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return, they are liable for the negligence penalty under section
6662(a)(1).
At the hearing of petitioners’ motion to dismiss and before
the trial, the Court admonished petitioner against arguing that
wage income was not includable in gross income and therefore not
subject to income tax. Petitioner ignored our warning. Section
6673(a)(1) allows this Court to award a penalty not in excess of
$25,000 when proceedings have been instituted or maintained
primarily for delay, or where the taxpayer’s position is
frivolous or groundless; i.e., it is contrary to established law
and unsupported by a reasoned, colorable argument for a change in
the law. Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir.
1986), affg. in part an unreported order of this Court. We
believe that a penalty in this case is appropriate. The
positions argued by petitioner are frivolous and wholly without
merit. Moreover, we rejected petitioner’s frivolous arguments
when she raised them in her motion to dismiss. Accordingly, we
will require petitioners to pay a penalty to the United States in
the amount of $1,500 under section 6673(a)(1).
To reflect the foregoing,
An appropriate order
imposing the penalty under
section 6673(a), and decision
will be entered for respondent.
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Last modified: May 25, 2011