T.C. Mem o. 2 01 6- 32

UNITED STAT ES TAX COURT

LEONARD L. BEST AND EV ELYN R. BEST, Peti ti on ers v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt *

Doc ke t No . 26 66 2- 10 L. Fi le d F eb ru ary 29 , 20 16 .
Held : Ord er t o s ho w cau se why Ps ' co un se l s ho ul d n otpay ex ces si ve co st s p ur su an t t o I.R .C. se c. 66 73 (a)( 2) or b e sanc ti on ed pu rs uantto Ru le 33 (b ), Tax C ou rt Rul es of P ract ic e an d P ro cedur e, wil l b e m ad e ab so lu te an d e xc es si ve co st s i m po se d o n c ou ns el .
Don al d W. MacPh ers on , forpe ti ti on ers . Ch ris J. Sh el do n, Do reen M. Su si , andBran do n A. Kei m , forres po nd en t.

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 Bes t * v. Co m m is si on er, T.C. Mem o. 2 01 4- 72 .- 2 -

[* 2] SUPPLEMENTAL MEMORANDUM OPINI ON HALPERN, Ju dg e: Don al d W. MacPh ers on is pe ti ti on ers ' co un se l i n thi s cas e. Ina pr io r rep ort, Be stv. Co m m is si on er, T.C. Mem o. 2 01 4- 72 , we hel d tha t res po nd en t m ay

pro ceedwith c ol le ct io n o f pe ti ti on ers ' unpa id19 93 an d 1 99 4 Fed eral in co m e ta x, d et erm in edth atpe ti ti on ers m us t p ay a pe na lty of $ 5,0 00 pu rs ua ntto sec ti on 66 73 (a)( 1) , andco nt em pl at edsan ct io ni ng Mr. Ma cPh ers on for un ne ces saril y

bri ng in g andpro lo ng in g the se pro ceed in gs . By ord er d at edApri l 1 28 , 20 14 , we ord eredMr. Ma cPh ers onto sh ow caus e why we sh ou ldno t re qu ire hi m to pay res po nd en t's ex ces si ve co st s p ur su an t t o s ect io n 6 67 3( a)(2 ) orsan ct io n hi m pu rs uantto Ru le 33 (b ) (o rd er t o s ho w cau se ). W e al so ord eredres po nd en t t o ex pr es s h is vi ew on whet he r th e Co urt s ho ul d s an ct io n M r. Mac Ph ers on an d, i f so , to pro vi de a co m

pu ta ti on of t he ex ces s co st s re sp on de ntin cu rred . Mr. Mac Ph ers on an d re sp on de nthave co m pl ie d wi th ou r or de r, an d we h av e co ns id eredth ei r res po ns es . Alth ou gh Mr. Ma cPh ers on in it ia ll y ask edfora he ari ng , he h as withd rawnth atreque st . For t he reas on s s ta te d, we wi ll m ak e th e or de r to sh ow caus e ab so lu te an d awardto th e Uni te d S ta te s $ 19 ,83 7.5 0. Be cau se , Unl es s o th erwi se st at ed , all sec ti on refe ren ces are t o the Int ern al Rev enue 1 Co de of 1 98 6, as am en de d andineffe ctat a ll rel ev an t t im es , andall Ru le refe ren ces are t o the Tax C ou rt Rul es of P ract ic e an d P ro cedur e.- 3 -

[* 3] inhi s re sp on se , Mr. Ma cPh ers on als o a dd res se d the pe na lty th atwe de te rm in edto im

po se onpe ti ti on ers , we wil l b rie fly elab or at e o n o urgro un ds for im po si ng th atpe na lty . Bac kg ro un d Thi s p ro ceed in g t o re vi ew res po nd en t's de te rm in at io n t o p ro ceedwith co ll ect io n o f pe ti ti on ers ' unpa id19 93 an d 1 99 4 F ed eral in co m e ta xe s i s n otth e fir stpro ceed in g i n thi s C ou rt a dd res si ng th os e ta xe s. Pre vi ou sl y , pet it io ne rs ch al le ng edres po nd en t's de te rm in at io n o f de fic ie nc ie s i n, an d a dd it io ns to , pe ti ti on ers ' 19 93 an d 1 99 4 i nc om e ta x l iabi li ti es . Thatpro ceed in g, Be stv. Co m m is si on er, T.C. Dkt . No. 2 22 41 -0 7 (J an . 2, 2 00 9) (st ip ul at edde ci si on ), was en de d b y ag reem en t o f th e p art ie s. We ent ereda st ip ul at edde ci si onsu st ai ni ng subs tant ia l p orti on s o f th e d efi ci en ci es intax alo ng with a dd it io ns to tax for bo th fai lu re t o fi le a return andfai lu re t o p ay tax ti m el y

an d a ls o fo r fai lu re t o p ay es ti m at edtax (al l am ount s, wi th ou t d is ti nc ti on , tax es ). Mr. Ma cPh ers on rep res en te d p et it io ne rs inth atpro ceed in g. Re sp on de ntass es se d the res ul ti ng ta xe s. Pet it io ne rs fai le d t o p ay th e as se ss edam ou nt s, an d re sp on de ntis su edto th em a Fi na l No ti ce o f In te ntto Levy andNot ic e o f You r Ri gh t t o aHeari ng . Pet it io ne rs reque st eda se ct io n 6 33 0 h eari ng , st at in g tha t the y wis he d t o pu rs ue co ll ect io n a lt ern at iv es an d p en al ty abat em en t. Mr . MacP he rs on- 4 -

[* 4] rep res en te d the m

at t he he ari ng . Sett le m en t Offi cer I rm a Hern an de z o f th e In te rn al Rev enue Serv ic e App eal s Off ic e (Ap pe al s) rev ie wedvario us co m pu te r tra ns cri pt s o f pe ti ti on ers ' acco un ts for19 93 an d 1 99 4 andco nc lu de d tha t p ro pe r as se ss m en ts ha d b eenm ad e an d tha t co ll ect io n o f th e unp ai d t ax es co ul d p ro ceed . Mr. Ma cPh ers on reque st edacco un t tran sc rip ts forbo th y ears , whi chMs . Hern an de z p ro vi de d t o h im . The tran sc rip ts id en ti fie d p et it io ne rs an d the y ear a nd type o f ta x re po rte d andsh owe d the am ou nt s an d d at es of a ss es sm en ts . Duri ng a te le ph on e co nf

eren ce wi th Ms . Hern an de z, Mr. M acPh ers on to ldhe r th at pe ti ti on ers ha d c ha ng edth ei r m in ds ab ou t d es iri ng a co ll ect io n a lt ern at iv e an d were wi th dr awin g the ir r eque stforsu ch . He con ced edth atpe ti ti on ers ha d st ip ul at eda de ci si on en te redby the Tax C ou rt a ndwere n otdi sp ut in g the un de rlyin g l iabi li ti es . He st at edth athe was d is pu ti ng th e p os td eci si on pro cedur al st ep s. Alt ho ug h h e cl ai m edth atth e as se ss m en ts were n ei th er t im el y no r pr op er, he ga ve no sp eci fic s. He rei te rat edhi s ea rli er re qu es t tha t M s. Hern an de z "p ro vi de a 's umm ary reco rdof a ss es sm en t', Fo rm 23 C an d aFo rm

