Krol v. Comm'r ( 2008 )

T.C. Memo. 2008-242
UNITED STATES TAX COURT
ARTHUR G. KROL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3332-08L. Filed October 29, 2008.
In 2005, P received a notice of deficiency for
2002. P’s attorney, A, timely filed a petition for
redetermination on P’s behalf. Neither P nor A
appeared when the case was called for trial. After the
Court issued a show cause order, A appeared and
consented to the dismissal of the case. R assessed the
deficiency. After P failed to pay the amount owing, R
proposed to levy. In 2007, P, through A, requested
administrative review and sought only to challenge the
underlying liability. R rejected the challenge on the
basis of I.R.C. sec. 6330(c)(2)(B) and issued a notice
of determination sustaining the proposed levy. In
2008, P, through A, filed a levy action with this
Court, seeking only to challenge the underlying
liability. R filed a motion for summary judgment; the
Court then issued a show cause order requiring A to
explain why A personally should not be liable under
I.R.C. sec. 6673(a)(2)(A) for multiplying the
proceedings unreasonably and vexatiously.
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Held: R’s motion for summary judgment shall be
granted. I.R.C. sec. 6330(c)(2)(B).
Held, further, A is liable personally under I.R.C.
sec. 6673(a)(2)(A) for excessive costs.
Jerry R. Abraham, for petitioner.
John W. Stevens and Steven L. Karon, for respondent.
MEMORANDUM OPINION
ARMEN, Special Trial Judge: This case is a collection
action involving a proposed levy. See sec. 6330(d); Rules 330-
334.1 Pending before the Court are (1) respondent’s Motion For
Summary Judgment, filed May 27, 2008, pursuant to Rule 121, and
(2) the Court’s Order And Order To Show Cause, dated June 27,
2008.
In his motion, respondent moves for a summary adjudication
in respondent’s favor “because, pursuant to I.R.C. 6330(c)(2)(B),
petitioner’s receipt of the statutory notice of deficiency
precludes him from challenging the underlying tax liability for
taxable year 2002, the only error assigned in the petition.”
In its order, the Court directed petitioner’s counsel of
record Jerry R. Abraham to show cause why the Court should not
1
All section references are to the Internal Revenue Code
of 1986, as amended; all Rule references are to the Tax Court
Rules of Practice and Procedure.
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conclude that he (i.e., Jerry R. Abraham) did not multiply the
proceedings unreasonably and vexatiously and why, therefore, the
Court should not require him, pursuant to section 6673(a)(2)(A),
to pay personally the excess costs, expenses, and attorney’s fees
reasonably incurred because of his conduct.2
At the time that the petition was filed, both petitioner and
Attorney Jerry R. Abraham resided in the State of Michigan.
Background
Our summary of the relevant facts necessarily begins with
petitioner’s prior action in this Court (dkt. No. 14170-05)
because that prior action is not only the linchpin of
respondent’s summary judgment motion in the instant action
(docket No. 3332-08L) but also central to our show cause order.
A. Petitioner’s Action for Redetermination at Dkt. No.
14170-05
By a notice of deficiency dated April 25, 2005, respondent
determined a deficiency in petitioner’s Federal income tax for
the taxable year 2002.3 See sec. 6212(a). The deficiency was
attributable to respondent’s determination that petitioner had
2
For convenience, we shall hereinafter generally refer to
petitioner’s counsel of record Jerry R. Abraham as Attorney Jerry
R. Abraham.
3
In that notice, respondent also determined an addition to
tax under sec. 6651(a)(1) for failure to timely file and an
accuracy-related penalty under sec. 6662(a) for negligence or
disregard of rules or regulations.
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failed to include on his income tax return for 2002 gambling
winnings in the aggregate amount of $415,625, as reported by
casinos in Las Vegas, Nevada, and Detroit, Michigan.4
In response to the notice of deficiency, petitioner
commenced a case in this Court by timely filing a petition for
redetermination of deficiency, which case was assigned docket No.
14170-05. See secs. 6213(a), 7502, 7503. The petition, which
was filed “by and through counsel”, was subscribed by Attorney
Jerry R. Abraham as “Attorney for Petitioner”. Attorney Jerry R.
