Tax Court in Brief | Addis v. Commissioner | Collection Due Process and Frivolous Positions

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The Tax Court in Brief – March 28th – April 1st, 2022

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Tax Litigation:  The Week of March 28, 2022, through April 1, 2022

Addis v. Comm’r, T.C. Memo. 2022-24 | March 28, 2022 |Urda, J. | Dkt. No. 12140-20L

Short Summary: Taxpayer, Jonah Addis (“Addis”) filed a delinquent tax return for his 2014 tax year. He reported zero dollars of income and a refund due. Third-party reporting showed that Addis had received income of $42,795 in 2014. The IRS assessed a $5,000 penalty for his taking a frivolous position. A notice of intent to levy was issued. Addis requested a hearing, which was conducted by correspondence. Addis claimed, among other things, that the federal tax laws did not apply to him. Addis’s request for relief from levy was denied. Addis sought review of the determination of the IRS’s Office of Appeals that upheld a notice of intent to levy.

Primary Holdings:  

Key Points of Law:

Insights: Taxpayers should refrain from taking frivolous positions in CDP proceedings. What is “frivolous” might be in the eyes of the beholder, based on the facts and circumstances of the case. However, the IRS has issued—and taxpayers should be aware of—notices on positions that the IRS deems are frivolous. See I.R.S. Notice 2010-33, 2010-17 I.R.B. 609. By taking a frivolous position, the taxpayer then sets himself or herself up for additional penalty of up to $25,000, which is determined by the discretion of the Tax Court. It is advisable to avoid that.

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