43 40 , pl us a co py of th e actua l d oc um en t s ig ne d b y th e o ffi cer d el eg at edau th or ity to ass es s i n thi s ca se , hi s na m e, an d the de le ga ti on ord er s ho win g h is au th or iz at io n t o a ss es s i n thi s ca se ." Inm ak in g tha t re qu es t, Mr . MacP he rs on ha d c omm un ic at edto Ms . Hern an de z: "Cl ie nt s ar e d oubt in g l iabi li ty/co nt es ti ng ti m el y & p ro pe r as se ss m en t & de le ga te d- 5 -

[* 5] au th or ity

of a ss es sm en t o ffi cer." Ms . Hern an de z ref us edhi s re qu es t fo r th os e do cu m en ts . She ex pl ai ne d tha t the re was no requi rem en t i n the Int ern al Rev enue Co de or t he reg ul at io ns th atApp eal s p ro vi de th e ta xp ay er wi th an y do cu m en ts du rin g the he ari ng pro ces s. Sh e st at edth at , as am at te r of pra ct ic e, pe ti ti on ers ha d be enfurni sh edth e acc ou nttrans cri pt s, wh ic h " id en ti fy th e ta xp ay ers , th e ch arac te r of th e li ab il ity

ass es se d, the tax ab le pe rio d andth e am ou ntof t he ass es sm en t" . Ms . Hern an de z in fo rm edMr. Ma cPh ers on th atApp eal s wo ul d i ss ue a de te rm in at io n s us ta in in g the lev y . On Nov em be r 1, 2 01 0, Ap pe al s s en t t o pe ti ti on ers a Not ic e o f Det erm in at io n C on cern in g C ol le ct io n Act io ns (s ) Und er Sect io n 6 32 0 and/o r 63 30 , in fo rm in g the m th atth e n ot ic e o f in te ntto lev y was co rrec t an d tha t re sp on de ntwou ldpro ceedwith c ol le ct io n. On Dec em

be r 1, 2 01 0, i n re sp on se to th e n ot ic e, pe ti ti on ers fil edth e pe ti ti on , whi chMr. Ma cPh ers on si gn edon th ei r be ha lf. By the pe ti ti on , pe ti ti on ers pra y edth at , "fo r la ckof p ro pe r as se ss m en t" , we det erm in e th atth ey ha ve no tax li ab il it ie s fo r th e y ears inis su e. They averredth atMs . Hern an de z ab us edhe r di sc ret io n b y

fai li ng to gi ve th em

co pi es of F orm

43 40 , Form

23 C, RACS 0 06 , or ade le ga ti on ord er fo r th e as se ss m en t o ffi cer wh o s ig ne d p et it io ne rs '- 6 -

[* 6] as se ss m en t. Res po nd en t an swe redth e p et it io n and , eve ntua ll y , th e cas e was 2 se t fo r tr ia l i n Jun e 2 01 2, i n P ho en ix , Arizo na . Inearl y Feb ru ary 20 12 , res po nd en t's co un se l co nt act edMr. Ma cPh ers on to di sc us s the cas e. Am on g o th er thi ng s, h e warn edMr. Ma cPh ers on th atth e is su es pe ti ti on ers ha d ra is eddu rin g the ir s ect io n 6 33 0 h eari ng an d h adall eg edinth e pe ti ti on were l is te d i n re sp on de nt 's fr iv ol ou s p os it io n n ot ic e an d wer e co nt rary to es tabl is he d l aw. At Mr. M acPh ers on 's re qu es t, re sp on de nt 's c ou ns el pro vi de d h im with c op ie s o f Not ic e 2 01 0- 33 , 20 10 -1 7 I.R .B. 60 9, an d R ev . Rul . 20 07 -2 1, 2 00 7- 14 I.R.B. 8 65 , andhe di rect edhi m to Crai g v . Comm is si on er, 1 19 T.C. 25 2, 2 62 (2 00 2) ("No r do es * * * [s ect io n 6 33 0( c)(1 )] m an da te th atth e App eal s o ffi cer actua 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 the App eal s o ffi cer rel ie d." ), an d Nes to r v. C omm is si on er, 1 18 T.C. 16 2, 1 66 (20 02 ) ("S ect io n 63 30 (c)( 1) do es no t re qu ire th e App eal s o ffi cer t o g iv e th e ta xp ay er a co py of th e ve rif ic at io n tha t the requi rem en ts of a ny app li cab le law o r adm in is tra ti ve pr oc edur e h av e b eenm et ."). Res po nd en t's co un se l warne d M r. Mac Ph ers on th at , if p et it io ne rs pro ceed ed , res po nd en t wo ul d re qu es t the Co urt t o i m po se a se ct io n Fo rm 43 40 is a "Ce rti fic at e o f Ass es sm en ts , Paym en ts , andOth er Sp eci fie d 2 Mat te rs ". Fo rm

23 C is an"As se ss m en t Ce rti fic at e--S umm ary Rec or d o f Ass es sm en ts ". RACS 0 06 is an"Re ve nu e Acco un ti ng Co nt ro l Syste m Rep ort 00 6" , a co m

pu te r-g en erat edequi va le ntof F orm 23 C. They all ev id en ce as se ss m en t. Fo r cl ari ty, we do no t i nc lu de th e fo rm na m es inth e te xt .- 7 -

[* 7] 66 73 (a)( 1) pe na lty

ag ai ns t the m . Som et im e aft er the y fil edth e p et it io n, res po nd en t p ro vi de d t o p et it io ne rs Cert ifi cat es of Off ic ia l Re co rd s at te st in g tha t th e an ne xe d F orm s 4 34 0 wer e true Fo rm s 4 34 0 fo r pe ti ti on ers ' 19 93 an d 1 99 4 t ax y ears . On Ap ril 4, 2 01 2, re sp on de ntfil eda m ot io n fo r su m m ary jud gm en t an d fo r a co nt in ua nc e (t o g iv e th e Co urt t im e to co ns id er the m ot io n fo r su m m ary jud gm en t). OnApri l 1 1, 2 01 2, i n aco nf eren ce ca ll with the parti es , we st at edou r rel uc tanc e to co nt in ue th e cas e if th ere was a ge nu in e d is pu te as t o am at eri al fact . Mr. Ma cPh ers on was u nwi ll in g t o s ta te th atth ere was no su chdi sp ut e. As a res ul t, we d en ie d the m ot io ns . Fiv e d ay s l at er, Mr . MacP he rs on co nt act ed res po nd en t's co un se l t o s ug ge stth atth e p art ie s s ub mitth e cas e to th e Co urt fu ll y st ip ul at edun de r Ru le 12 2 o r th atth e p art ie s m ak e cro ss -m ot io ns forsu m m ary jud gm en t. The ti m e fo r m ak in g s umm ary jud gm en t m ot io ns ha vi ng ex pi red , th e pa rti es ag reedto pro ceedwith aful ly sti pu la te d c as e. They sub m it te d ast ip ul at io n of fact s an d aRu le 12 2 m ot io n, wh ic h we g ran te d. Th ey fil edbri efs . Inou r pr io r rep ort, we s tate d tha t we d is cern edfro m th e p et it io n two gr ou nd s u nd erl y in g p et it io ne rs ' as si gn m en ts of e rro r. Bes t v . Comm is si on er, T.C. Mem o. 2 01 4- 72 , at * 9. On e, co ll ect io n c ou ldno t p ro ceedbe cau se Ms . Hern an de z ha d abu se d h er d is cret io n i n re lying ontra ns cri pt s t o v eri fy th atth ei r unpa idtax- 8 -

