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V. Section 6673(a)(1) Penalty
Section 6673(a)(1) authorizes the Tax Court to impose a
penalty on a taxpayer, not to exceed $25,000, if the Court finds,
among other things, that the taxpayer’s position is frivolous or
groundless. Sec. 6673(a)(1)(B). The purpose of section 6673 is
to compel taxpayers to think and to conform their conduct to
settled principles before they file returns and litigate. Takaba
v. Commissioner, 119 T.C. 285, 295 (2002). A taxpayer's position
is frivolous if it is contrary to established law and unsupported
by a reasoned, colorable argument for change in the law. E.g.,
Nis Family Trust v. Commissioner, 115 T.C. 523, 544 (2000). We
need not find specific damages to invoke section 6673(a)(1);
rather, that section is a penalty provision, intended to deter
and penalize frivolous claims and positions in proceedings before
this Court. Bagby v. Commissioner, 102 T.C. 596, 613-614 (1994).
Petitioner does not here argue for any change in the law,
and there is no plausible argument that he did not have to file a
tax return for 2000. Petitioner’s argument to the contrary is
frivolous, and we so find. The Court twice warned petitioner--at
a pretrial conference in March 2004 and at trial in May 2004--
that the argument he was advancing was of the sort that might
subject him to a penalty under section 6673. We have little
sympathy for petitioner’s obstinacy in the face of our warnings.
We believe that petitioner is deserving of a substantial penalty
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