Robert Hurford and Catherine Simone Hale - Page 3




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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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