In Uncategorized on 07/03/2018 at 14:38

Rides the Boss Hoss

I’m sure my readers, those few, those happy few, have been seized with doubt and misgivings, until today’s happy news from Judge Ruwe. The answer is here (at least until 6 Cir weighs in). When frivolity is on the table, the Boss Hoss is not.

Benton Williams, Jr., 151 T. C. 1, filed 7/3/18, has a penchant for frivolity. He never bothered with a return, so IRS gave him a SFR and a deficiency at the same price. Ben riposted as follows.

“In his petition, petitioner raised frivolous arguments.  He then filed several pretrial motions in which he raised the same type of arguments.  …respondent’s counsel sent petitioner a letter informing him that the arguments he raised in a motion for summary judgment were frivolous and that respondent would move for the Court to impose a penalty under section 6673(a)(1) if he persisted. …respondent’s counsel sent petitioner another letter, in which he reminded petitioner of the Tax Court’s authority to impose a penalty under section 6673(a)(1).” 151 T. C. 1, at p. 4.

But on the trial Ben was adamant, frivoling away.

Judge Ruwe: “At trial petitioner neither testified nor presented any witnesses. However, he asserts, using tax-protester type arguments, that the income he received in 2012 is not taxable under the Code.  His arguments are shopworn tax protester arguments that have been universally rejected by this Court. We will not painstakingly address petitioner’s arguments ‘with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit.’” 151 T. C. 1, at p. 5 (Citations omitted, but they’re all the usual suspects I’ve blogged, from Wnuck forward).

So Ben gets hit with nonfiling and nonpaying chops because Section 6751(b)(2). As we used to yell playing tag, grasping a fellow player’s hand while touching the base, “Electricity!”

But is the Section 6673 frivolity chop a Graev matter?

“The penalty at issue in Graev III was a section 6662(a) penalty, which is a penalty determined by the Commissioner in a notice of deficiency or by Chief Counsel for the Internal Revenue Service (IRS) in the answer or amended answer filed on behalf of the Commissioner in this Court.  What Graev III made clear is that an initial determination by the IRS to assert a penalty requires written approval by an IRS supervisor and that an initial determination by a Chief Counsel attorney to affirmatively plead such a penalty on behalf of the IRS requires written supervisory approval by the attorney’s supervisor. However, Graev III left many questions unanswered.” 151 T. C. 1, at p. 10. (Citations omitted).

Of course, Judge Ruwe is referring to The Great Concurrer, Judge Mark V Holmes’ concurrence in Graev III, so check out my blogpost “Stir, Baby, Stir – That Silt,”12/20/17. Now you’re up to speed.

But did Section 6751 overrule Section 6673 by implication?

Negatory, good buddy, says Judge Ruwe and the entire Tax Court bench.

‘Sections 6673(a)(1) and 6751(b)(1) are not in irreconcilable conflict, section 6751(b)(1) is not a substitute for section 6673(a)(1), and Congress did not express a manifest intent to repeal section 6673(a)(1) or to modify the longstanding procedural rules that govern the processing of cases in the Tax Court.

“An irreconcilable conflict exists when ‘there is a positive repugnancy between * * * [the statutes] or * * * they cannot mutually coexist.’  If the two statutes can coexist, it is the duty of the courts to give effect to both.”

“Here the purposes of sections 6751(b)(1) and 6673(a)(1) can both be served while giving effect to both provisions.” 151 T.C. 1, at p. 12. (Citations omitted).

The legislative histories of the two statutes make it clear. The 1998 addition of Section 6751 was made to keep IRS grunts from using chops to bludgeon taxpayers into adverse settlements. The 1989 addition of Section 6673 was to permit Tax Court Judges to whang the pates of the rounders and frivolers who dissipate scarce judicial resources and divert same from meritorious petitioners.

And the “Big Courts,” those enshrined by Art III of the Constitution, have the same powers.

“Title 26, section 7482(c)(4) is similar to section 6673(a)(1).  It grants the Supreme Court of the United States and the U.S. Circuit Courts of Appeals the power to impose penalties in cases where the decision of the Tax Court is affirmed and the court decides ‘that the appeal was instituted or maintained primarily for delay or that the taxpayer’s position in the appeal is frivolous or groundless. ‘Section 6673(b)(1) authorizes the District Courts to impose a penalty not in excess of $10,000 if a taxpayer maintains a ‘frivolous or groundless’ position in a section 7433 proceeding.  Section 6751(b)(1) was not intended as a broad restraint mechanism on the Federal judiciary.  It was not intended to cover the imposition of penalties that Congress intended could be imposed by courts because of misbehavior by a litigant during the course of a judicial proceeding.  Accordingly, we hold that section 6751(b)(1) does not apply to the Tax Court when it imposes penalties under section 6673(a)(1).” 151 T. C. 1, at p. 16.

Ben was warned…twice. He frivoled. He earns a $2K Section 6673 chop, and enduring fame, as his case will doubtless be picked up by the trade press and the blogosphere.

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