-11-
Respondent argues that although petitioners did not have an
opportunity to dispute the liability, “section 6330(c)(2)(B)
applies only when a taxpayer is challenging a liability asserted
by the Service that differs in the amount from the taxpayer’s
self-determination.” Respondent’s argument that the frivolous
return penalties are self-determined is strained at best; simply
put, frivolous return penalties are determined and assessed by
the Commissioner. Nevertheless, even if we are to accept
respondent's argument that the penalties are self-determined,
petitioners would not be barred from challenging the underlying
liability, i.e., the frivolous return penalties, during a section
6330 hearing. Section 6330(c)(2)(B) permits taxpayers to
challenge the existence or amount of the tax liability reported
on their original tax return. Montgomery v. Commissioner, supra
at 10. U.S. District Courts have also held that a taxpayer may
challenge the frivolous return penalty in the context of a
section 6330 hearing. See Yuen v. United States, supra at 1224.
Petitioners did not receive a notice of deficiency with
respect to the frivolous return penalties because the statutory
deficiency procedures, sections 6211-6216, do not apply to
frivolous return penalties under section 6702.5 Sec. 6703(b);
Yuen v. United States, supra at 1224. Petitioners also have not
5Sec. 6212 authorizes the Commissioner to send notices of
deficiency.
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Last modified: March 27, 2008