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The Court also concludes that petitioner does not fit within any
of the exceptions enumerated in section 6654(e).5 Therefore, the
Court sustains respondent’s determination of the addition to tax
pursuant to section 6654(a).
III. Section 6673 Penalty
Section 6673(a)(1) authorizes the Tax Court to impose a
penalty not in excess of $25,000 on a taxpayer for proceedings
instituted primarily for delay or in which the taxpayer’s
position is frivolous or groundless. “A petition to the Tax
Court, or a tax return, is frivolous if it is contrary to
established law and unsupported by a reasoned, colorable argument
for change in the law.” Coleman v. Commissioner, 791 F.2d 68, 71
(7th Cir. 1986).
Respondent, on brief, has asked the Court to impose a
penalty under section 6673(a)(1). In petitioner’s 2005 trial,
petitioner was ordered to pay $5,000 to respondent for asserting
meritless and frivolous arguments. Leggett v. Commissioner,
5Sec. 6654(e) provides two mechanical exceptions to the
addition to tax. First, the addition is not applicable if the
tax shown on the taxpayer’s return for the year in question (or,
if no return is filed, the taxpayer’s tax for that year), reduced
for these purposes by any allowable credit for wage withholding,
is less than $1,000. Sec. 6654(e)(1). Second, the addition is
not applicable if the taxpayer’s tax for the full 12-month
preceding taxable year was zero and the taxpayer was a citizen or
resident of the United States. Sec. 6654(e)(2). The Court has
concluded that petitioner is liable for a deficiency for 2002
that net of withholding exceeds $1,000. Petitioner’s tax
liability for 2001 was greater than zero. See Leggett v.
Commissioner, supra.
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