Monday, March 3, 2014

Waltner v. Commissioner, T.C. Memo. 2014-35 (Feb. 27, 2014):

This case has occupied an inordinate amount of the Court’s time. The Court could have disposed of the entire matter summarily by reference to Crain v. Commissioner [737 F.2d 1417 (5th Cir. 1984)] or any number of other cases that stand for the proposition that we need not address frivolous arguments. After all, Mr. Waltner asserted frivolous arguments, and even after the Court rejected those arguments and warned him about potential sanctions under section 6673, he continued to press those arguments. The Court has taken the time, however, to address those arguments because Mr. Waltner appears to be perpetuating frivolous positions that have been promoted and encouraged by Peter Hendrickson’s book Cracking the Code: The Fascinating Truth About Taxation in America (2007). Indeed, it appears not merely that Mr. Waltner’s positions are predicated on that book but that his returns and return information have been used to promote the frivolous arguments contained in that book. Consequently, a written opinion is warranted.

Judicial opinions are the “‘heart of the common law system’” and serve as “a critical component of what we understand to be the ‘law.’”8 Statutes and regulations provide simply an outline; judicial opinions fill in the details by providing the rule of law the court applied, the court’s rationale in applying that law, and the underlying facts.Judicial opinions serve many purposes: they assist attorneys in advising clients and preparing cases; they provide the lower court’s rationale when the appellate court must evaluate its decision; they inform the public of the court’s analysis; and they establish clear and articulate rules for the future. It is with these purposes in mind that we address whether Mr. Waltner’s conduct merits sanctions while addressing the underlying frivolous positions upon which he relies and which he perpetuates by allowing his return information to be used.

Conclusion. Mr. Waltner took a series of frivolous positions that have repeatedly been rejected by the courts. Even after this Court cautioned him that he was making frivolous arguments, he continued to advance them, and his conduct merits sanctions. The Court is authorized to impose sanctions of up to $25,000. In the hope that Mr. Waltner heeds this warning, the Court imposes a penalty under section 6673 of $2,500. Mr. Waltner has other matters pending in this Court in which he is asserting arguments similar to those presented in this case, and he has now been cautioned in both an order and this opinion. We hope that he will heed the warning. And future litigants are on notice that the positions advanced in Cracking the Code are frivolous and relying on those positions may result in sanctions.

Update: Joe Kristan has more here.

https://taxprof.typepad.com/taxprof_blog/2014/03/tax-court-issues.html