T.C. Mem o. 2 01 6- 43

UNITED STAT ES TAX COURT

HOWARD E. MAY AND ESTATE O F JUDITH A. MAY, DECEASED, MARC IA M. MAY, PERSONAL REPRESENTATIVE, Peti ti on ers v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt *

Doc ke t No . 14 54 5- 12 L. Fi le d M arch 8, 2 01 6.

Don al d W. MacPh ers on an d B rad le y S. MacP he rs on , forpe ti ti on ers . Bran do n A. Kei m , forres po nd en t.

SUPPLEMENTAL MEMORANDUM OPINI ON LAUBER, Ju dg e: In o urpri orrep ort i n t hi s ca se , we hel d t ha t re sp on de nt m ay pro ceedwith c ol le ct io n o f pe ti ti on ers ’ unpa id20 04 Fed eral in co m e ta x

Thi s o pi ni onsupp le m en ts ou r pr ev io us ly file d M em or an du m Opi ni on in * May v. Co m

m is si on er, T.C. Mem o. 2 01 4- 19 4.- 2 -

[* 2] li ab il ity ; d eci de d t ha t p et it io ne rs sh al l p ay a pe na lty of $ 50 0 t o t he Uni te d St at es un de r se ct io n 6 67 3( a)(1 ); a ndco nt em pl at edsan ct io ni ng pe ti ti on ers ’ co un se l, Do na ldW . MacP he rs on (Mr. M acPh ers on ), fo r advanc in g fr iv ol ou s ar gu m en ts an d u nn eces sa ril y

pro lo ng in g t he se pro ceed in gs . By ord er d at ed 1 Sep te m be r 26 , 20 14 , we ord eredMr. Ma cPh ers on to sh ow caus e why we sh ou ld no t re qu ire hi m

to pa y res po nd en t’s ex ces s co st s p ur su an t t o s ect io n 6 67 3( a)(2 ) or sa nc ti on hi m

purs ua ntto Ru le 33 (b ). W e al so ask edres po nd en t t o e xp res s h is vi ew as to whet he r th e Co urt s ho ul d s an ct io n M r. Mac Ph ers onan d t o p ro vi de a co m pu ta ti on of a ny exce ss co st s tha t the Int ern al Rev enue Serv ic e (IR S) h ad in cu rred . Havi ng co ns id eredth ei r res po ns es , we wil l o rd er Mr . MacP he rs on to pa y res po nd en t’s ex ces s co st s o f $7 ,18 8. Bac kg ro un d Neit he r HowardMay nor Ju di th May, th enhu sb an d a ndwife , fil eda ti m el y Fed eral in co m e ta x re tu rnfor 20 04 . The IR S p rep areda subs ti tu te forreturn (SFR ) fo r pe ti ti on er-h us ba ndus in g t hi rd -p arty in fo rm at io n andis su eda no ti ce o f de fic ie nc y

to hi m in20 10 . The IR S d idno t p rep are a n S FR fo r pe ti ti on er-wi fe an d All st atut ory

refe ren ces are t o t he Int ern al Rev enue Co de ineffe ctat a ll 1 rel ev an t t im es , andall Ru le refe ren ces are t o t he Tax C ou rt Rul es of P ract ic e an d Pro cedur e. W e ro un d a ll m on et ary am ou nt s t o t he ne ares t d ol lar. All refe ren ces to “ Mr. Ma cPh ers on ” are to Don al d W. MacPh ers on , andno t t o B rad le yS. MacPh ers on , who subs eque nt ly ent eredanap pe aran ce i n thi s ca se .- 3 -

[* 3] di d n otis su e a n ot ic e o f de fic ie nc y to he r. Pet it io ne r-h us ba nddi d n otsee k

2 red et erm in at io n o f th e d efi ci en cy inth is Co urt an d t he IRS as se ss edth e de fic ie nc y . Inearl y 20 11 pe ti ti on ers joi nt ly sub mit te d aFo rm 10 40 , U.S. Ind iv idua l In co m e Tax Return, fo r 20 04 . The IR S th ereupo n c om bi ne d i ts co m

pu te r-b as ed ta x m odul es forpe ti ti on er-hus ba ndan d p et it io ne r-wi fe. As a r es ul t o f th atco m bi na ti on , pet it io ne rs ’ co ns ol id at edFo rm 43 40 , Cert ifi cat e o f Ass es sm en ts , Pay m en ts , andOth er Sp eci fie d M atte rs , for20 04 in di cat ed(in co rrec tl y) th atth e IRS ha d i ss ue d n ot ic es of d efi ci en cy bo th to pe ti ti on er-h us ba ndan d t o p et it io ne r-wi fe. Tha t was be cau se th e “ no ti ce o f de fic ie nc y ” tr an sa ct io n c od e, whi chwas o rig ina ll y po st edco rrec tl y

