TAX COURT OPINION

Case: Randy Lee Lother
Docket Number: 26538-11
Judge: Buch
Opinion Type: bench
Filed: 05/07/2013
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 RANDY LEE LOTHER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) O R D E R Docket Nos. 26538-11, 9392-12. Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit with this Order to both petitioner and respondent a copy of the transcript of findings of session at St. Paul, Minnesota. fact and opinion that was rendered at the trial the trial those pages of in these cases that contain the oral In accordance with the oral findings of fact and opinion, decisions will be entered for respondent. (Signed) Ronald L. Buch Judge Dated: Washington, D.C. May 7, 2013 SégyED MAY - 8 2013 Capital Reporting Company 3 1 Bench Opinion by Judge Ronald L. Buch 2 April 25, 2013 3 4 5 6 7 8 9 Randy Lee Lother v. Commissioner Docket Nos. 26538-11; 9392-12 THE COURT: The Court has decided to render oral findings of fact and opinion in this case, and the following represents the court's oral findings of fact and opinion. The oral findings of fact and opinion may not be relied upon as precedent 10 in any other case. This opinion is in conformity 11 with Internal Revenue Code section 7459(b) and rule 12 13 14 15 152(a) of the Tax- Court Rules of Practice and Procedure. Any section references that follow refer to the internal revenue code in effect during the years at issue, and rule references are to the Tax 16 Court Rules of Practice and Procedure. 17 18 19 20 21 22 23 24 25 The Court called this case on April 22, 2013, and both parties appeared. This consolidated case actually involves two separate notices of deficiency, two separate years, and two separate docket numbers. Docket number 26538-11 involves a statutory notice of deficiency signed by Richard Guernsey and dated August 15, 2011 relating to 2008. Docket number 9392-12 involves a notice of deficiency signed by 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 Bill Bankowsky and dated January 9, 2012 relating to 2 3 4 5 6 7 8 9 10 11 12 13 14 15 2009. As its first order of business, the Court asked the parties whether they had completed any stipulations, and they had not. So with the Court's assistance, the parties worked through a series of stipulations. In total, the Court worked through three sets of stipulations, all of which had originally been prepared before the cases were consolidated. The stipulations were revised by the parties on the record, revisions were signed or initialed by the parties, and three sets of stipulations were accepted by the Court. The stipulations included copies of the notices of deficiency, and most importantly, declarations of 16 Maureen Green, docket number 26538-11 exhibit 3-J and 17 Bill Bankowsky, exhibit 4-J. These exhibits explain 18 19 20 21 22 23 24 25 to whom the authority to sign a notice of deficiency was delegated. The information regarding to whom authority is delegated was important because Mr. Lother's only argument was that the people who signed the notices of deficiency lacked the authority to do so. Other than the stipulations, Mr. Lother offered no evidence. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 What was clear at the time of trial is that Mr. 2 3 4 5 Lother had not reviewed the proposed stipulations. Before consolidation, Respondent had filed moti-ons under Rule 91(f) in both cases, and according to Respondent's motions, those stipulations had 6 originally been sent to Mr. Lother on January 8, 7 8 9 2013. Yet, it was only after reviewing the stipulations on the record that Mr. Lother realized that the 2009 notice of deficiency had been signed by 10 Bill Banowsky, and not by Mr. Guernsey. Seeing his 11 12 13 14 15 16 17 puzzlement, the Court showed Mr. Lother his original petition in docket no. 9392-12 from the Court's file, and it included the notice of deficiency that Mr. Lother had mailed to the Court, which had been signed by Mr. Bankowsky. After reviewing this material for what appeared to be the first time, Mr. Lother appeared to 18 withdraw his delegation of authority argument, which 19 20 21 22 23 24 25 was appropriate, given that the declarations clearly resolve the issue. He presented no other arguments and no evidence concerning errors in the notice of deficiency. Next, Respondent's counsel asked the Court to impose a sanction under section 6673 of the Internal Revenue Code. That provision authorizes the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 Court to impose a penalty of up to $25,000 if a 2 3 4 proceeding is begun or continued for the purpose of delay or to perpetuate frivolous arguments. Respondent's principal position appeared to be that 5 Mr. Lother was advancing frïvolous arguments. 6 7 8 9 Whether IRS personnel 'have acted outside their delegated authority can be consequential. See, e.g., In re Klee, 216 B.R. 42, 44-45 (Bankr. D. Ore. 1997). The Court does not fault Mr. Lother for 10 merely having raised the delegation of authority 11 12 13 14 15 16 17 18 19 20 21 22 23 argument. Where Mr. Lother can be faulted, however, is for not having read the materials that were sent to him that clearly answer the question. The Court could impose on Mr. Lother a penalty for delay. Once the information was provided to him in January, he should have abandoned this argument. But to his credit, once the Court called the information to his attention, he did not perpetuate the argument. It also should be noted that the Court has not identified a prior proceeding in which Mr. Lother presented frivolous arguments or was warned about possible sanctions under section 6673. When asked, respondent's counsel could not identify one, either. 24 Accordingly, the Court will not sanction Mr. Lother 25 here. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 The Court warned Mr. Lother on the record, and restates it here in this bench opinion, that perpetuating frivolous arguments or causing needless delay of a proceeding before this Court may subject him to sanctions in the future. Tsith his delegation of authority issue resolved and having raised no other issues decisions will be entered for respondent. (Whereupon, at 9:09 a.m., the above- entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com