- 19 -
suggest that petitioners relied heavily on the advice of their
counsel and may not have known about the nature of the legal
arguments advanced by counsel.”
Petitioners filed responses to the Court’s orders to show
cause. They all argue that the standard for imposition of a
penalty under section 6673 is bad faith, and bad faith does not
encompass nonfrivolous arguments. They catalog both identical
errors in, and defenses to, the settlement officer’s
determination that respondent may proceed with his collection
actions; viz, (1) the affirmative defense of statute of
limitations, (2) the imposition of double taxation, or “whipsaw”,
(3) an innocent spouse claim, (4) the presentation of collection
alternatives, including an offer-in-compromise, (5) the
settlement officer’s failure to provide requested documents, and
(6) the settlement officer’s failure to accord them adequate time
to perfect their defense. They argue that sanctions are not
applicable to good faith efforts by taxpayers and their counsel
to reach agreement with the IRS. Finally, they appear to argue
that, notwithstanding the receipt of a statutory notice of
deficiency, a taxpayer is entitled to raise the underlying tax
liability in a section 6330 hearing.
B. Discussion
We shall impose section 6673(a)(1) penalties on petitioners
in each case before us. We shall do so because we believe that
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
Last modified: November 10, 2007