Or, Frivolity Isn’t Free
So learns Scott F. Wnuck, in 136 T.C. 24, filed 5/31/11. Scott moved for reconsideration of his frivolous arguments after his petition was dismissed from the bench and he was hit with a Section 6673(a) penalty of $1000.
Moving to the next plateau, Judge Gustafson writes a 27-page opinion deconstructing Scott’s ludicrous arguments, affirms the deficiency theretofore assessed, and ups the frivolity penalty to $5000, warning Scott that any more gaming will result in a higher penalty.
Said Judge Gustafson, “Mr. Wnuck advanced frivolous arguments, as we have shown. Both during Mr. Wnuck’s trial and in the bench opinion served several days later, the Court clearly stated to Mr. Wnuck that it found his positions not just unavailing but frivolous. For that reason the Court, in its original decision, imposed on Mr. Wnuck a $1,000 penalty pursuant to section 6673(a); and the Court warned him of steeper penalties to follow if he persisted.
“Mr. Wnuck disregarded that explicit warning when he filed his subsequent motion for reconsideration. That motion made clear that Mr. Wnuck did not have new points to make; he simply repeated the arguments that had already been ruled frivolous and suggested that the Court should have addressed those arguments in more detail in an opinion. He had to know that his motion was foredoomed, but there was a reason (i.e., an improper reason) for him to file the motion nonetheless.” 136 T.C. 24, at pp. 25-26.
Tax Court upbraids Scott for using the automatic stay on filing a motion for reconsideration to delay the proper assessment and collection of tax. Then Judge Gustafson takes aim at the real harm frivolous behavior causes.
He puts it this way: “Moreover, not only the authoring Judge’s time is involved in producing an opinion. To prepare a Tax Court opinion for public release requires substantial work by law clerks, clerical staff, and the Office of the Reporter of Decisions, as well as other Judges.[Footnote Omitted] A Tax Court opinion is thus the product of considerable institutional effort.
“The substantial effort expended to produce a Tax Court opinion is well spent, even in a small case and even where the outcome is clear, if the contentions being adjudicated are made seriously and in good faith. Taxpayers with disputes both large and small need to know that their good-faith disagreements with the tax collector will get serious attention from this Court. However, the peddlers of frivolous anti-tax positions and their clients who file petitions advancing those positions should not be allowed to divert and drain away resources that ought to be devoted to bona fide disputes. If frivolous positions were to bog down the operations of this Court, the resulting disadvantage would accrue not mainly to the Court itself but rather to litigants with legitimate issues and to the public generally. To responsibly manage its resources, the Court should therefore not address every frivolous argument.”[emphasis in original], 136 T.C. 24, at pp. 20-21.
So peddlers and frivoloteers beware. Frivolity isn’t free.
Practitioners, take a look at the law review article by Chief Judge Cohen, cited in Footnote 11 at page 21 of the Wnuck opinion. It’s an excellent overview of Tax Court Operations.