Section 106 Burden of Proof and the ?Willful Neglect? Defense

• Library: Tax Law 2009

Taxpayers benefit from the initial presumption that taxing statutes, especially those asserting penalties, are to be construed strictly against the taxing authority. Brown Group, Inc. v. Admin. Hearing Comm’n, 649 S.W.2d 874, 881 (Mo. banc 1983); Travelhost of Ozark Mountain Country v. Dir. of Revenue, 785 S.W.2d 541, 546 (Mo. banc 1990). Section 621.050.2, RSMo 2000, places the burden of proof in all matters on the taxpayer, with certain exceptions. But see § 136.300, RSMo 2000, shifting the burden of proof to MoDOR on factual issues under certain conditions. One pertinent exception, § 621.050.2(1), places the burden of proof with MoDOR when the issue involved is “[w]hether the taxpayer has been guilty of fraud with attempt to evade tax.” Aspects of this burden of proof are discussed in detail in Mayflower Transit, Inc. v. Director of Revenue, No. 89-001815RS, 1991 WL 80259 (Mo. Admin. Hearing Comm’n, Feb. 26, 1991).

In each of the penalty provisions discussed in §§11.102–11.104 above, the taxpayer bears the burden of proof as to whether “reasonable cause” or the absence of “willful neglect” is present. The caselaw is ably summarized and analyzed in Oakland Park Inn v. Director of Revenue, No. 90-001041RS, 1991 WL 80261 (Mo. Admin. Hearing Comm’n, Mar. 1, 1991), as follows:

[The taxpayer] had the burden of persuasion and also the burden of producing evidence showing reasonable cause and good faith in its failure to file use tax returns. Furthermore, [the taxpayer] is the party asserting the affirmative—that there...