to pe ti ti on er-h us ba nd ’s tax m odul e, m ig rat edto pe ti ti on ers ’ co ns ol id at edtax m odul e aft er the IRS re cei ve d t he ir u nt im el y 20 04 joi ntreturn. Thi s co m pu te r en try was la te r co rrec te d. Afte r rec ei vi ng th e la te -fi le d 2 00 4 re tu rn , th e IRS ab at edth e ta x p rev io us ly as se ss edag ai ns t p et it io ne r-h us ba ndinanam ountne ces sa ry to co nf orm th e as se ss m en t t o the am ou ntpe ti ti on ers ha d s el f-re po rte d. Acco rd in gl y , pet it io ne rs ’ Fo rm 43 40 for20 04 , as o f y ear e nd20 12 , refl ect edth e fo ll owi ng : $ 16 ,46 5 o f ta x a sJu di th May die d i n 2 01 3 a ndwas re pl acedas apa rty by he r es ta te ’s 2 pe rs on al rep res en tati ve . For c on ve ni en ce, we wi ll co nt inue to refe r to Howar d May’ s d ecea se d wi fe as “pe ti ti on er-wi fe.”- 4 -

[* 4] se ss edon Aug us t 3 0, 2 01 0; $4 ,40 7 o f ta x aba te d o n M ay 2, 2 01 1; an d $1 2,0 58 of n etass es se d t ax . The n etass es se d t ax refl ect s the tax th atpe ti ti on ers se lf- rep orte d o n t he ir l at e-fi le d re tu rn , whi chth ey ha d n otpa idinful l. The IRS i ni ti at edpro ceed in gs to co ll ectpe ti ti on ers ’ unpa id20 04 tax li ab il ity. On Oct ob er 1 0, 2 01 1, the IRS s en t p et it io ne rs a Fi na l No ti ce o f In te ntto Levy an d No ti ce o f You r Ri gh t t o aHeari ng , andpe ti ti on ers ti m el y reque st eda co ll ect io n due pro ces s (C DP) h eari ng . In the ir r eque stpe ti ti on ers st at edth atth ey in te nd edto see k re li ef thr ou gh co ll ect io n a lt ern at iv es , har ds hi p wai ve rs , pen al ty ab at em en t, an d ach al le ng e to th ei r un de rlyin g t ax li ab il ity for20 04 . Peti ti on ers al so de m an de d t ha t the IRS “pr oduc e 2 3c , RACS 0 06 an d a ny oth er as se ss m en t do cu m en ts ”; a si gn edass es sm en t d oc um en t “ with l eg ib le si gn atur es an d [t he ] typedna m e o f [the ] of

fic er wh o s ig ne d” ; an d t he de le ga ti on ord er au th or iz in g the as se ss m en t o ffi cer t o s ig n t he ass es sm en t. The CDP h eari ng was a ss ig ne d t o S et tl em en t Offi cer S il va(SO Si lv a). SO Si lv a se nta le tt er t o p et it io ne rs an d M r. Mac Ph ers on sch edul in g atel ep ho ne CDP he ari ng forMarc h 6 , 20 12 . The l et te r ex pl ai ne d tha t, i f pe ti ti on ers wis he d t he IRS to co ns id er co ll ect io n a lt ern at iv es , th ey sh ou ldpro vi de be fo re the co nf eren ce a co m pl et edFo rm

43 3- A, Col le ct io n In fo rm at io n S tate m en t fo r W ag e Earn ers an d Sel f-Em pl oyed In di vi du al s, al on g wi th supp orti ng fin an ci al in fo rm at io n.- 5 -