[* 8] ha d b eenpro pe rly ass es se d. Two, c ol le ct io n c ou ldno t p ro ceedbe cau se ne ithe r th e acc ou nttra ns cri pt s n orth e Fo rm s 4 34 0 p ro vi de d t o p et it io ne rs du rin g pe nd en cy of t hi s ca se m eetres po nd en t's du ty im po se d b y sec ti on 62 03 to furni sh th em with c op ie s o f th e Co m

m is si on er's reco rd s o f as se ss m en t fo r th e unp ai d t ax inis su e. W e tr eat edpe ti ti on ers ' gr ou nd s as rai si ng qu es ti on s o f la w. W e fo un d s ub st an ti al au th or ity reb ut ti ng pe ti ti on ers ' cla im th atMs . Hern an de z co ul d n otrel y onco m pu te r tr an sc rip ts to ve rif

y th atth ei r unpa idtax ha d b eenpro pe rly ass es se d. We st at ed : "No th in g i n e vi de nc e in di cat es an y irr eg ul ari ty in the ass es sm en t p ro cedur e th atwou ldrai se a qu es ti onth atth e as se ss m en ts were n otva li dl y m ad e in acco rd an ce wi thth e requi rem en ts of s ect io n 30 1.6 20 3- 1, Pr oc ed . & Adm in . Reg s." Id. at*1 4. W e li ke wis e fo un d s ub st an ti al au th or ity th atres po nd en t h adsat is fie d h is ob li ga ti on un de r se ct io n 6 20 3 t o fu rn is h p et it io ne rs with the reco rd s o f as se ss m en ts of t he ir u np ai d t ax . W e st at edth atth e in fo rm at io n i n the acco un t tra ns cri pt s fu rn is he d t o p et it io ne rs by Ms. Hern an de z "c on st itut es all of 't he pe rti ne ntparts of t he ass es sm en t', wh ic h, p ur su an t t o s ect io n 3 01 .62 03 -1 , Pro ced . & Admin . Reg s., o n the ir r eque st , res po nd en t m us t furn is h t o the m ." Id . at * 15 . W e ci te d b ot h c as es of t hi s C ou rt a ndof t he Co urt o f App eal s fo r th e Nin th Cir cu it fo r th e p ro po si ti on th at"[Th e Co m m is si on er] m ay

ch oo se am on g d oc um en ts so- 9 -

[* 9] lo ng as t he form

us edid en ti fie s the tax pa y er, s ta te s the ch arac te r of th e li ab il it ie s as se ss ed , th e ta x p eri odgi vi ng ris e to th e as se ss m en t, the am ou ntof t he as se ss m en t, an d the da te of a ss es sm en t." Bes t v . Comm is si on er, at*1 6 (a lt erat io n inori gi na l) ( qu ot in g B at tl e v . Comm is si on er, T.C. Mem o. 2 00 9- 17 1, 2 00 9 WL 21 51 78 6, at*5 ). The Fo rm s 4 34 0 fu rn is he d t o p et it io ne rs aft er thi s ca se co m m en cedco nt ai ne d i nf

orm at io n m

uc h the same as th atco nt ai ne d i n the acco un t tra ns cri pt s. Id . at * 16 -* 17 . W e im po se d asec ti on 66 73 (a)( 1) pe na lty on pe ti ti on ers be cau se th ei r two gr ou nd s l ack edm eri t an d wer e co nt rary to es tabl is he d l aw. W e fo un d tha t the ir arg um en ts were fri vo lo us ; tha t n ot hi ng supp orte d the ir a ss ig nm en ts of e rro r, whi ch cau se d u s t o fu rth er co nc lu de th atth ei r cl ai m s wer e g ro un dl es s; an d, fi na ll y , th at th ey m ai nt ai ne d the pro ceed in gs pri m ari ly for d el ay . W e reject edth ei r rel ianc eon -co un se l d efen se . W e co nt em

pl at edlev y in g e xc es s co st s o n M r. Mac Ph ers on forun reas on ab ly an d u nn eces saril y

bri ng in g andpro lo ng in g the pro ceed in gs . W e sa idth atwe wou ldacco rdhi m

th e o pp ortu ni ty to re sp on d t o tha t ch arg e.- 10 -

[* 10 ] Dis cu ss io n I. Requi rem en ts foranAwardof Ex ces s C os ts A. In tro du ct io n Sect io n 6 67 3( a)(2 ) pl ai nl y im po se s thr ee p rere qu is it es to anawardof e xc es s co st s. Fi rs t, the att orne y

or o th er p ract it io ne r (wit ho utdi st in ct io n, at to rn ey ) m us t en ga ge in"u nr eas on ab le an d v ex at io us " co nduc t. Sec on d, tha t " un reas on ab le an d ve xa ti ou s" co nduc t m

us t b e co nduc t tha t " m

ul ti pl ie s the pro ceed in gs ." Fi na ll y , th e do ll ar am ou ntof t he san ct io n m us t b ear afin an ci al ne xu s t o the ex ces s pr oc eed in gs ; i .e., th e sa nc ti on m ay no t ex ceedth e 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 . See Gil le sp ie v. Co m mis si on er, T.C. Mem o. 2 00 7- 20 2, 2 00 7 WL 21 20 06 9, at*1 0, af f'd , 29 2 F . App 'x 5 17 (7t h Ci r. 20 08 ). B. Unr eas on ab le an d Vex at io us Co nduc t The pu rp os e o f se ct io n 6 67 3( a)(2 ) is to pe na li ze an att orne y forhi s m is co nduc t i n unr eas on ab ly andve xa ti ou sl y m ul ti pl y in g the pro ceed in gs . Co ng res s h as no t, h owe ve r, sp eci fie d the de gr ee o f cu lp ab il ity th atanatt orne y m us t ex hi bi t b efo re we m ay co nc lu de th athi s co nduc t i n m ul ti pl y in g the pr oc eed in gs is un reas on ab le an d v ex at io us . W e h av e p rev io us ly reli edon in te rp ret at io ns of 2 8 U.S.C. s ec. 1 92 7 (2 01 2) to asc ert ai n m is co nduc t ju st ifyin g- 11 -

[* 11 ] sa nc ti on s u nd er s ect io n 6 67 3( a)(2 ) be cau se bo thserve th e sa m e p ur po se an d ha ve subs tant ia ll y

id en ti cal lan gu ag e. See, e.g ., Takab a v . Comm is si on er, 1 19 T.C. 28 5, 2 96 -2 97 (20 02 ); Gi ll es pi e v . Comm is si on er, 2 00 7 WL 21 20 06 9, at*1 0. The Co urts of Ap pe al s ar e n otun ifo rm on th e le ve l o f m is co nduc t re qu ire d fo r sa nc ti on s. Mo reo ve r, ap pe ll at e v enue reg ard in g s ect io n 6 67 3( a)(2 ) is un cert ai n. Venue forap pe al of Tax Co urt d eci si on s i s g ov ern edby sect io n 7 48 2( b) . The ve nu e fo r ap pe al is li ke ly eith er the Co urt o f App eal s fo r th e Nin thCir cu it (b ecau se of t he leg al res id en ce o f pe ti ti on ers ), se e se c. 74 82 (b )(1 )(A), o r th e Co urt of App eal s fo r th e Dis tri ctof C ol um bi a Ci rcu it , see sec . 74 82 (b )(1 ) (fl us h lang ua ge ). The C ourt o f App eal s fo r th e Nin th Cir cu itis am on g the m ajor ity of th e Co urts of Ap pe al s re qu iri ng a sh owi ng of b adfai th . See Mo or e v . Keeg an Mg t. Co . (Inre Keeg anMg m t. Co . Sec. Lit ig .), 78 F.3d43 1, 4 36 (9t h C ir. 1 99 6) (s ta ti ng th at28 U.S.C. sec . 19 27 san ct io ns m us t b e supp orte d b y

