After noting the previous Tax Court Decision, I was a bit surprised to find the final case reported yesterday to be a whopper.
Consider a “professional” tax preparer who doesn’t prepare his own tax return. The IRS discovers that the preparer doesn’t file tax returns for six years and asks him for records so that they can determine what he owes. He refuses. Then the IRS contacts his customers to determine what he owes; the preparer demands that the IRS stop as their an invasion of his right to privacy. The IRS then send the preparer notices of what he owes. The preparer returns them after marking them, “Refused for Fraud F.R.C.P. 9(b),” and includes an attachment with numerous “frivolous arguments.” The IRS sends an official notice of deficiency; the preparer returns it (stamped as above) with a similar attachment. The IRS prepares a lien on the preparer; the preparer then files a case in Tax Court.
In Tax Court, the preparer claimed that he had no taxable income. But, as the Tax Court noted, “A taxpayer may dispute the existence or amount of his or her tax liability at a section 6330(b) hearing if he or she did not receive a notice of deficiency or did not otherwise have an opportunity to dispute the tax liability. Sec. 330(c)(2)(B). [The preparer] received the notice of deficiency for 1994-99. Thus, [the preparer] may not dispute the existence or amount of his tax liabilities for those years under sections 6320 and 6330.” The preparer was also hit with a $15,000 penalty for frivolous arguments.
Case: Wetzel v. Commissioner (T.C. Memo 2005-211)
Tags: BozoTaxPreparer