Laura K. Davis, et al. - Page 22
- 22 -
instituted and has maintained the proceedings in those cases
primarily for delay. We further believe that, in support of that
goal, he raised frivolous arguments and relied on groundless
positions. We have on more than one occasion during these
consolidated proceedings stated our concern that petitioners had
raised meritless arguments that served merely to delay the
collection of tax. We accorded Mr. Davis both a hearing and the
opportunity to respond in writing to our concerns. Neither by
his testimony, Ms. Osborn’s testimony, nor his written responses
to our orders to show cause has Mr. Davis shown us the merit of
any averment, claim, or argument advanced by him.5 In our orders
5 Unsupported by any citation of authority, Mr. Davis
claims that the standard for imposition of a penalty under sec.
6673(a)(1) is bad faith. In Takaba v. Commissioner, 119 T.C.
285, 294 n.2 (2002), we observed:
There is some question whether it is necessary for
a court to find that a taxpayer acted in bad faith in
order to impose a penalty on him under sec.
6673(a)(1)(B) for putting forth a frivolous or
groundless position. Compare Branch v. I.R.S., 846
F.2d 36, 37 (8th Cir. 1988) (“A taxpayer’s asserted
good faith is not relevant to the assessment of
frivolous return [sec. 6702] penalties.”) with May v.
Commissioner, 752 F.2d 1301, 1306 (8th Cir. 1985)
(“showing of willfulness, or lack of good faith, is
required [for sec. 6673(a)(1) damages]”).
We have not, however, required a showing of bad faith before
imposing a sec. 6673(a)(1)(B) penalty, see, e.g., Bean v.
Commissioner, T.C. Memo. 2006-88; Holmes v. Commissioner, T.C.
Memo. 2006-80; Wetzel v. Commissioner, T.C. Memo. 2005-211, and
do not believe that to be a requirement of the statute.
Moreover, we believe that the Court of Appeals for the Sixth
Circuit, where, barring a stipulation to the contrary, any appeal
Page: 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
Last modified: November 10, 2007