a fi nd in g o f subjec ti ve ba d fa ith) . Butitha s h el d tha t b adfai th is sh own when anatt orne y "kno win gl y

or r eck le ss ly" rais es a fri vo lo us arg um en t. Id . The Co urt o f App eal s fo r th e Dis tri ctof C ol um

bi a Ci rcu itm ay

requi re o nl y

a sh owi ng of r eck le ss ne ss . See LaP rad e v . Kid de r Peabo dy & Co., 1 46 F.3d89 9, 9 05 (D.C. Cir . 19 98 ) ("Th is co urt h as no t yet es tabl is he d wh ethe r th e st an da rdforim po si ti on of s an ct io ns un de r 28 U.S.C. § 1 92 7 s ho ul d b e 'rec kl es sn es s' o r th e m or e st rin ge nt'ba d fa ith.'" );- 12 -

[* 12 ] Dov er v . Med st ar Wash . Hos p. Ct r., Inc ., 98 9 F . Sup p. 2 d 5 7, 6 3 (D.D.C. 20 13 ) (rep eat in g C ou rt o f App eal s' a dm on it io n) . Becau se we are u ns ur e o f ap pe ll at e v enue , andbe cau se we fin d tha t M r. Mac Ph ers on 's c on du ctwou ld co ns ti tu te ba d fa ith u nd er the Co urt o f App eal s fo r th e Nin th Cir cu it 's t es t fo r ba d fai th , we wil l fo r pu rp os es of t hi s ca se (an d wi th ou t d eci di ng th e st an da rdinth is Co urt), a do ptth atst an da rd . See Tak ab a v . Comm is si on er, 1 19 T.C. at 2 98 . W e h av e al ready

fou ndth atpe ti ti on ers ' as si gn m en ts of e rro r are fri vo lo us an d g ro un dl es s an d wer e rai se d p rimaril y for de lay . See Be stv. Co m

m is si on er, at *2 1. We bel ie ve th atMr. Ma cPh ers on in te nt io na ll y ab us edth e jud ic ia l p ro ces s b y br in gi ng an d c on ti nu in g thi s ca se on be ha lf o f pe ti ti on ers kn owi ng th ei r cl ai m s t o be witho utm eri t. In de ed , by hi s o wn d ecl arat io n s ub m it te d i n s up po rt o f pe ti ti on ers ' res po ns e to res po nd en t's m ot io n t o i m po se san ct io ns on pe ti ti on ers , Mr. Ma cPh ers on ap pe ars to co nc ed e th atat l eas t o ne of p et it io ne rs ' as si gn m en ts was fri vo lo us . Id. at*2 3. He s ta te s tha t h e "c on cl ud edm an y y ears ag o tha t the '23 C is su e' was a 'de adlet te r' in so far as ob ta in in g the 23 C," i d., an d yet, as de sc rib edsupr a, he ass ig ne d e rro r rel at edto Fo rm 23 C. Desp it e Mr. Mac Ph ers on 's n ow ar gu in g tha t i t was no t a c on ces si on , hi s s ta te m en t, al on g wi th cas es cit edinth e p et it io n, d em on st rat es anawaren es s o n h is part t ha t p et it io ne rs are n otleg al ly ent it le d t o any part ic ul ar d oc um en t fo r se ct io n 6 20 3 p ur po se s. Mr .- 13 -

[* 13 ] Mac Ph ers onkn owi ng ly rais eda fri vo lo us arg um en t b y arg ui ng othe rwis e, an d s o h e act edinba d fa ith. Se e Keeg anMg m t. Co ., 78 F.3dat 4 36 . Mo reo ve r, as to pe ti ti on ers ' rem ai ni ng ass ig nm en ts of e rro r, m on th s b efo re res po nd en t m ad e h is m ot io n fo r su m m ary jud gm en t re sp on de nt 's c ou ns el pu t M r. Mac Ph ers on on no ti ce tha t re sp on de ntco ns id eredth os e arg um en ts fri vo lo us an d co nt rary to es tabl is he d l aw. At Mr. M acPh ers on 's re qu es t, re sp on de nt 's c ouns el pr ov id edto hi m

th e au th or ity

on whi chco un se l re li ed . Andso Mr. Ma cPh ers on ha d fu rth er kno wled ge th athi s cl ai m s wer e wit ho utm eri t. C. Mu lt ip li cat io n o f th e Pro ceed in gs Inth e fac e o f bo th th e au th or ity Mr. Ma cPh ers on kn ew atth e ti m e th e pe ti ti on was fi le d andth e au th or ity pro vi de d b y

res po nd en t's co un se l, Mr . Mac Ph ers on pe rs is te d. At n o p oi ntdi d h e co nc ed e an y of h is ass ig nm en ts of 3
One of t he au th or it ie s re sp on de nt 's c ou ns el bro ug htto hi s at te nt io n was 3 Nes to r v. C omm is si on er, 1 18 T.C. 16 2, 1 66 (20 02 ) ("S ect io n 6 33 0( c)(1 ) do es no t requi re the App eal s o ffi cer t o g iv e th e ta xp ay er a co py of th e v eri fic at io n tha t the requi rem en ts of a ny app li cab le law o r admin is tra ti ve pro cedur e h av e b eenm et ."). Mr. Ma cPh ers on po in ts to Ju dg e Fo le y 's d is se nt in g o pi ni on , id . at 1 79 -1 80 , in whi chhe op in edth atth e App eal s Off ic er's ve rif

ic at io n was erro ne ou s b ecau se he ha d n otco m

pl ie d wi th th e requi rem en t o f se c. 62 03 th at , up on hi s re qu es t, "t he Secr et ary sh al l fu rn is h the tax pay er a co py of th e rec or d o f th e as se ss m en t." The fact s h ere a re d is ti ng ui sh ab le , bec au se Ms . Hern an de z p ro vi de d p et it io ne rs with acco un t tran sc rip ts co nt ai ni ng th e "p ert in en t p art s o f th e as se ss m en t" , whi chis all th atis requi redby sec. 3 01 .62 03 -1 , Pro ced . & Adm in . Reg s. Inany cas e, th e di ss en ti ng op in io n was no t tha t ad op te d b y th e Co urt.- 14 -

