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Frivolous Appeals to Delay Collection Actions Bring Stiff Tax Court Penalties

IR-2003-28, March 11, 2003

WASHINGTON  — Thirty-eight persons who attempted to delay tax collections by pursuing frivolous court cases ended up with $126,000 in penalties during the last two years. The Internal Revenue Service warns that the Tax Court may impose sanctions of up to $25,000 on those who misuse their right to a court review of IRS collection procedures merely to stall their tax payments.

“Taxpayers have rights that they should invoke when appropriate,” said IRS Chief Counsel B. John Williams.  “But those who would abuse those rights to stall tax collections should realize that they may incur substantial penalties.”

The IRS Restructuring and Reform Act of 1998 set forth various taxpayer rights related to tax liens or levies, including the right to seek judicial review. While an appeal is pending, the IRS usually may not enforce collection.

In December 2000, the Tax Court warned taxpayers that it would impose penalties against those who “institute or maintain a lien or levy action primarily for delay or whose position in such a proceeding is frivolous or groundless” (Pierson v. Commissioner, 115 T.C. 581). Such positions contend that the income tax is not valid, that the person or type of income is not subject to the tax, or espouse other arguments that the Court has previously rejected as baseless.

The Court has repeatedly stated that frivolous cases waste its limited resources and delay the resolution of other taxpayers’ genuine controversies. Using its authority under Internal Revenue Code Section 6673, it is levying increasingly severe penalties on those pursuing such cases. 

The final section of a document called The Truth about Frivolous Tax Arguments, lists a number of cases that have incurred penalties. The document presents 21 frivolous assertions, along with a summary of the law and relevant legal decisions involving these false claims. 

The table below is a list of Section 6673 penalties imposed in Collection Due Process cases by the Tax Court. To read specific opinions, use the petitioner's last name to search in the Tax Court's Historical Opinion area.

Case

Citation

Penalty

TCM refers to Tax Court Memorandum Decision
TC refers to Tax Court Regular Decision

Bartschi v. Commissioner

TCM 2002-268

$2,500

Copeland v. Commissioner

TCM 2003-46

$1,000

Craig v. Commissioner

119 TC No. 15

$2,500

Crow v. Commissioner

TCM 2002-149

$1,500

Davich v. Commissioner

TCM 2002-255

$5,000

Davidson v. Commissioner

TCM 2002-194

$4,000

Davis v. Commissioner

TCM 2001-87

$4,000

Eiselstein v. Commissioner

TCM 2003-22

$5,000

Fink v. Commissioner

TCM 2003-61

$2,000

Flathers v. Commissioner

TCM 2003-60

$1,500

Gunselman v. Commissioner

TCM 2003-11

$1,000

Hack v. Commissioner

TCM 2002-243 and -244

$2,000

Haines. v. Commissioner

TCM 2003-16

$2,000

Hauck v. Commissioner

TCM 2002-184

$10,000

Hill v. Commissioner

TCM 2002-272

$3,500

Keene v. Commissioner

TCM 2002-277

$5,000

Kiley v. Commissioner

TCM 2002-315

$5,000

Koenig v. Commissioner

TCM 2003-40

$2,000

Land v. Commissioner

TCM 2002-263

$4,000

Nestor v. Commissioner

TCM 2002-251

$5,000

Newman v. Commissioner

TCM  2002-135

$1,000

Perry v. Commissioner

TCM 2002-165

$2,500

Rennie v. Commissioner

TCM 2002-296

$1,500

Roberts v. Commissioner

118 TC 365 (2002)

$10,000

Robinson v. Commissioner

TCM 2002-316

$2,500

Schmith v. Commissioner

TCM 2002-252

$1,000

Schroeder v. Commissioner

TCM 2002- 190

$1,000

Smeton v. Commissioner

TCM 2002-140

$1,000

Smith v. Commissioner

TCM 2003-45

$500

Standifird v. Commissioner

TCM 2002-245

$7,500

Stewart v. Commissioner

TCM 2002-225

$7,500

Tornichio v. Commissioner

TCM 2002-291

$12,500

Villwock v. Commissioner

TCM 2002-235

$1,000

Wagner v. Commissioner

TCM 2002-180

$4,000

Watson v. Commissioner

TCM 2001-213

$1,500

Williams v. Commissioner

TCM 2002-111

$1,000

Yacksyzn v. Commissioner

TCM 2002-99

$1,000

 
Page Last Reviewed or Updated: 18-Aug-2012