[* 5] On Fe brua ry

7, 2 01 2, M r. Mac Ph ers on wrot e SO Si lv a to reque stanex te nsi onof t im e to pro vi de th e reque st eddo cu m en ts . SO Sil vagrant edth atreque st , bu t M r. Mac Ph ers on subm it te d n o d oc um en ts by the ex te nd edde ad li ne . On Mar ch6, 2 01 2, the da y

of t he sch edul edhe ari ng , SO Sil varece iv eda fax fro m Mr. Mac Ph ers on reque st in g t ha t the he ari ng be co nt in ue d. SO Si lv a g ran te d t ha t reque stan d re sc he du le d t he he ari ng forMarc h 1 4, 2 01 2. SO Si lv a cal le d M r. Mac Ph ers on at t he res ch edul edhe ari ng ti m e, bu t h e was no t av ai labl e. Late r th atday , SO Sil vasen t p et it io ne rs a le tt er, wit h aco py to M r. Mac Ph ers on , no ti ng th atMr. Ma cPh ers on ha d b eenun av ai labl e fo r th e h eari ng an d tha t s he ha d n otrece iv edan y do cu m en ts rel ev an t t o c on si de rat io n o f co lle ct io n a lt ern at iv es . Mr. Mac Ph ers on cal le d S O Sil vath e n ex t d ay to say tha t h e ha d b eenil l an d was co nf us edab ou t the res ch edul edhe ari ng . SO Sil vagra nt ed hi m anex te ns io n o f ti m e unt il Marc h 2 8, 2 01 2, t o s ub m itth e requi redfin an ci al in fo rm at io n. Mr . MacP he rs on subm it te d n o re le va ntdo cu m en ts by tha t d at e. In st eadhe subm it te d, o n M arch 29 , 20 12 , ano th er l et te r de m an di ng th atth e IRS pr oduc e d el eg at io n o rd ers , cert ifi cat es of a ss es sm en t wi th ori gi na l s ig na tu res , and so on . At thi s p oi ntSO Sil varev ie wedth e co m pu te r tr an sc rip ts of p et it io ne rs ’ 20 04 acco un t an d c on cl ud edth atth e requi rem en ts of app li cab le law an d a dm in is -- 6 -

[* 6] tra ti ve pro cedur e h adbe enm et . She co nf irmed th atth e n etass es se d t ax for 20 04 , whi chco rres po nd edto th e ta x l iabi li ty pet it io ne rs ha d s el f-re po rte d o n the ir la te -fi le d 2 00 4 re tu rn , hadbe enpro pe rly ass es se d. Sh e d et erm in edth atpe ti ti on ers were n oten ti tl edto co ns id erat io n o f a co ll ect io n a lt ern at iv e b ecau se th ey ha d fai le d t o p ro vi de th e requi redfin an ci al in fo rm at io n d es pi te sev eral ex te ns io ns of ti m e in whi chto do so . She acco rd in gl y clo se d the cas e an d, o n M ay 8, 2 01 2, the IRS s en t p et it io ne rs a no ti ce o f de te rm in at io n s us ta in in g t he co ll ect io n a ct io n. Sh ortl y be fo re the sch edul edCDP h eari ng , Mr. Ma cPh ers on ha d fi le d wi th th e IRS a Free do m

of I nf orm at io n Act(FOIA) re qu es t s eek in g c op ie s o f “ th e fo rm s 2 3C , 43 40 , RACS0 06 an d a ny oth er as se ss m en t d oc um en ts ” fo r pe ti ti on ers ’ 20 01 -2 01 0 t ax y ears . On Apr il 2, 2 01 2, the IRS d is cl os ur e o ffi ce s up pl ie d h im with t he reque st eddo cu m en ts , st at in g t ha t “ [t]hi s i s a f ul l g ran t o f y ou r reque st .” The co ve r le tt er n ot edth at“ th e Fo rm 23 C an d R ev enue Acco un ti ng Co nt ro l Syste m (RACS) 00 6 re po rts are a s umm ary reco rdof a ss es sm en t tha t d oe s n otid en ti fy sp eci fic tax pa y ers by nam e.” On J un e 7 , 20 12 , pet it io ne rs ti m el y pe ti ti on edth is Co urt fo r rev ie w. The on ly gro un d o f erro r al le ge d i n t he pe ti ti on , pre pa redan d s ig ne d b y Mr. Ma cPh erso n, co nc ern edth e supp os edim pr op rie ty of th e as se ss m en t fo r 20 04 . The p et it io n ackno wled ge d t ha t p et it io ne rs “ ag reedto ” th atass es sm en t b y sel f-re po rti ng a li a-- 7 -

[* 7] bi li ty in tha t am ou nton th ei r la te -fi le d 2 00 4 re tu rn . The p et it io n n ev erthe le ss co nt en de d t ha t the ass es sm en t “ was no t l eg al ly m ad e” b ecau se th e IRS ha d n ot supp li ed“ a p ro pe r as se ss m en t d oc um en t” be ari ng “ th e si gn atur e o f th e as se ss m en t of fic er” t og ethe r with aco py of th e d el eg at io n o rd er au th or iz in g t he off ic er t o m ak e th e as se ss m en t. The pe ti ti on all eg edth atpe ti ti on ers ha d “ reque st edof res po nd en t a s umm ary reco rdof a ss es sm en t Fo rm 23 C, RACS 0 06 , anda Fo rm 43 40 ” b utth at“ res po nd en t fa il edto supp ly pet it io ne rs with aFo rm 23 C, RACS0 06 [or ] Fo rm