[* 14 ] erro r. It was reck le ss an d u nr eas on ab le of M r. Mac Ph ers on to di sr eg ardth e au th or ity res po nd en t's co un se l b ro ug htto hi s at te nt io n andto co nt inue pro se cu ti on of pe ti ti on ers ' m eri tl es s cl ai m s. Mr. Ma cPh ers on furth er m ul ti pl ie d the pro ceed in gs an d v ex at io us ly im pe de d the res ol ut io n o f th is cas e b y ob jecti ng to res po nd en t's m ot io n fo r su m m ary jud gm en t o n the gro un ds th atth ere was a ge nu in e d is pu te as t o m at eri al fact s an d the n, i n l es s tha n aweek , rev ers in g c ou rs e an d s ug ge st in g tha t the parti es subm itth e cas e to th e Co urt fu ll y st ip ul at edun de r Ru le 12 2 o r m ak e cro ss m ot io ns forsu m

m ary jud gm en t. Inres po ns e to th e o rd er t o s ho w cau se , he s ta te s th athi s re as on forwant in g atri al was t o a ll ow p et it io ne rs to tes ti fy inde fen se to th e se ct io n 6 67 3( a)(1 ) pe na lty . He nev er m ad e th atcle ar t o the Co urt i n h is ob jecti onan d h as no t o ffer edanex pl an at io n fo r hi s al m os t i m m ed ia te ch an ge of m in d. Fi na ll y , we fin d M r. Mac Ph ers on to ha ve m ul ti pl ie d p ro ceed in gs inhi s res po ns e to ou r or de r to sh ow caus e. He subm it te d o ve r 40 0 p ag es pu rp orti ng to supp ort h is cla im

th atsan ct io ns are n otap pr op ria te , bu t m uc h o f itco ns is ts of M r. Mac Ph ers on 's p ers is te nc e wit h arg um en ts we ha ve alr eady to ldhi m are fr iv ol ou s. 4 Des pi te Mr. Ma cPh ers on 's i napp ro pr ia te pe rs is te nc e wit h fr iv ol ou s 4 arg um en ts , res po nd en t h as no t as ke d andwe wil l n otim po se on Mr. Ma cPh ers on

(co nt in ue d...)- 15 -

[* 15 ] D. Fi na nc ia l Nex us to Exce ss Pro ceed in gs The se pro ceed in gs ne ve r sh ou ldha ve be enbro ug ht . All o f res po nd en t's co st s ar e, th us , ina se ns e, ex ces si ve . There is , ho wev er, s om e d is ag reem en t am on g the Co urts of Ap pe al s i n i nt erp ret in g 2 8 U.S.C. s ec. 1 92 7 a s t o wh ethe r itis on ly pos si bl e to m

ul ti pl y , or p ro lo ng , th e p ro ceed in gs aft er a ca se ha s b een in it ia te d; pre su m ab ly becau se anatt orne y can no t b eg into m

ul ti pl y th e p ro ceed in gs un ti l s om e p ro ceed in g h as co m e in to ex is te nc e fo r th e at to rn ey to m ul ti pl y . Co m pa re Keeg anMg m

t. Co ., 78 F.3dat 4 35 (st at in g tha t 2 8 U.S.C. s ec. 1 92 7 "ap pl ie s o nl y

to un ne ces sa ry

fil in gs an d t act ic s o nc e a l aws ui t h as be gu n" ), with In re TCI Lt d., 7 69 F.2d44 1, 4 48 (7t h C ir. 1 98 5) (st at in g tha t, u nd er 2 8 U.S.C. s ec. 19 27 , tri al jud ge "h adth e au th or ity to awardth e fee s i nc urredrig htfro m th e be gi nn in g" ). W e h av e n otad dr es se d the an al og ou s i ss ue un de r se ct io n 6 67 3( a)(2 ), an d we a re n otco m

pe ll edto do so to da y

bo th be cau se res po nd en t h as ask edon ly fo r ex ces si ve co st s as so ci at edwith the workbe gi nn in g m or e th ana y ear a fte r res po nd en t an swe redth e p et it io n andbe cau se , as d is cu ss edin fra, we fi ndMr. Mac Ph ers on in de pe nd en tl y san ct io nabl e und er Ru le 33 (b ).
(...co nt inue d) 4 ex ces s co st s fo r ti m e sp en t re ad in g andres po nd in g t o h is ov er 4 00 pa ge s o f subm is si on s.- 16 -

[* 16 ] II. Vio la ti on of Rul e 3 3( b) Mr. Ma cPh ers on ha s al so vi ol at edRu le 33 (b ) an d the ABA Mo de l Ru le s o f Pro fes si on al Co nduc t (M od el Ru le s) , whi ch , by Ru le 20 1( a), g ov ernhi s p ract ic e be fo re thi s C ou rt. Inpe rti ne ntpart, R

ul e 3 3( b) pro vi de s: (b ) Effec t o f Si gn atur e. The s ig na tu re o f co un se l * * * co ns ti tu te s a c ert ifi cat e b y th e si gn er tha t the si gn er h as readth e pl ead in g; th at , to th e b es t o f th e si gn er's kn owl ed ge , in fo rm at io n, an d be li ef fo rm edaft er re as on ab le in qu iry, it i s wel l g ro un de d i n fa ctan d is warran te d b y

ex is ti ng law o r a g oo d fa ith arg um en t fo r th e ex te ns io n, m od ifi cat io n, o r rev ers al of e xi st in g l aw; a ndth atitis no t in te rp os edforany

im pr op er p ur

po se , su chas t o h aras s o r to cau se un ne ces sa ry

de lay or n eed le ss in crea se inth e co stof l it ig at io n. * * * If a p le ad in g i s s ig ne d i n v io la ti on of t hi s R ul e, th e Co urt, upo n m ot io n o r up on it s o wn i ni ti at iv e, m ay im po se up on th e p ers on who si gn edit , a rep res en te d p arty , or b ot h, anap pr op ria te san ct io n, wh ic h m ay in cl ud e anord er t o p ay

to th e o th er p arty

or p art ie s the am ou ntof th e rea so nabl e ex pe ns es in cu rredbe cau se of the fil in g o f th e pl ead in g, i nc lu di ng reas on ab le co un se l's fees . Inpe rti ne ntpart, M od el Ru le 3.1 st at es : "A l awy er s ha ll no t b rin g o r de fen d a p ro ceed in g, o r as se rt o r co nt ro ve rt a n i ss ue th erei n, u nl es s the re i s a b as is inlaw an d fa ctfordo in g s o tha t i s n otfri vo lo us , whi chin cl ud es a go odfai th arg um en t fo r anex te ns io n, m od ifi cat io n o r rev ers al of e xi st in g l aw." As we ha ve alr eady st at ed , pet it io ne rs ' arg um en ts were fri vo lo us . W e fu rth er fi ndth atarg um en ts to m od ify or rev ers e ex is ti ng law wer e n otm ad e in go odfai th .- 17 -

[* 17 ] Pet it io ne rs arg ue d tha t s ect io n 3 01 .62 03 -1 , Pro ced . & Adm in . Reg s., i s in va li d anda de ni al of due pro ces s b ecau se , inres po ns e to a ta xp ay er's reque stfor a co py of th e rec or d o f th e as se ss m en t, s ee s ec. 6 20 3, the reg ul at io n re qu ire s o nl y th atth e Sec ret ary pr ov id e "the pe rti ne ntparts of t he ass es sm en t" , whi chdo no t in cl ud e th e as se ss m en t s ou rce d oc um en t (F orm 23 C o r RACS 0 06 ), in cl ud in g the na m e an d s ig na tu re o f th e as se ss m en t o ffi cer a ndth e d at e o f as se ss m en t. In 5 res po ns e, res po nd en t ar gu edth atpe ti ti on ers were b arre d fr om arg ui ng th e in va li di ty of th e reg ul at io n b ecau se th ey ha d n otrai se d the is su e dur in g the ir se ct io n 6 33 0 h eari ng an d the is su e p lay edno rol e inApp eal s' d et erm in at io n t o pr oc eedwith c ol le ct io n. Itis tru e th atwith ra re ex cep ti on we do no t h av e au th or ity to co ns id er i ss ue s tha t wer e n otrai se d b efo re Ap pe al s. See , e.g., Giam el li v. Co m

m is si on er, 1 29 T.C. 10 7, 1 15 (20 07 ) (und erl y in g l iabi li ty); Mag an a v . Comm is si on er, 1 18 T.C. 48 8, 4 93 -4 94 (20 02 ) (ab us e o f di sc ret io n) ; se cs . 30 1.6 32 0- 1( f)(2 ), Q&A-F3 , 30 1.6 33 0- 1( f)(2 ), Q&A-F3 , Pro ced . & Adm in . Reg s. Pri nc ip al ly for tha t re as on , we di d n otdi sc us s the va li di ty of th e reg ul at io n inou r pr io r rep ort. Inpe rti ne ntpart, s ec. 3 01 .62 03 -1 , Pro ced . & Adm in . Reg s., p ro vi de s: "If 5 th e ta xp ay er re qu es ts a co py of th e rec or d o f as se ss m en t, h e sh al l b e fu rn is he d a co py of th e p ert in en t p art s o f th e as se ss m en t wh ic h s etforth th e n am e o f th e ta xp ay er, the da te of a ss es sm en t, the ch arac te r of th e li ab il ity

ass es se d, the tax ab le pe rio d, i f ap pl ic ab le , andth e am ou nt s as se ss ed ."- 18 -