Abraham was (and remains) a member of the bar of this Court.
In the petition for redetermination, petitioner disputed the
deficiency in tax, as well as the addition to tax and accuracy-
related penalty. The substantive paragraphs of the petition and
the prayer for relief recited as follows:
4. The amount of the tax liability as set forth
in said Notice of Deficiency is based upon an erroneous
computation of taxpayer’s gambling winnings as no
offset is provided for taxpayer’s gambling losses as
allowed by Internal Revenue Code § 165(d).
5. Commissioner’s inaccurate calculations stem
from resulting inaccuracies relating both to taxpayer’s
gambling winnings and losses.
WHEREFORE, Petitioners [sic] respectfully request
that this Court disallow these revisions as pertaining
to Petitioner’s gambling winnings and losses and abate
4
The inclusion in income of unreported gambling winnings
also served to decrease otherwise allowable itemized deductions
claimed by petitioner on Schedule A, Itemized Deductions. See
sec. 68.
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the relevant portion of the existing liability with any
accompanying penalties.
In due course, and pursuant to notice provided by certified
mail, dkt. No. 14170-05 was called for trial on June 12, 2006, at
Detroit, Michigan.5 However, at that time, there was no
appearance by or on behalf of petitioner. In contrast, counsel
for respondent appeared and filed a Stipulation Of Facts.6 Also,
counsel for respondent orally moved to dismiss the case for lack
of prosecution.7
In response to the Court’s inquiry regarding the absence of
Attorney Jerry R. Abraham, counsel for respondent surmised as
follows:
I talked to Mr. Abraham a month and a half ago, he
returned my calls. The only issue he said was, his
client still needed to get documentation to him showing
the losses from the gambling income. That was his only
issue.
That’s why he didn’t originally get a Tax Court
memo, because when Attorney Jerry Abraham got them to
me, I was going to take them, and if he had some
losses, then make an adjustment. My guess is, his
client never gave him any evidence of any losses to
offset the gambling income.
5
The case was called at Detroit because Attorney Jerry R.
Abraham, acting on behalf of petitioner, had designated that city
“for all trial proceedings in this matter.”
6
The Stipulation Of Facts had been executed by Attorney
Jerry R. Abraham on June 5, 2006, and by respondent’s counsel on
June 9, 2006.
7
Subsequently, respondent’s counsel reduced his motion to
writing and, on June 13, 2006, filed a Motion To Dismiss For Lack
Of Prosecution. Counsel for respondent served his motion on
Attorney Jerry R. Abraham by mail on June 12, 2006.
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The Court responded as follows:
Well, that might be so, but this is an opportunity
for Petitioner’s counsel to come to Court and indicate
to the Court what he wants the Petitioner to do with
his case.
Merely not to show is not a satisfactory response.
Therefore, the Court is going to order a show cause
hearing to Mr. Abraham as to why he should not be
sanctioned for failure to appear. * * *
On June 13, 2006, the Court served an Order To Show Cause
dated June 12, 2006, on Attorney Jerry R. Abraham directing him
to appear on June 19, 2006, at Detroit, Michigan, and show cause
why the Court should not impose a sanction on him for excessive
costs pursuant to section 6673(a)(2).
At the show cause hearing, Attorney Jerry R. Abraham
appeared, as did counsel for respondent. The transcript for that
hearing includes the following colloquy:
MR. ABRAHAM: Basically, back on June the 6th I
made a call to the District Counsel attorney and I
advised him that my client still had not given us the
documents that we needed and that I told him, in
addition, that if he did not give it to me by June the 7th,
we would sign a consent.[8]
* * * * * * *
THE COURT: A consent to what?
MR. ABRAHAM: To judgment.
* * * * * * *
8
Notwithstanding the professed lack of documentation,
Attorney Jerry R. Abraham never filed a motion for continuance,
either before or at the trial session.
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THE COURT: And, counsel, are you now saying you
don’t object to the granting of that motion [to dismiss
for lack of prosecution]?
MR. ABRAHAM: At this time I do not.
THE COURT: Well, first, let me say this, sir:
that I can see perhaps some room for confusion, but as
counsel of record, it’s your obligation to make sure
that either the matter is properly taken care of or you
appear here to inform the Court as to the status. You
understand that?
