- 26 -
underlying tax liability may be found to have done so “primarily
for delay” and hit with a penalty of up to $25,000 under section
6673(a)(1)(A). Anyone admitted to practice in this Court who
files such a petition may be found to have “multiplied the
proceedings * * * unreasonably and vexatiously” under section
6673(a)(2) and required to “pay personally the excess costs,
expenses, and attorneys’ fees reasonably incurred because of such
conduct”.3
It’s beyond cavil that courts of limited jurisdiction,
including the Tax Court, have inherent power to protect their
processes from abuse by awarding sanctions and costs even though
they lack jurisdiction over the underlying dispute. Willy v.
Coastal Corp., 503 U.S. 131 (1992) (sanctions under Fed. R. Civ.
P. 11, allowed even though case dismissed for want of subject
matter jurisdiction); Cooter & Gell v. Hartmarx Corp., 496 U.S.
384 (1990) (same where complaint voluntarily dismissed before
3 Taxpayers in frivolous return penalty and employment tax
penalty cases who wish to dispute the Commissioner’s collection
determination are already being put on notice that they should
file a complaint with the appropriate district court. Following
our opinion in Van Es v. Commissioner, 115 T.C. 324 (2000), the
Commissioner apparently changed the form of notice of
determination in frivolous return penalty collection cases to
tell the taxpayer to file a complaint in the appropriate district
court. The notice of determination in the case at hand so
stated, but petitioners disregarded the notice and filed a
petition with the Tax Court. Similarly, the taxpayer in Moore v.
Commissioner, 114 T.C. 171 (2000), an employment tax penalty
collection case, disregarded the instruction in the notice of
determination to file a complaint in the appropriate district
court.
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011