[* 18 ] Inan y

ev en t, ev enif the va li di ty of se ct io n 3 01 .62 03 -1 , Pro ced . & Adm in . Reg s., were pro pe rly befo re u s, p et it io ne rs ha ve m ad e n o p laus ib le arg um en t fo r it s i nv al id ity . The p ert in en t s en te nc e o f th e reg ul at io n, p ro vi di ng th atth e Secr et ary fu lfi ll s h is du ty to a t ax pa y er reque st in g aco py of th e rec or d o f as se ss m en t b y

furni sh in g h im

a co py of th e p ert in en t p art s o f th e as se ss m en t, h as be ena part o f th e reg ul at io n s in ce i ts pro m ul ga ti on in19 54 . See T.D. 61 19 , 19 55 - 1 C .B. 14 5, 1 49 -1 50 . The Co urt o f App eal s fo r th e Nin th Cir cu itha s s ta te d wi th res pe ctto th atsen te nc e: "Thi s re pr es en ts a pe rm is si bl e in te rp ret at io n o f se ct io n 62 03 , andwe are the refo re b ou ndto gi ve itde fere nc e." Ko ff v . Uni te d S ta te s, 3 F .3d12 97 , 12 98 (9t h C ir. 1 99 3) . Also , nu m ero us cas es ho ldth at , to sat is fy a ta xp ay er's sec ti on62 03 reque stforth e rec or d o f th e as se ss m en t, the Secr et ary ne edno t p ro vi de ori gi na l d oc um en ts , su chas aFo rm 23 C, RACS 0 06 , or the na m e an d s ig na tu re o f th e as se ss m en t o ffi cer. E.g., Go od m anv. Un it edSta te s, 1 85 F. App 'x 7 25 , 72 8 (1 0t h C ir. 2 00 6) ("No parti cu lar fo rm or d oc um en t i s n eed edto sa ti sf y th e requi rem en ts of I .R.C. § 62 03 an d Tre as ury Reg ul at io n § 30 1.6 20 3- 1. In st ead , an a ss es sm en t re co rdis su ffi ci en t i f itpro vi de s the tax pa y er wi th th e requi redin fo rm at io n.); Niem el a v . Uni te d S ta te s, 9 95 F.2d10 61 (1s t Ci r. 19 93 ) (unp ub li sh edtab le de ci si on ) (ci ti ng Gent ry ); Ge nt ry v. Un it edSta te s, 9 62 F.2d 55 5, 5 58 (6t h C ir. 1 99 2) ("Th e Treas ury Reg ul at io ns sp eci fy

th atth e ta xp ay er i s- 19 -

[* 19 ] en ti tl edto a co py of th e p ert in en t p art s o f th e as se ss m en t d oc um en ts * * * [an d] [n]ei th er the Tax C od e n orth e Treas ury Reg ul at io ns requi re tho se pe rti ne nt pa rts to be ori gi na l d oc um en ts [.]"); Un it edSta te s v . Hart, 9 17 F.2d26 (7t h C ir. 19 90 ) (u np ub li sh edtab le de ci si on ) (s ta ti ng th atth e la w is set tl edth atth e Gov ern m en t d oe s n otha ve to pro du ce o rig in al do cu m en ts to co m pl y with s ect io n 62 03 an d s ect io n 3 01 .62 03 -1 , Pro ced . & Adm in . Reg s.); Bat tl e v . Commis si on er, 20 09 W L 21 51 78 6, at*5 . The l on g e xi st en ce o f se ct io n 3 01 .62 03 -1 , Pro ced . & Adm in . Reg s., an d the weig htof autho rit y co ntrary to p et it io ne rs ' arg um en t tha t th e reg ul at io n i s i nv al idlea d u s t o c on cl ud e th atpe ti ti on ers di d n otm ak e th ei r co nt rary argu m en t i n g oo d fa ith. Whi le Mr. Ma cPh ers on m ay be di ss at is fie d tha t Co ng res s h as no t g iv en ta xp ay ers cart e b lanc he to sea rch th e Co m mis si on er's reco rd s wh enth e Co m m is si on er m

us t t ak e act io n t o c ol le ctunpa idtax es , pe ti ti on ers have no leg al 6 Inhi s d ecl arat io n s ub m it te d i n s up po rt o f pe ti ti on ers ' res po ns e to 6 res po nd en t's m ot io n t o i m po se san ct io ns on pe ti ti on ers , Mr. Ma cPh ers on st at es th at , si nc e p et it io ne rs "h ada m ajorco ll ect io n p ro bl em * * * [h e] deci de d t o try

th e as se ss m en t i ss ue be li ev in g the re i s s om e ch an ce o f la ckof p ro pe r as se ss m en t whi chwil l re su ltinvo id in g the ass es sm en t an d c au si ng * * * [p et it io ne rs ] to be free of the de btas ares ul t o f th e st atut e o f li m it at io ns ". See Bes t v . Co m m is si on er, T.C. Mem o. 2 01 4- 72 , at * 23 . W e d o n otdi rect ly addres s wh ethe r th e as se ss m en t was pro pe r bu t, ra th er, wh ethe r Ms . Hern an de z co m pl ie d wi th sec . 63 30 (c)( 1) an d (3 )(A) an d wh ethe r pe ti ti on ers rece iv ed"a co py of th e p ert in en t (co nt in ue d...)- 20 -