MR. ABRAHAM: Yes. I do.
THE COURT: All right. I’m going to grant the
motion to dismiss for lack of prosecution and deem that
you have satisfied the motion to show cause, Mr.
Abraham. Thank you very much.
MR. ABRAHAM: Thank you.
Thereafter, by Order Of Dismissal And Decision entered and
served July 3, 2006, the Court granted respondent’s Motion To
Dismiss For Lack Of Prosecution, thereby sustaining all of
respondent’s determinations in the April 25, 2005 notice of
deficiency.
Petitioner did not file any posthearing motion or a notice
of appeal. Accordingly, the Court’s Order Of Dismissal And
Decision at dkt. No. 14170-05 became final in due course. See
secs. 6214(d), 7481(a)(1), 7483. Thereafter, respondent assessed
the deficiency, addition to tax, and accuracy-related penalty,
together with statutory interest. See secs. 6215(a), 7459(d);
see also sec. 6601(a).
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B. Petitioner’s Collection Action at Dkt. No. 3332-08L
As previously stated, the instant case (dkt. No. 3332-08L)
is a collection action involving a proposed levy. The
commencement of that action had as its origin petitioner’s
failure to pay, upon notice and demand made pursuant to section
6303(a), the liability arising out of petitioner’s above-
described action for redetermination of deficiency. The
collection action developed as follows:
On August 2, 2007, respondent sent petitioner a Notice Of
Intent To Levy And Notice Of Your Right To A Hearing (final
notice of intent to levy) in respect of petitioner’s outstanding
liability for 2002. In response to the final notice of intent to
levy, petitioner, acting through his power of attorney (POA)
Jerry R. Abraham, filed with respondent a Form 12153, Request for
a Collection Due Process or Equivalent Hearing.9 The reason given
for objecting to the proposed levy was as follows:
Taxpayer requests a re-open audit. He know [sic] has
located evidence of gambling losses to offset winnings
and negate the assessed tax.
Following a telephone conference between Attorney Jerry R.
Abraham and respondent’s settlement officer, respondent’s Appeals
9
Petitioner’s power of attorney Jerry R. Abraham is the
same Jerry R. Abraham who was petitioner’s counsel of record in
the action for redetermination of deficiency at dkt. No. 14170-05
and is the same Jerry R. Abraham who is petitioner’s counsel of
record in the instant collection action (dkt. No. 3332-08L). For
convenience, we shall hereinafter refer to petitioner’s power of
attorney Jerry R. Abraham as Attorney Jerry R. Abraham.
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Office sent petitioner a Notice Of Determination Concerning
Collection Action(s) Under Section 6320 and/or 6330 (notice of
determination) dated January 18, 2008. In the notice of
determination, respondent’s Appeals Office sustained the proposed
levy.
The Attachment to the notice of determination states, in
part, as follows:
ISSUES RAISED BY THE TAXPAYER
In your written request, Form 12153, your POA raised
the liability as an issue.
At the telephone conference, your POA was advised you
are not able to raise the liability as an issue under
CDP [Collection Due Process] because you had a prior
opportunity to do so. Your POA agreed.
* * * * * * *
OTHER ISSUES RAISED
No other issues were raised. Your POA did not ask for
a collection alternative.
In response to the notice of determination, petitioner
timely filed the instant collection action (levy action), which
action was assigned docket number 3332-08L. The petition was
subscribed by both petitioner individually and by Attorney Jerry
R. Abraham as counsel for petitioner.
The two (and only) substantive paragraphs of the petition
provide as follows:
5. The underlying liability is not accurate. The
original deficiency assessment was based primarily upon
gambling winnings, but it did not include any
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information relating to relevant offsetting losses.
These offsetting losses will greatly reduce this
taxpayer’s taxable income as well as his corresponding
tax liability. Evidence of these losses was provided
to the Service, but no adjustments have been made to
decrease the current liability. Therefore, taxpayer
requests that collection ceases pending the accurate
adjustment of the 2002 tax liability.
6. Taxpayer has presented documentary evidence of
gambling losses which should be offset against his
recorded gambling winnings. This evidence has been
presented to the Service, but has not yet resulted in
any adjustment.
