intelligent administration of the trust department warranted the postponement of the filing of the federal gift tax return for a few more months.
14. No extension of time was requested for the filing of the return in question; no attempt was made to secure the services of an accountant to assist in the preparation of the various returns required to be filed; and the services of legal counsel were belatedly obtained in regard to this federal tax problem.
15. The plaintiff-executor did not accord to the federal gift tax problem the same degree of ordinary business care and prudence that it extended to the state inheritance tax problem, and the problem of its other trust accounts, and which was required and ought to have been exercised under the circumstances. Consequently, plaintiff's failure to file the return within a reasonable time was not due to reasonable cause but was due in fact to wilful neglect within the meaning of the delinquent penalty statute. 26 U.S.C. § 6651.
16. The Court finds as a matter of fact that the delinquency in filing the federal gift tax return in question was not due to reasonable cause on the part of either the decedent or the plaintiff-executor but was due in fact to wilful neglect on the part of both within the meaning of the delinquent penalty statute. 26 U.S.C. § 6651.
Conclusions of Law
1. This Court has jurisdiction by virtue of 28 U.S.C. § 1346(a)(1).
2. The burden of proof is upon the taxpayer to show that the failure to file a timely return was due to reasonable cause and not due to wilful neglect. 26 U.S.C. § 6651; Ferrando v. United States, 245 F.2d 582 (9 Cir. 1957); Sanders v. Commissioner of Internal Revenue, 225 F.2d 629 (10 Cir. 1955); Hatfried, Inc. v. Commissioner of Internal Revenue, 162 F.2d 628 (3 Cir. 1947).
3. Reasonable cause means the exercise of ordinary business care and prudence. Sanders, supra; Hatfried, supra.
4. Penalties imposed under the revenue laws were designed to attach to conduct of a taxpayer which is intentional, or knowing, or voluntary rather than accidental. United States v. Murdock, 290 U.S. 389, 394, 78 L. Ed. 381, 54 S. Ct. 223 (1933); Hatfried, supra. A conscious decision to defer the filing of a return, after acquiring knowledge of its delinquency, beyond a reasonable time and without reasonable cause, is wilful neglect.
5. The plaintiff has not carried its required burden of proof in establishing that the failure of the decedent to file his 1964 federal gift tax return during his lifetime within the prescribed period was due to reasonable cause and not to wilful neglect.
6. The plaintiff has not shown that there was reasonable cause for the failure to file during the entire period of delinquency, April 15, 1965 to March 2, 1966, a period of approximately eleven months. Even assuming that the decedent was too ill, although he legibly signed his federal income tax return and made its timely filing, nevertheless, no reasonable cause exists for the plaintiff-executor's failure to act more promptly than it did. Ferrando v. United States, supra. As a matter of fact, the lapse of some seven months after the plaintiff had acquired knowledge of the gifts and failed to file a return promptly was not the use of ordinary business care and prudence under these circumstances. The plaintiff-bank professes an expertise in the administration of trust accounts and decedent estates. Its explanation for belated filing was that it was too busy with other work. Yet it had never sought an extension of time for filing, nor additional accounting assistance, nor legal services. In fact, it took a calculated risk in not filing until some seven months after it qualified as executor and undertook management of this estate. Under the circumstances, prudence dictated dispatch in the filing of a return. A plea of "too busy" is insufficient to relieve the taxpayer or his legal representative of the obligation imposed by statute to make timely filing. Van Schaick v. Commissioner, 32 B.T.A. 736; Pioneer Automobile Service Co. v. Commissioner, 36 B.T.A. 213; Cowden v. Commissioner Internal Revenue, October 21, 1965 P-H Memo T.C., par. 65, 278); and see Logan Lumber Co. v. Commissioner of Internal Revenue, 365 F.2d 846 (5 Cir. 1966), wherein it is aptly stated at page 854:
"If every taxpayer who forgot to file a return or was too busy to file a return escaped the penalty for failure to file, our tax system would soon collapse."