[* 20 ] gr ou nd s t o c om

pl ai n abo utMs . Hern an de z's tre atm en t o f th em or Ap pe al s' res ul ti ng de te rm in at io n t o p ro ceedwith c ol le ct io n. Mr . MacP he rs onha d n o b as is infactan d i n l aw fo r br in gi ng th is pro ceed in g andsi gn in g the pe ti ti on . "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 rea so nabl e in qu iry int o the vi ab il ity of apl ead in g b efo re i t i s s ig ne d. " Verst eeg v. Co m m is si on er, 9 1 T.C. 3 39 , 34 3 (1 98 8) . Mr. Mac Ph ers on ha s s ig ne d p le ad in gs an d o th er p ap ers to bri ng an d d efen d the se pro ceed in gs kn owi ng pe ti ti on ers ' cl ai m s t o b e m eri tl es s. He has do ne so invi ol at io n o f ou r Ru le s an d the Mo de l 7 Ru le s an d, thu s, h as in te nt io na ll y ab us edth e jud ic ia l p ro ces s. We m ay san ct io n hi m forth atco nduc t. Acco rd in gl y , san ct io ns sh ou ldbe im po se d o n M r. Mac Ph ers on un de r bo th se ct io n 6 67 3( a)(2 ) an d R ul e 3 3( b) forfil in g the pe ti ti on an d m ul ti pl y in g the pr oc eed in gs un reas on ab ly andve xa ti ou sl y . Becau se on ly friv ol ou s i ss ue s wer e rai se d, the bri ng in g o f th is cas e in an d o f it se lf wa s n othi ng m or e th ana m eri tl es s (...co nt inue d) 6 pa rts of the ass es sm en t" , whi chis all th atth ey were en ti tl edto un de r se c. 30 1.6 20 3- 1, Pr oc ed . & Adm in . Reg s. The pl ead in gs an d p ap ers we ha ve inm in d are the pe ti ti on , pet it io ne rs ' 7 br ie f, pe ti ti on ers ' rep ly brie f, pe ti ti on ers ' res po ns e to res po nd en t's m ot io n t o im po se a pe na lty , supp le m en t t o p et it io ne rs ' res po ns e to res po nd en t's m ot io n t o im po se a pe na lty , pet it io ne rs ' m ot io n fo r rec on si de rat io n, an d p et it io ne rs ' no ti ce o f rel ev an t ju di ci al de ci si on s.- 21 -

[* 21 ] ta ct ic requi rin g the us e o f Gov ern m en t an d C ourt r es ou rces th atco ul d ot he rwis e h av e b eenap pl ie d t o h ear l eg it im at e ta xp ay er co nc ern s. Re sp on de ntis en ti tl edto hi s at to rn ey 's fe es in cu rredinde fen di ng th is cas e. The t act ic s M r. Mac Ph ers on em

pl oyed i n thi s ca se were d es ig ne d t o i m pe de res po nd en t's le gi ti m at e eff

orts to co ll ectpe ti ti on ers ' unpa id19 93 an d 1 99 4 t ax es . III. Am ou ntof S an ct io ns One op ti on for

de te rm in in g the am ou ntof s an ct io ns to im po se on Mr. Mac Ph ers on is to fol lo w whatwe sa idinHarp er v . Comm is si on er, 9 9 T.C. 5 33 , 54 9 (1 99 2) : "At to rn ey 's fe es award edun de r se ct io n 6 67 3( a)(2 ) are to be co m pu te d b y m ul ti pl y in g the nu m

be r of ex ces s h ours reas on ab ly exp en de d o n the li ti ga ti on by a reas on ab le ho ur ly rate. The pro du ctis kn own as t he 'lo de st ar' am ount ." W e o rd eredres po nd en t t o p ro vi de us with aco m pu ta ti on of c os ts to as si stus inco m

pu ti ng a lo de st ar am ou nt . In tha t re gard , res po nd en t h as pro vi de d us with d ecl arat io ns of At to rn ey s B ran do n A. Kei m an d Do reen M. Su si . Atta ch ed to bo th de cl arat io ns are co pi es of r es po nd en t's in te rn al ti m ek eep in g re co rd s, sh owi ng th e ti m e ex pe nd edon th is cas e b y , am on g o th ers , Mr. Kei m an d M s. Su si . Res po nd en t s ub m it s fo r rei m bu rs em en t 1 15 .25 ho ur s o f Mr. Kei m 's t im e at $1 50 anho ur . Mr. Keim

is th e at to rn ey

with d ay -to -d ay

res po ns ib il ity

forth is cas e. He is em

pl oyed i n the Offic e o f Ch ie f Co un se l i n P ho en ix , Arizo na . He has- 22 -

[* 22 ] be enadm it te d t o p ract ic e la w inAriz on a si nc e 2 01 1. He h as de ta il edti m e sp en t o n thi s ca se si nc e Janu ary 28 , 20 12 , whi chin vo lv es ti m e sp en t o n re se arch , dr aft in g, t el ep ho ne cal ls , andrev ie w of s ub mis si on s t o the Co urt. Res po nd en t al so subm it s fo r rei m

bu rs em en t 1 2.7 5 h ours of M s. Su si 's t im e at$2 00 anho ur . Ms. Su si is Mr. Kei m 's s up erv is or . She is anAss oc ia te Area Co un se l i n the Offic e o f Ch ie f Co un se l i n P ho en ix , Arizo na . She ha s b eenem pl oyed b y th atoff ic e si nc e 19 83 . She ha s d et ai le d t im e sp en t o n thi s ca se si nc e Apr il 7, 2 01 2, wh ic h pr in ci pa ll y

in vo lv es rev ie w of v ari ou s s ub m is si on s t o the Co urt. Mr. Ma cPh ers on do es no t ch al le ng e th e rea so nabl en es s o f ei th er Mr . Keim 's orMs . Sus i's ho ur ly rates . For t he m os t p art , he a ls o d oe s n otch al le ng e th e ti m e sp en t b y eit he r Mr. Kei m

or M s. Su si . He clai m s tha t re sp on de ntdi d n otpro vi de ti m e sh eet s/reco rd s s ho win g t im e ex pe nd ed . Thatcla im is un tru e. Res po nd en t's in te rn al ti m ek eep in g re co rd s wer e at ta ch edto bo thMr. Kei m 's andMs . Sus i's de cl arat io ns . He als o arg ue s tha t M r. Keim 's e xp en di tu re o f 27 ho ur s t o p rep are a m ot io n fo r su m

m ary jud gm en t an d m ot io n fo r co nt in ua nc e, an d M s. Su si 's ex pe nd itur e o f 2.2 5 h ou rs to rev ie w th os e m ot io ns were n otreas on ab le or ne ces sa ry : "No awardsh ou ldbe pro vi de d fo r ti m e ex pe nd edre the us el es s M SJ ". W e d o n otfin d 2 7 h ou rs ex pe nd edto pre pa re a m ot io n fo r su m m ary jud gm en t an d am ot io n fo r co nt in ua nc e to be un reas on ab le . Andth e o nl y reas on- 23 -

[* 23 ] th atm ot io n was "u se le ss " was th atMr. Ma cPh ers on rep res en te d t o res po nd en t an d the Co urt tha t tria l was ne ces sa ry as t he re were ge nu in e is su es of factto be tri ed . As we h av e al read y st at ed , th atrep res en tati onwas qui ck ly refut ed whe n, fi ve day s l at er an d a fte r we d en ie d the m ot io ns , Mr. Ma cPh ers on su gg es te d th atth e p art ie s s ub m itth e cas e to th e Co urt fu ll y st ip ul at edun de r Ru le 12 2. If M r. Mac Ph ers on ha d n otm ad e h is in it ia l re pr es en ta ti on , we cou ldha ve ful ly reso lv ed th e cas e th ro ug h re sp on de nt 's m ot io n fo r su m m ary jud gm en t. An d s o M r. Mac Ph ers on pro lo ng edth es e p ro ceed in gs ev enfurth er. W e al so fin d 2 .25 ho ur s ex pe nd edto rev ie w a m ot io n fo r su m m ary jud gm en t an d m ot io n fo r co nt in ua nc e to be reas on ab le . Mr. Ma cPh ers on kn ew orsh ou ldha ve kn own th atth is cas e sh ou ldne ve r ha ve be enco m

m en ced . Andforth atreas on , we are i nc li ne d t o h ol d tha t M r. Mac Ph ers on is li ab le forall of t he ti m e sp en t b y res po nd en t, n otto m en ti on ti m e ex pe nd edby the Co urt i n p ro ces si ng an d re vi ewin g a ll of M r. Mac Ph ers on 's subm is si on s. We will li m itou r sa nc ti on s, h owe ve r, to th e lo de st ar am ou nt subm it te d b y

res po nd en t: 11 5.2 5 h ou rs of M r. Keim 's t im e at$1 50 /h ou r an d 1 2.7 5 ho ur s o f Ms . Sus i's ti m e at$2 00 /h ou r equa ls $1 9,8 37 .50 . W e wil l s an ct io n M r. Mac Ph ers on an d re qu ire hi m to pay th atam ou nt .- 24 -

