In a recent court decision an attorney’s malpractice will not avoid a late filing penalty.
An executor diligently hired a lawyer to file an estate’s 706 (why they did not hire a CPA is the true question).
Unbeknownst to the executor, the attorney was battling brain cancer and misled her about filing an extension for the return.
Well after the due date had passed, the executor uncovered the deceit and learned that the 706 hadn’t been filed. When the return was finally filed late, IRS levied late filing and late payment penalties on the estate. Even though the estate won a malpractice suit against the lawyer, the court said the executor is responsible for ensuring that the 706 is filed and upheld both of the penalties.
I hope that the settlement covered the penalties in the settlement.