After filing an Answer, respondent filed his Motion For
Summary Judgment. See Rules 36, 121. As previously stated,
respondent moves for a summary adjudication in respondent’s favor
“because, pursuant to I.R.C. [section] 6330(c)(2)(B),
petitioner’s receipt of the statutory notice of deficiency
precludes him from challenging the underlying tax liability for
taxable year 2002, the only error assigned in the petition.”
The heart of respondent’s motion lies in paragraphs 11 and
12 thereof, which paragraphs state as follows:
11. Because the petitioner received the notice of
deficiency in sufficient time to petition the Tax Court
and did do so, it was improper for petitioner to
challenge the tax liability to which the statutory
notice of deficiency related.
12. Because it was improper for the taxpayer to
challenge in the CDP hearing the existence or amount of
petitioner’s liability with respect to taxable year
2002, the validity of petitioner’s underlying tax
liability is not properly at issue before this Court.
[Sego v. Commissioner, 114 T.C. 604 (2000)].
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On June 13, 2008, petitioner, through Attorney Jerry R.
Abraham, filed a Response In Opposition to respondent’s motion.
Therein petitioner contends that respondent’s reliance on section
6330(c)(2)(B) is erroneous for two reasons.
First, the general statutory directive of Section 6330
is to allow an aggrieved taxpayer to raise any and all
“alternatives to collection” which are appropriate in
any given context. Second, while Section 6330(c)(2)(B)
does limit the scope challenges [sic] to the accuracy
of a liability, it does not do so when the taxpayer
“did not otherwise have an opportunity to dispute such
tax liability.” Id.
On June 27, 2008, the Court issued its Order And Order To
Show Cause. The Court’s order directed Attorney Jerry R. Abraham
to show cause why the Court should not conclude that he (i.e.,
Attorney Jerry R. Abraham) multiplied the proceedings
unreasonably and vexatiously and why, therefore, the Court should
not require him, pursuant to section 6673(a)(2)(A), to pay
personally the excess costs, expenses, and attorneys’ fees
reasonably incurred because of his conduct.
On August 18, 2008, Attorney Jerry R. Abraham filed a
Response To Order To Show Cause. In it, Attorney Jerry R.
Abraham asserts that petitioner “steadfastly” continues to
request “an accurate re-determination of his 2002 tax liability”
and, toward that end, has sought “this forum to request a re-open
audit as an alternative to the full collection of a tax liability
which he knew to be inaccurate.” Attorney Jerry R. Abraham
further asserts that “a request for a re-open audit” is a
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“collection alternative” and that a collection alternative is
specifically identified by section 6330(c)(2)(A)(iii) as an
appropriate issue to be considered at a collection-related
hearing. Attorney Jerry R. Abraham then concludes as follows:
Section 6330(c)(2)(B) * * * clearly limits the ability
to challenge an underlying tax liability as generated through a
deficiency assessment. However, the statute [section
6330(c)(2)(B)] also clearly provides that such limitation for
challenge cannot apply when a taxpayer “did not otherwise have an
opportunity to dispute such tax liability.” In the present
action, this Petitioner was not afforded such an opportunity.
Granted that this taxpayer availed himself of the
full appeals process surrounding his 2002 liability,
but he simply could not have been afforded any
reasonable opportunity to challenge the assessment
without further corroboration or evidence of his
losses. Without this kind of evidence, he could not
have been afforded an effective opportunity to
challenge the deficiency based on all the merits of his
case.
A hearing on the Court’s June 27, 2008 Order And Order To
Show Cause was held in Washington, D.C., on August 20, 2008.
Having filed the aforementioned August 18, 2008 Response To Order
To Show Cause, Attorney Jerry R. Abraham chose not to attend in
person. (So did petitioner.) In contrast, counsel for
respondent did appear and argued in support of a finding that
Attorney Jerry R. Abraham unreasonably and vexatiously multiplied
proceedings and, as a result, should pay personally excess costs,
expenses, and attorney’s fees pursuant to section 6673(a)(2)(A).
Respondent’s motions counsel also introduced a Declaration by
respondent’s field counsel John W. Stevens of Detroit, Michigan,
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detailing the time spent (a total of 10.0 hours) dealing with
dkt. No. 3332-08L. Counsel requested that respondent be
compensated at the rate of $150 per hour.