[* 24 ] IV. Sect io n 6 67 3( a)(1 )(B) Pen al ty Im po se d o n P et it io ne rs InMr. Ma cPh ers on 's re sp on se to th e o rd er t o s ho w cau se , he c on ti nu es to ad dr es s the sec ti on 66 73 (a)( 1) pe na lty th atwe de te rm in edto im po se on pe ti ti on ers . See Be stv. Co m m is si on er, at*2 2. We will bri efl y ex pa ndonou r reas on s fo r im

po si ng th e p en al ty. Sect io n 6 67 3( a)(1 )(B) all ows th e Tax Co urt t o s an ct io n t ax pa y ers for adva nc in g fr iv ol ou s o r gr ou nd le ss po si ti on s. Inou r pr io r rep ort, we s ta te d tha t rel ianc e o n the advi ce o f co un se l i s n ota de fen se to th e im po si ti on of asec ti on 66 73 (a)( 1) (B) p en al ty. Bes t v . Comm is si on er, at*2 2. Mr . MacP he rs on po in ts ou t th atinNeon at ol og y

Ass oc s., P.A. v. C omm is si on er, 1 15 T.C. 43 , 10 3 (2 00 0) , aff'd , 29 9 F .3d22 1 (3 d C ir. 2 00 2) , we all owe d ju stsu cha de fen se . Thatis tru e. Inth atcas e, th e Co m

m is si on er m ov edforth e sa nc ti on , onth e b as is inpart o f th e ta xp ay ers ' co un se l's li ti ga ti onco nduc t, i .e., "co nt es t[i ng ] un reas on ab ly the adm is si bi li ty of do cu m en ts ", "f ai l[i ng ] to co m

pl y ful ly w ith d is co ve ry

reque st s," un reas on ab ly call in g c ert ai n wi tn es se s, an d " un reas on ab l[y] * * * d efen d[ in g] ag ai ns t (1 ) res po nd en t's m ot io n t o c om pe l d oc um en ts * * * an d (2 ) res po nd en t's of fer o f ev id en ce as to cert ai n m ark et in g m at eri al s an d o th er ev id en ce." Id. at10 2. W ith re sp ectto th os e g ro un ds , we sai d:- 25 -

[* 25 ] Pet it io ne rs are n otdi rect ly resp on si bl e fo r m os t o f th e act io ns li st ed by resp on de ntinsupp ort o f hi s m ot io n t o i m po se pe na lt ie s. Th os e act io ns are b es t trace d t o p et it io ne rs ' co un se l, an d, g iv enth e fac ts of th is cas e, we de cl in e to im pu te th e act io ns of p et it io ne rs ' co un se l t o pe ti ti on ers th em se lv es forth e p ur po se s o f im

po si ng a pe na lty

un de r se ct io n 6 67 3( a)(1 )(B) . Peti ti on ers ha ve reas on ab ly reli edon th e advi ce o f th ei r tr ia l co un se l tha t the ir l it ig at in g p os it io ns ha d m eri t. * * * [I d. at10 3.] The fact s tha t wer e b efo re u s i n Neo na to lo gy Asso cs . are d is ti ng ui sh ab le fro m th e fac ts he re b efo re u s. We are n othe re d eal in g wi th tax pa y ers rel y in g o n co un se l fo r ho w to co nduc t l it ig at io n. We are d eal in g wi thpe ti ti on ers ' de ci si on s to bri ng th is cas e in th e fi rs t p la ce an d the n t o m ai nt ai n i t. The ir d ecl arat io ns , set fo rth inpart i n B es t v . Comm is si on er, at*2 1- *2 2, m ak e itcle ar tha t i t was no t th ei r id ea t o ra is e b efo re Ap pe al s an d i n thi s C ou rt t he is su es with re sp ectto whi ch th ey ass ig ne d e rro r. Eachde cl ares : "I have rel ie d t ot al ly on the tax advi ce o f MACP HERSON co nc ern in g m y Co ll ect io n Du e Pro ces s Hea rin g * * * reque st , pe ti ti on to th e Tax Co urt, an d Tax Co urt l it ig at io n." Id. (a lt erat io n i n o rig in al ). Pet it io ne rs ' as si gn m en ts of e rro r ch al le ng e es tabl is he d l aw. Neithe r de cl ares th at he (orsh e) ei th er re adth e p et it io n o r as ke d M r. Mac Ph ers onab ou t i ts co nt en t. As we sa id , id . at * 22 , "[we] nee d * * * [no t] exc us e a t ax pa y er's fai lu re t o re vi ew pl ead in gs an d o th er d oc um en ts fil edon hi s b eh al f." Als o: "The pu rp os e o f se ct io n 6 67 3 i s t o c om

pe l t ax pa y ers to th in k andto co nf orm th ei r co nduc t t o- 26 -

[* 26 ] set tl edpri nc ip le s b efo re the y fil e returns an d l it ig at e." Id . W e h av e n o ev id en ce tha t p et it io ne rs ful fil le d tho se ob li ga ti on s. Pet it io ne rs m ay no t b li nd ly rel y on co un se l t o a dv an ce ar gu m en ts an d u se ig no ran ce as a sh ie ldto av oi d a se ct io n 6 67 3( a)(1 )(B) pe na lty . W e co nt in ue to be li ev e th atpe ti ti on ers sh ou ldpay a se ct io n 6 67 3( a)(1 ) pe na lty of $ 5,0 00 to th e Uni te d S tate s i n thi s ca se . 8 V. Co nc lu si on W e wil l m ak e ab so lu te th e o rd er t o s ho w cau se inth atwe wil l awa rdth e Uni te d S tate s $ 19 ,83 7.5 0 a s a p en al ty im po se d a ga in stMr. Ma cPh ers on un de r se ct io n 6 67 3( a)(2 ). The ord er t o s ho w cau se wil l b e m ad e ab so lu te .

Res po nd en t i nf

orm edMr. Ma cPh ers on th atpe ti ti on ers ' po si ti on was 8 fri vo lo us , andMr. Ma cPh ers onha d adu ty to i nf orm pe ti ti on ers of r es po nd en t's po si ti on . See Ru le 20 1( a); Mo de l Ru le s o f Pro f'l Co nduc t r. 1 .4. Itsh ou ldha ve be enpe ti ti on ers ' de ci si on as t o wh ethe r th ey want edto pro ceedwith arg um en ts th atres po nd en t re ga rd edas f riv ol ou s. See Mo de l Ru le s o f Pro f'l Co nduc t r. 1.2 (a), 1 .4. If M r. Mac Ph ers ondi d n otco m m un ic at e su chim

po rta ntin fo rm at io n to pe ti ti on ers , th atm ay

res ol ve a m at te r be twee n the m , bu t i t d oe s n otdi sc ha rg e pe ti ti on ers ' ob li ga ti on s b efo re thi s C ou rt. Se e Uni te d S ta te s v . Boyle, 4 69 U.S. 24 1, 2 50 (19 85 ).