The U.S. Supreme Court declined on Monday to take up RSBCO’s appeal, leaving in place a Fifth Circuit ruling that overturned a jury’s decision to excuse the wealth management company from a $579,000 penalty imposed by the IRS for late filing of informational returns.
RSBCO, a subsidiary of Argent Financial Group, had sought to reinstate the jury’s ruling, which concluded that the company’s failure to file the returns on time was justified due to an employee’s mental health problems. The employee had been diagnosed with depression and other mental health issues, which RSBCO argued caused delays in filing. The Supreme Court’s decision leaves intact the Fifth Circuit’s June ruling, which vacated the jury’s verdict and called for a new trial.
In 2022, a jury sided with RSBCO after hearing testimony that the employee’s mental health struggles had contributed to the filing delay. The jury found that the employee’s incapacity was sufficient to excuse the company from penalties for the late returns. However, the Fifth Circuit disagreed with the jury’s conclusion. In its decision, the appeals court ruled that the trial court had failed to properly instruct the jury on what constitutes a valid excuse for late filings under the law. The court stated that an employee’s mental health issues alone were not enough to excuse the company from its obligations under tax laws.
