Opinion
1500-21
04-12-2022
ARLIN GEORGE HATFIELD, III & JENNIFER HATFIELD, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Albert G. Lauber Judge.
This case and the related case at docket no. 7327-20 are calendared on the Court's June 13, 2022, remote trial session, at which the undersigned will be presiding. On February 16, 2022, respondent filed a Motion for Partial Summary Judgment in this case. We directed petitioners to respond to respondent's Motion on or before March 23, 2022. It appears that petitioners have not yet filed a response. We will extend the time within which petitioners shall file a response to April 29, 2022. Petitioners are advised that failure to respond to a motion for summary judgment may result in entry of a decision against the defaulting party. See Tax Court Rule 121(d).
In their Petition in this case and the related case, petitioners contend that "wages" earned by United States citizens are not subject to Federal income tax. Variations of this argument are contained in The Truth About Frivolous Tax Arguments, a compendium of frivolous positions and the case law refuting them that the IRS publishes and occasionally updates. See The Truth About Frivolous Tax Arguments, Internal Revenue Service (Mar. 2022), https://www.irs.gov/privacy-disclosure/the-truth-about-frivolous-tax-arguments-introduction (characterizing as frivolous the arguments that "[w]ages are not income" and that "[o]nly foreign-source income is taxable); see also Rev. Rul. 2006-18, 2006-1 C.B. 743, 743 (emphasizing that "[a]ll wages are included in gross income for purposes of determining federal income tax liability" and any argument to the contrary "has no merit and is frivolous").
Section 6673(a)(1) of the Internal Revenue Code authorizes this Court to require a taxpayer to pay to the United States a penalty, not in excess of $25,000, "[w]henever it appears to the Tax Court that-(A) proceedings before it have been instituted or maintained . . . primarily for delay, [or] (B) the taxpayer's position in such proceeding is frivolous or groundless." The purpose of section 6673 is to compel taxpayers to conform their conduct to settled tax principles and to deter the waste of judicial and IRS resources. Coleman v. Commissioner, 791 F.2d 68, 71-72 (7th Cir. 1986); Salzer v. Commissioner, T.C. Memo. 2014-188, 108 T.C.M. (CCH) 284, 287. "Frivolous and groundless claims divert the Court's time, energy, and resources away from more serious claims and increase the needless cost imposed on other litigants . . . ." Kernan v. Commissioner, T.C. Memo. 2014-228, 108 T.C.M. (CCH) 503, 512, aff 'd, 670 Fed.Appx. 944 (9th Cir. 2016).
We warn petitioners that they risk a significant penalty under section 6673(a) (1) if they advance frivolous positions in their response to respondent's Motion for Partial Summary Judgment. See, e.g., Balice v. Commissioner, T.C. Memo. 2015-46, 109 T.C.M. (CCH) 1220, 1224 (imposing penalty of $25,000), see also Waltner v. Commissioner, T.C. Memo. 2014-35, 107 T.C.M. (CCH) 1189, 1203 (summarizing several common frivolous arguments and putting "future litigants . . . on notice" that adopting these arguments "may result in sanctions").
In consideration of the foregoing, it is
ORDERED that the time within which petitioners shall file a response to respondent's Motion for Partial Summary Judgment is extended to April 29, 2022.