Jack Harkness is a professional tiddly winks player.

1. Jack Harkness is a professional tiddly winks player.He set athletic records during his three years at college. Upon his graduation, he embarked upon a career in professional tiddly winks. He played for the major leagues from 1996 to 2003, when he received a career-ending injury. Taxpayer embarked upon the next phase of his life without any significant training or experience other than in tiddlywinks.After he retired from professional competition, he began investing in various businesses. He hired a friend of a friend's former sister-in-law, Gwen Cooper, as his business manager (although her only prior experience was as a police officer and investigator). Jack gave Gwen a power of attorney, authorizing her to engage in real estate, banking, tax matters, and in fact, all matters.

Gwen hired Torchwood Tax Consultants to prepare Jack's tax returns. Gwen told Torchwood to use her business address as the mailing address for all Jack's tax returns.

In 2008, Jack became concerned about Gwen's statement that he had poor cash flow, and he sent her a notice terminating both the management agreement and the power of attorney. He also terminated the services of Torchwood. Shortly thereafter, Torchwood sent him a copy of the many notices sent by the IRS, saying they never received any tax returns for 2006 to the present.

Jack hired your firm as his new accountants, and you prepared his 2006 and 2007 returns, showing tax liability of about $1.5 million per year (tiddly winks made Jack a rich man). You later timely filed the 2008 returns.

The IRS assessed the late filing and late payment penalties. See Code Sections 6651(a)(1) and (a)(2). You now must prepare a formal memo in Jack's defense. Here's a hint to get you started: consider U.S. v. Boyle, 469 U.S. 241 (1985) and its progeny.