Following the aforementioned hearing, the Court issued an
Order dated August 25, 2008, directing Attorney Jerry R. Abraham
to file a response to the Declaration from respondent’s field
counsel. Attorney Jerry R. Abraham complied with that order by
filing a Response on September 10, 2008.
In his Response, Attorney Jerry R. Abraham argues that
respondent’s field counsel’s “ten hour computation is
disproportionate and inaccurate.” Attorney Jerry R. Abraham
further argues that he (i.e., Attorney Jerry R. Abraham) “pursued
an accepted administrative strategy of audit reconsideration
which appeared to fall within the broad statutory mandate of
Internal Revenue Code (‘IRC’) Section 6330(c)(2)(A)(iii)” and
that he acted neither vexatiously nor in bad faith.
Discussion
A. Respondent’s Motion
The record is clear that respondent sent petitioner a notice
of deficiency for 2002 and that petitioner received it in
sufficient time to file a petition for redetermination of
deficiency with this Court. Indeed, petitioner timely filed such
a petition. Thus, petitioner had an opportunity to dispute his
underlying tax liability. The fact that petitioner squandered
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that opportunity by failing to appear at trial and by consenting
to the dismissal of the case is irrelevant.
In view of the foregoing, section 6330(c)(2)(B) bars
petitioner from challenging the existence or amount of his
underlying liability in the instant collection action. This
Court so held in Sego v. Commissioner, 114 T.C. 604 (2000), and
has continued to so hold in an uninterrupted line of cases.10 In
short, petitioner is statutorily barred from challenging the
existence or amount of his underlying liability in the instant
collection action.
The record is equally clear that petitioner did not, and has
not, offered a collection alternative. A collection alternative,
which may include the posting of a bond, the substitution of
other assets, an installment payment agreement, or an offer-in-
compromise, see sec. 6330(c)(2)(A)(iii), does not contemplate a
challenge to the existence or amount of the underlying liability
in the guise of a “request for a re-open audit”. Petitioner’s
assertion to that effect (“the general statutory directive of
Section 6330 is to allow an aggrieved taxpayer to raise any and
10
Insofar as sec. 6330(c)(2)(B) is concerned, we are not
aware of a single case from any other Federal court that is
contrary to Sego v. Commissioner, 114 T.C. 604 (2000), and its
numerous progeny. Indeed, petitioner cites no case, from this or
any other court, in support of his position regarding sec.
6330(c)(2)(B).
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all ‘alternatives to collection’ which are appropriate in any
given context”) is nothing but sophistry.
Because petitioner raised no issue other than his underlying
liability, and because petitioner is statutorily barred from
raising that issue, the Court shall grant respondent’s Motion For
Summary Judgment. Sec. 6330(c)(2)(B).
B. Order To Show Cause
We turn now to the Court’s Order And Order To Show Cause
dated June 27, 2008. We must first decide whether Attorney Jerry
R. Abraham is liable under section 6673(a)(2) for excessive
costs. If we decide that Attorney Jerry R. Abraham is so liable,
then we must also decide the amount of his liability.
1. Counsel’s liability for excessive costs
Section 6673(a)(2)(A) provides as follows:
(2) Counsel’s Liability for Excessive Costs.--
Whenever it appears to the Tax Court that any attorney
or other person admitted to practice before the Tax
Court has multiplied the proceedings in any case
unreasonably and vexatiously, the Tax Court may
require–
(A) that such attorney or other person pay
personally the excess costs, expenses, and
attorneys’ fees reasonably incurred because of
such conduct * * *
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See Estate of Allison v. Commissioner, T.C. Memo. 2008-149, for
the most recent case applying section 6673(a)(2)(A) as a sanction
against an attorney for a taxpayer. See also Rule 33(b).11
Attorney Jerry R. Abraham commenced, and has prosecuted, the
instant collection action seeking only to challenge the existence
or amount of petitioner’s underlying liability, notwithstanding
the clear statutory bar of section 6330(c)(2)(B). Attorney Jerry
R. Abraham has done so notwithstanding his knowledge that
11
Rule 33(b) deserves to be quoted; thus, in relevant
part:
(b) Effect of Signature: The signature of counsel
or a party constitutes a certificate by the signer that
the signer has read the pleading; that, to the best of
the signer’s knowledge, information, and belief formed
after reasonable inquiry, it is well grounded in fact
and is warranted by existing law or a good faith
argument for the extension, modification, or reversal
of existing law; and that it is not interposed for any
improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of
litigation. The signature of counsel also constitutes
a representation by counsel that counsel is authorized
to represent the party or parties on whose behalf the
pleading is filed. * * * If a pleading is signed in
violation of this Rule, the Court, upon motion or upon
its own initiative, may impose upon the person who
signed it, a represented party, or both, an appropriate
sanction, which may include an order to pay to the
other party or parties the amount of the reasonable
expenses incurred because of the filing of the
pleading, including reasonable counsel’s fees.
