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As explained in detail below, we shall grant respondent’s
oral motion to dismiss for lack of jurisdiction and to strike
and respondent’s motion for summary judgment. However, we shall
deny respondent’s request for the imposition of a penalty upon
petitioners pursuant to section 6673(a).
Background
On September 22, 1997, petitioners filed a joint Federal
income tax return for 1996 on which they reported $184,041.63 of
wage income, a tax liability of zero, and claimed a refund with
regard to $23,363.87 of withholding tax. On February 9, 1998,
respondent assessed a $500 frivolous return penalty against
petitioners pursuant to section 6702. On October 8, 1998,
respondent filed with the County Recorder in Fresno County,
California, a Notice of Federal Tax Lien listing the $500
penalty imposed under section 6702 as the amount due.
In the meantime, on May 19, 1998, respondent issued a
notice of deficiency to petitioners determining a deficiency of
$46,502 in their Federal income tax for 1996 and an addition to
tax under section 6651(a)(1) of $2,313.81. On May 27, 1998,
petitioners’ then attorney-in-fact, Thomas W. Roberts, wrote a
letter to respondent acknowledging that petitioners received the
notice of deficiency and challenging respondent’s authority to
enter an assessment against petitioners based on a so-called
substitute for return. Petitioners did not file a petition for
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