43 40 .” Mr. Ma cPh ers onadva nc edth is co nt en ti onev en th ou gh th e IRS ha d p ro vi de d t ho se do cu m en ts to hi m onApri l 2 , 20 12 , in res po ns e to hi s FOI A reque st . On Au gu st1, 2 01 2, af

te r fi li ng hi s an swe r, co un se l fo r res po nd en t n ot ifi ed Mr. Ma cPh ers on th atth e as se ss m en t-f oc us edarg um en ts he adva nc edinth e pe ti ti on ha d b eenid en ti fie d, i n No ti ce 2 01 0- 33 , 20 10 -1 7 I.R .B. 60 9, as fri vo lo us ta x p os it io ns . This let te r advi se d M r. Mac Ph ers onth at , if h e p ers is te d i n p res si ng su charg um en ts , res po nd en t wo ul d a skth e Co urt t o i m po se a pe na lty

for tak in g a

“ fri vo lo us or g ro un dl es s” po si ti on ina Tax Co urt p ro ceed in g o r in st itut in g s uc h pr oc eed in g “pr im ari ly for d el ay .” See s ec. 6 67 3( a)(1 )(A) an d (B ). Inearl y 20 13 co un se l fo r res po nd en t d is co ve redth atpe ti ti on er-wi fe s ho ul d ha ve be enaffo rd edanop po rtu ni ty to d is pu te he r 20 04 tax li ab il ity at t he CDP- 8 -

[* 8] he ari ng be cau se sh e (u nl ik e p et it io ne r-h us ba nd ) ha d n otrece iv eda no ti ce o f de fic ie nc y . Res po nd en t ac co rd in gl y m ov edto rem an d t he cas e to th e IRS App eal s Offi ce fo r a s up pl em en ta l CDP he ari ng to gi ve pe ti ti on er-wi fe “ anop po rtu ni ty to pr ov id e ev id en ce d is pu ti ng [he r] und erl y in g l iabi li ty” for 2 00 4. Pe ti ti on ers di d n ot op po se th atreque st , andwe gr an te d i t. Mr. Ma cPh ers on rep res en te d p et it io ne r-wi fe atth e supp le m en ta l h eari ng . Dur in g t ha t h eari ng he advanc edno arg um en ts an d s ub m it te d n o e vi de nc e co ncern in g h er ac tu al tax li ab il ity for20 04 , whi chwas the st at edpu rp os e fo r th e rem an d. Ra th er, h e adva nc edth e sa m e se rie s o f as se ss m en t-f oc us edco nt en ti on s th athe ha d p rev io us ly beenwarn edwere fri vo lo us . SO Sil vaag ai n re vi ewed pe ti ti on ers ’ acco un t tran sc rip ts an d c on firm edth atpe ti ti on er-wi fe’s t ax li ab il ity fo r 20 04 ha d b eenpro pe rly ass es se d i n the am ou ntth atsh e h adsel f-re po rte d o n he r de li nque ntreturn. SO Si lv a fu rth er d et erm in edth atpe ti ti on ers ha d n otsubm it te d, ei th er atth e o rig in al or t he supp le m en ta l CDP he ari ng , any do cu m en ta ti on th atwou lden ti tl e th em

to co ns id erat io n o f a co ll ect io n a lt ern at iv e. On M ay 29 , 20 13 , th e IRS is su eda supp le m en ta l n ot ic e o f de te rm in at io n s us ta in in g t he pro po se d c ol le ct io n a ct io n. On J ul y 26 , 20 13 , Mr. Ma cPh ers on fil edon pe ti ti on ers ’ be ha lf a n a m en dm en t t o p et it io n. Itall eg edth atSO Sil va ’s act io ns inco nn ect io n wi th th e sup-- 9 -

[* 9] pl em en ta l h eari ng “ em ph as iz e[d ] th e n eedforpro du ct io n b y res po nd en t t o pe ti ti on ers of aFo rm

