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Under section 6702, as applicable in this case, a $500 civil
penalty may be assessed against a taxpayer if three requirements
are met.7 First, the taxpayer must file a document that purports
to be an income tax return. Sec. 6702(a)(1). Second, the
purported return must lack the information needed to judge the
substantial correctness of the self-assessment or contain
information indicating the self-assessment is substantially
7Sec. 6702 has been amended by the Tax Relief and Health
Care Act of 2006, Pub. L. 109-432, div. A, sec. 407(a), 120 Stat.
2960. The amendment is effective for submissions made and issues
raised after the date on which the Secretary first prescribes a
list of frivolous positions under sec. 6702(c). That list was
announced on Mar. 15, 2007, in Notice 2007-30, 2007-14 I.R.B.
883. Petitioners’ 2003 Form 1040 and Form 843 were submitted in
2004; therefore, the amendment is not applicable to this case.
Sec. 6702 as applicable to this case provides:
Sec. 6702(a). Civil Penalty.--If--
(1) any individual files what purports to be a
return of the tax imposed by subtitle A but which--
(A) does not contain information on which the
substantial correctness of the self-assessment may
be judged, or
(B) contains information that on its face
indicates that the self-assessment is
substantially incorrect; and
(2) the conduct referred to in paragraph (1) is
due to--
(A) a position which is frivolous, or
(B) a desire (which appears on the purported
return) to delay or impede the administration of
Federal income tax laws,
then such individual shall pay a penalty of $500.
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