Kenneth Woodward failed to properly rollover a $150,000 IRA distribution and the Tax Court issued its opinion on his penalty yesterday.  The sole issue in front of the court, because Woodward admitted his mistake, was whether he was liable for it.  

"Generally, the most important factor is the extent of the taxpayer's effort to assess the proper tax liability, including reliance on the advice of a tax return preparer," the court said.  "An honest understanding of fact or law that is reasonable considering the taxpayer's education, experience, and knowledge may indicate reasonable cause and good faith."

According to the opinion, Woodward argued that "his research on the Internet using the Google search engine provided him with reasonable cause for the position he took when filing" his return. Unfortunately, Woodward either did not or could not provide the sources he actually used from Google.  

In ruling that the research just wasn't enough and requiring a $27,606 deficiency payment and upholding a $5,521 fine, the Tax Court couldn't resist what sounds like a tiny bit of sarcasm:  "We recognize that petitioner had not worked as an accountant for years before filing the 2004 return, but his accounting degree, M.B.A., and C.P.A. training, no matter how stale, undoubtedly taught him what sources could be relied upon as definitive; such as, for example, the Internal Revenue Code and the income tax regulations, both of which are readily available on the Internet."

The Tax Prof Blog, beloved by tax attorneys everywhere, has additional coverage of the case.