23 C o r RACS 0 06 .” Mr. Ma cPh ers onadva nc edth is co nt en ti onev enth ou gh he was a lre ady inpo ss es si on of t ho se ass es sm en t d oc um en ts . On Se pt em

be r 18 , 20 13 , res po nd en t m ov edforsu m m ary jud gm en t an d fo r im po si ti on of ape na lty

un de r se ct io n 6 67 3( a). Mr. M acPh ers on fil eda res po ns e (in cl ud in g 1 7 e xh ib it s) th atto ta le d 1 59 pa ge s. Fro m th is welt er o f pape r we d is cern edtwo th eo rie s. Fi rs t, h e co nt en de d t ha t SO Si lv a h adab us edhe r di sc ret io n by relying on co m

pu te riz edacco un t tran sc rip ts , rathe r th anph y si cal so ur ce d oc um en ts , to ve rif

y th atth e IRS ha d p ro pe rly ass es se d p et it io ne rs ’ se lf- rep orte d t ax li ab il it ie s. Sec on d, h e co nt en de d t ha t the se li ab il it ie s wer e n otowed , or wer e p er se un co ll ect ib le , bec au se SO Sil vafai le d t o fu rn is h p et it io ne rs with c op ie s o f si gn edreco rd s o f as se ss m en t ac co m pani edby a del eg at io n o rd er at te st in g t o t he as se ss in g o ffi ci al ’s cap aci ty to as se ss . 3 InMay v. Comm is si on er, T.C. Mem o. 2 01 4- 19 4, we re jecte d b ot h a rg um en ts an d g ran te d s umm ary jud gm en t fo r res po nd en t. Fi rs t, we h el d t ha t SO Si lv a co ul d p ro pe rly rely on th e co m pu te riz edacco un t tran sc rip ts forpe ti ti on ers ’ The arg um en ts Mr. Ma cPh ers on adva nc edran ge d fr om accu si ng th e IRS of 3 de frau di ng th e p ub li c to ass ert in g t ha t s ec. 3 01 .62 03 -1 , Pro ced . & Adm in . Reg s., sh ou ldbe in va li da te d b ecau se itm en ti on s d is tri ctan d re gi on al di rect or s, p os it io ns th atno lo ng er ex is t. Ma ny of h is arg um en ts , bes id es be in g fr iv ol ou s, were no t rai se d at the CDP h eari ng , andwe th eref or e d ecl in edto ad dr es s the m .- 10 -

[* 10 ] acco un t, as op po se d t o o rig in al so ur ce d oc um en ts , to ve rif y th atth e 2 00 4 as se ss m en ts ha d b eenpro pe rly m ad e, no ti ng est ab li sh edcas e la w to th is effe ct . See, e.g ., Crai g v . Comm is si on er, 1 19 T.C. 25 2, 2 62 (20 02 ) (h ol di ng th atsec ti on 63 30 (c)( 1) do es no t “ m an da te th atth e App eal s o ffi cer a ctua ll y gi ve a ta xp ay er a co py of th e v eri fic at io n upo n wh ic h t he App eal s o ffi cer r el ie d” ); S he rwo odv. Co m m is si on er, T.C. Mem o. 2 00 5- 26 8, 9 0 T.C.M . (CCH) 5 12 , 51 5. Se co nd , we he ldth atSO Sil va ’s refu sa l t o s up pl y pe ti ti on ers with d el eg at io n o rd ers an d a sse ss m en t s ou rce d oc um en ts co nt ai ni ng ori gi na l s ig na tu res was e nt ire ly pro pe r an d pr ov id edno ba si s o n wh ic h t he y co ul d c ha ll en ge th ei r ta x l iabi li ty for 2 00 4, ag ai n no ti ng est ab li sh edcas e law to th is effe ct . See Ko ff v . Uni te d S ta te s, 3 F.3d12 97 , 12 98 (9t h C ir. 1 99 3) ; Ro be rts v. Co m m is si on er, 1 18 T.C. 36 5, 3 70 n.7 (20 02 ), aff’d, 3 29 F.3d12 24 (11 th Cir . 20 03 ); Ne st orv. Co m mis si on er, 1 18 T.C. 16 2, 16 6- 16 7 (2 00 2) (“ The re i s n o re qu ire m en t u nd er i nt ern al rev enue laws or reg ul at io ns th atth e App eal s o ffi cer g iv e th e ta xp ay er a co py of th e d el eg at io n * * * [o rd er] from

th e Sec ret ary to th e p ers on * * * wh o s ig ne d t he ve rif ic at io n requi redun de r se ct io n 6 33 0( c)(1 )).”); Bat tl e v . Comm is si on er, T.C. Mem o. 2 00 9- 17 1, 9 8 T.C.M . (CCH) 4 5, 4 8. W e fu rth er h el d tha t p et it io ne rs ’ as se ss m en t-f oc us edarg um en ts were fri vo lo us an d h adbe enin te rp os edso le ly to d el ay th e co ll ect io n o f th ei r 20 04 tax li ab il i-- 11 -

