Dawson Craig Lane - Page 12

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               Motion for Damages                                                     
                    In our previous letter to you dated January 11,                   
               2005, we cautioned you that if you continued to assert                 
               frivolous arguments, our office would file a motion                    
               asking the Court to impose damages under I.R.C. � 6673.                
               Enclosed is a copy of a recent court opinion, Kilgore                  
               v. Commissioner, T.C. Memo. 2005-24 (filed February 15,                
               2005).  Kilgore is a collection due process case in                    
               which the Tax Court granted the IRS’s motion for dam-                  
               ages under section 6673, and ordered that taxpayer to                  
               pay the United States a penalty of $10,000.  Our office                
               is affording you one final opportunity to concede your                 
               case, and thereby avoid a possible award of substantial                
               damages under section 6673.  We urge you to read the                   
               Kilgore decision carefully before deciding how to                      
               proceed in your case.  If you advise us, in writing, by                
               April 15, 2005, that you are conceding your case, we                   
               will mail you an appropriate proposed Decision for the                 
               parties to sign and file with the Tax Court.  Other-                   
               wise, we will proceed to prepare your case for trial,                  
               and will, at trial, file a motion seeking damages.                     
               A taxpayer may raise challenges to the existence or the                
          amount of the taxpayer’s underlying tax liability if the taxpayer           
          did not receive a notice of deficiency or did not otherwise have            
          an opportunity to dispute the tax liability, sec. 6330(c)(2)(B),            
          including the tax liability reported in the return that such                
          taxpayer filed, Montgomery v. Commissioner, 122 T.C. 1 (2004).              
               Respondent did not issue a notice of deficiency with respect           
          to petitioner’s taxable year 2001.  Nor did petitioner otherwise            
          have an opportunity to dispute his alleged tax liability for that           
          year.  We shall review respondent’s determination de novo.  Boyd            
          v. Commissioner, 117 T.C. 127, 131 (2001); Landry v. Commis-                

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