- 10 -
v. Commissioner, supra at 66. Additionally, counsel had fair
notice that costs might be imposed against him for pursuing such
frivolous arguments. At trial, after Mr. Ray made his opening
statement, the Court read section 6673(a)(2) aloud and gave the
following warning:
The Court simply read that section to you, Mr. Ray,
suggesting to you that you proceed at your peril. And
if you want to proceed, you certainly may proceed. It
may well be that there's something new that I've never
seen or heard of before, but I'd, frankly, be
surprised.
Despite the warning, Mr. Ray proceeded to present argument with
respect to the aforementioned issues. When Mr. Ray asked the
Court if briefs could be filed with respect to the issues raised,
the Court initially declined. At a later point in the
proceeding, the Court indicated that it would permit briefs on
the issue of the application of penalties or costs under section
6673. Nevertheless, Mr. Ray submitted a brief which included
other arguments previously made. Mr. Ray also indicated in
petitioners' brief as follows:
At trial the undersigned was unaware that no financial
information had been included on the Forms 1040 NR
filed by Petitioners and would not have argued that
said filing constitutes a return. This attorney is
without sufficient information on the subject to form
an opinion on the matter.
The record in this case demonstrates that petitioners'
counsel acted in bad faith. Bad faith relates not only to the
commencement of litigation, but to the continuation of litigation
vexatiously, wantonly, or for oppressive reasons. Harper v.
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