[* 11 ] ty. May v. Commis si on er, at*1 7- *1 9. Be cau se res po nd en t (t o h is cred it ) ha d a ckno wled ge d an e rro r th atsupp orte d re m an d o f th e cas e to th e IRS App eal s Offi ce, we fo un d a t l eas t a s ci nt il laof s up po rt f or a po rti on of p et it io ne rs ’ or ig in al po si ti on . W e acc or di ng ly con cl ud edth ata rel at iv el y m od es t p en al ty w as jus ti fie d an d re qu ire d p et it io ne rs to pa y to th e Uni te d S ta te s a s ect io n 6 67 3( a)(1 ) pe na lty of $5 00 . Fi na ll y , we con cl ud edth atMr. Ma cPh ers on co ul d b e d es erv in g o f sa nc ti on un de r se ct io n 6 67 3( a)(2 ) orRu le 33 (b ) fo r adva nc in g fr iv ol ou s ar gu m en ts an d un ne ces saril y

pro lo ng in g t he pro ceed in gs . W e o rd eredhi m to sh ow caus e why he sh ou ldno t b e sa nc ti on ed . W e co nc urren tl y ord eredres po nd en t t o e xp res s h is vi ews on th is po in t an d t o fu rn is h t he Co urt wi th co m pu tati on s o f an y

ex ces s co st s th e IRS ha d i nc urredon acco un t o f Mr. M acPh ers on ’s con du ct . On Oct ob er 2 4, 2 01 4, M r. Mac Ph ers on fil edon be ha lf o f pe ti ti on ers a m ot io n fo r rec on si de rat io n (i nc lu di ng 52 ex hi bi ts ) th atto ta le d 2 59 pa ge s. Th is do cu m en t p res en te d ra m

bl in g v ari at io ns on th e as se ss m en t-f oc us edarg um en ts th at th e Co urt h adreject edinit s o pi ni on . Mr. Mac Ph ers on co nc urren tl y fil eda se pa rat e 4 2- pa ge m ot io n fo r rec on si de rat io n, s up po se dl y on hi s o wn b eh al f. Thi s as se rte d tha t the reg ul at io n g ov ern in g “ m etho d o f as se ss m en t,” s ect io n 3 01 .62 03 -1 , Pro ced . & Adm in . Reg s., was in va li d wh enpro m ul ga te d i n 1 95 4 b ecau se th e- 12 -

[* 12 ] Dep art m en t o f th e Treas ury ha d a ll owe d a n i ns uf

fic ie ntnu m

be r of da y s fo r publ ic no ti ce an d c omm en t. Pet it io ne rs ha d n otadva nc edth is arg um en t p rev io us ly at an y st ag e o f th is li ti ga ti on , anditwas n otad dr es se d i n t he Co urt’s o pi ni on . W e d en ie d b ot h m ot io ns forreco ns id erat io n. On No ve m

be r 10 , 20 14 , res po nd en t fi le d ares po ns e to ou r or de r co nc ern in g sa nc ti on s. Inres po nd en t’s v ie w, “ th e ta ct ic s u se d i n t hi s ca se were d es ig ne d t o de lay co ll ect io n b ecau se , with t he ex cep ti on of t he un de rlyin g l iabi li ty chal le ng e th atwas qui ck ly aban do ne d o n re m an d, the pl ead in gs an d o th er fi li ng s i n thi s ca se rai se d n ot hi ng bu t fr iv ol ou s, g ro un dl es s, an d s ta tu to ril y -p recl ud edarg um en ts , whi chco ul d h av e n o p ur

po se bu t t o d el ay

co ll ect io n.” Res po nd en t s ou gh t at to rne y ’s fees on ly for the pe rio d a fte r May 29 , 20 13 , th e d at e o n wh ic h t he supp le m en ta l n ot ic e o f de te rm in at io n was is su ed . Duri ng th atpe rio d, re sp on de nt ’s tri al at to rn ey lo gg ed24 .75 ho ur s an d alaw cl erklo gg ed34 .75 ho ur s, ch ie fly in p rep arin g re sp on de nt ’s m ot io n fo r su m m ary jud gm en t wi th supp orti ng m em or an du m an d affi da vi t. Em

pl oyin g h ou rly rates of $ 15 0 a nd$1 00 , res pe ct iv el y , res po nd en t re qu es te d tha t we awa rdex ces s co st s o f $7 ,18 8. Mr . MacP he rs on do es no t ch al le ng e th e rea so nabl en es s o f th es e rat es bu t co nt en ds th atth e 5 9.5 ho ur s ex pe nd ed were ex ces si ve .- 13 -

[* 13 ] On Dec em

be r 3, 2 01 4, M r. Mac Ph ers on fil eda res po ns e to our or de r co ncern in g s an ct io ns th atto ta le d (i nc lu di ng ex hi bi ts ) 29 9 p ag es . This do cu m en t was larg el y cu t an d p as te d fr om

hi s 2 59 -p ag e m ot io n fo r rec on si de rat io n. Itrei te rat ed th e as se ss m en t-f

oc us edarg um en ts he ha d m ad e p rev io us ly.

Dis cu ss io n Sect io n 6 67 3( a)(2 )(A) p ro vi de s tha t “ [w]hen ev er i t ap pe ars to th e Tax Co urt th atan y att orne y * * * h as m

ul ti pl ie d t he pro ceed in gs inany cas e unr eas on ab ly an d v ex at io us ly,” we m ay requi re tha t the att orne y

“pa y pe rs on al ly the ex ces s co st s, ex pe ns es , andatt orne y s’ fees reas on ab ly inc urredbe cau se of s uc h c on du ct .” W e m ay su a sp on te im

po se su chco st s o n t he off en di ng att orne y . See Waltn er v . Co m m is si on er, T.C. Mem o. 2 01 4- 13 3, at*2 3; Edward s v . Comm is si on er, T.C. Mem o. 2 00 2- 16 9, af

f’d, 11 9 F . App ’x 29 3 (D.C . Cir . 20 05 ); Lea chv. Co m m is si on er, T.C. Mem o. 1 99 3- 21 5. Sh ortl y aft er thi s ca se was d oc ke te d i n t hi s C ou rt, re sp on de nt ’s cou ns el no ti fie d M r. Mac Ph ers on th athi s as se ss m en t-f oc us edarg um en ts ha d b eenid en ti fie d as “ fri vo lo us ” inNot ic e 2 01 0- 33 , supr a. Thi s No ti ce ex pl ic it ly chara ct eri zes as

“ fri vo lo us ” th e subm is si on th at [v ]erifi cat io n u nd er s ect io n 6 33 0 t ha t the requi rem en ts of a ny app li cab le law o r adm in is tra ti ve pro cedur e h av e b eenm etm ay on ly be ba se d o n o ne or m or e p art ic ul ar fo rm s o r do cum en ts (whi chm us t b e- 14 -

[* 14 ] ina cert ai n fo rm at ), su chas asu m m ary reco rdof a ss es sm en t, o r th atth e p art ic ul ar fo rm s o r do cu m en ts or t he on es on whi ch ve rif ic at io n was actua ll y

de te rm in edm

us t b e p ro vi de d t o atax pa y er ata co ll ect io n due pro ces s h eari ng . [Id., 2 01 0- 17 I.R.B. at61 1- 61 2.] The se are p reci se ly the arg um en ts th atMr. Ma cPh ers on ha s ad va nc edat e ve ry st ag e o f th is pro ceed in g. The cas e was lat er re m an de d t o t he IRS Ap pe al s Off ic e to en ab le pe ti ti on erwife , if s he wis he d, t o c ha ll en ge he r un de rlyin g t ax li ab il ity for20 04 . Rath er tha n adva nc e a g oo d- fai tharg um en t (i f on e ex is te d) co nc ern in g t ha t l iabi li ty, Mr. Ma cPh ers on co nt in ue d t o p res s the same ass es sm en t-f oc us edarg um en ts th athe ha d rece nt ly beento ldwere fri vo lo us . He th enpe rs is te d i n a dv an ci ng th os e sa m e arg um en ts rep eat ed ly in thi s C ourt. Th es e arg um en ts were fri vo lo us , no t o nl y ina le ga l, b utals o i n afactua l s en se . He arg ue d a ga inan d a ga inth at“ res po nd en t fai le d t o s up pl y

pe ti ti on ers with aFo rm

23 C, RACS0 06 [or ] Fo rm 43 40 ” ev en th ou gh th e IRS ha d p ro vi de d t ho se do cu m en ts to hi m , m on th s o r y ears earl ie r, in res po ns e to hi s FOI A reque st . Mr. Ma cPh ers on als o re pr es en te d t he tax pa y ers inBes t v . Comm is si on er, T.C. Mem o. 2 01 4- 72 . He adv an cedon be ha lf o f th os e ta xp ay ers , andwe fo un d fri vo lo us , exa ct ly the same ass es sm en t-f oc us edarg um en ts th atwe have fou ndfri vo lo us he re. Ina Supp le m en ta l M em or an du m Opi ni on inBes t, we co nc lu de d tha t- 15 -

[* 15 ] Mr. Ma cPh ers on , by adva nc in g t he se arg um en ts , had“ m ul ti pl ie d the pr oc eed in gs * * * u nr eas on ab ly andve xa ti ou sl y ,” se c. 66 73 (a)( 2) , andrequi red hi m to pa y th e ex ces s co st s i nc urredby resp on de nt , Bes t v . Comm is si on er, T.C. Mem o. 2 01 6- 32 , at * 20 -* 21 . For t he reas on s s ta te d a t l en gth i n t ha t o pi ni on , we reac h the same con cl us io n h ere. We fin d t ha t M r. Mac Ph ers onkn owi ng ly or reck le ss ly adv an cedarg um en ts th athe kn ew were fr iv ol ou s an d l ack in g i n a ny le ga l b as is . Becau se hi s ac ti on s thu s m an ife st edsubjec ti ve ba d fa ith, the y are de se rv in g o f sa nc ti onun de r se ct io n 6 67 3( a)(2 ). See M oo re v . Keeg anMg m t. Co . (Inre Keeg anMg m

t. Co ., Sec. Lit ig .), 78 F.3d43 1, 4 36 (9t h C ir. 1 99 6) ; Re li an ce In s. Co . v. Swee ne y

Co rp . 79 2 F .2d11 37 , 11 38 (D.C. Cir . 19 86 ); Tak ab a v . Com m is si on er, 1 19 T.C. 28 5, 2 96 -2 97 (20 02 ). 4 As i n B es t, we wi ll li mitou r sanc ti on s t o t he lo de st ar am ou ntsubm it te d b y res po nd en t, wh ic h c ov ers att orne y ’s fees in cu rreddu rin g t he pe rio d a fte r th e supp le m en ta l n ot ic e o f de te rm in at io n was is su ed . Mr. Mac Ph ers ondo es no t ch al Fo r th e rea so ns st at edinou r Supp le m en ta l M em or an du m Opi ni on inBes t, 4 T.C. Mem o. 2 01 6- 32 , at * 16 , we fin d t ha t M r. Mac Ph ers on ’s con du ctals o v io la te d Ru le 33 (b ) an d t he Mo de l Ru le s o f Pro fes si on al Co nduc t. Ru le 33 (b ) cl earl y im po se s “ anaffi rm at iv e dut y on each att orne y

to co nduc t a r eas on ab le in qu iry int o th e v iabi li ty of a p le ad in g b efo re i t i s s ig ne d.” Verst eeg v. Co m mis si on er, 9 1 T.C. 33 9, 3 43 (19 88 ). Mr. Ma cPh ers on adva nc edarg um en ts th atwere l eg al ly and factua ll y ba se le ss , andwe fin d t ha t h is arg um en ts to m od ify or rev ers e ex is ti ng law were n otm ad e in go odfai th . He has in te nt io na ll y ab us edth e jud ic ia l p ro ces s, an d we m ay

san ct io n h im

for th at .- 16 -

[* 16 ] le ng e th e rea so nabl en es s o f th e h ou rly rates res po nd en t em pl oyed o r th e nu m be r of ho ur s h is pe rs on ne l l og ge d, co nt en di ng on ly tha t the nu m be r of ho ur s was ex ces si ve rel at iv e to th e ta sk s p erfo rm ed . W e d o n otfin d 5 9.5 ho ur s t o b e an ex ces si ve am ou ntof t im e fo r pr ep ari ng a 37 -p ag e m em or an du m insupp ort o f su m m ary jud gm en t, a s up po rti ng affi da vi t, an d m is cel lane ou s co urt p ap ers du rin g th is pe rio d. We will acco rd in gl y m ak e ab so lu te th e o rd er t o s ho w cau se an d a ward th e Uni te d S ta te s $ 7,1 88 as ape na lty im po se d a ga in stMr. Ma cPh ers on un de r se ct io n 6 67 3( a)(2 ). To re fle ctth e fo reg oi ng , The ord er t o s ho w cau se wil l b e m ad e ab so lu te .