See Gillespie v. Commissioner, T.C. Memo. 2007-202, affd. on
other issues 102 AFTR 2d 6215, 2008-2 USTC par. 50,552 (7th Cir.
2008), for a case in which we justified sanctions against a
taxpayers’ attorney under both sec. 6673(a)(2)(A) and Rule 33(b).
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petitioner received the April 25, 2005 notice of deficiency in
sufficient time to file an action for redetermination with this
Court, as demonstrated by the fact that he himself (i.e.,
Attorney Jerry R. Abraham) commenced and prosecuted the action
for redetermination of deficiency at dkt. No. 14170-05. The fact
that Attorney Jerry R. Abraham agreed to the granting of the
Respondent’s Motion To Dismiss For Lack Of Prosecution (and never
even filed a motion for continuance) in no way avoids the fact
that Attorney Jerry R. Abraham himself commenced and prosecuted
the action for redetermination and was therefore fully aware of
that action.
Further, Attorney Jerry R. Abraham has cited no case from
this or any other Federal court that would even remotely justify,
given the clear statutory bar of section 6330(c)(2)(B), the
commencement and prosecution of the instant collection action
that seeks only to challenge the existence or amount of the
underlying liability.
The argument by Attorney Jerry R. Abraham suggesting that
petitioner “did not otherwise have an opportunity to dispute such
tax liability” constitutes a reckless disregard of both fact and
well-established law.
The argument by Attorney Jerry R. Abraham that appears to
equate a challenge to the existence or amount of the underlying
liability to a collection alternative is specious. In our view,
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litigation that is commenced and prosecuted without regard to
section 6330(c)(2)(B) is frivolous, and we cannot imagine any
purpose for such litigation other than to delay collection. See
infra note 13.
The present case does not involve a lay person untutored in
the law. Rather, it involves an attorney who is a member of the
bar of this Court. Practicing as he does before this Court,
Attorney Jerry R. Abraham should possess knowledge of section
6330, the statute that regulates pre-levy procedures, and
specifically subsection (c)(2)(B) thereof.12 That statute has
been part of the Internal Revenue Code since 1998 and has been
the subject of numerous opinions of this Court. See Internal
Revenue Service Restructuring and Reform Act of 1998, Pub. L.
105-206, sec. 3401, 112 Stat. 685, 746; Sego v. Commissioner, 114
T.C. 604 (2000), and its progeny.
In commencing the instant action, Attorney Jerry R. Abraham
has disrespected the clear bar of section 6330(c)(2)(B), and he
12
If Attorney Jerry R. Abraham wishes to impugn his level
of competence, then suffice it to say that he was expressly
educated as to the bar of sec. 6330(c)(2)(B) by respondent’s
Appeals settlement officer who, in the Attachment to the notice
of determination, told him that “you are not able to raise the
liability as an issue under CDP because you had a prior
opportunity to do so.” (Attorney Jerry R. Abraham has never
contradicted the Appeals settlement officer’s statement, nor has
Attorney Jerry R. Abraham ever contradicted the Appeals
settlement officer’s further statement that “Your POA agreed”,
i.e., that Attorney Jerry R. Abraham agreed with the Appeals
settlement officer’s statement.)
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has done so without principled justification.13 In so doing we
find that he acted not only recklessly but in bad faith in
commencing and prosecuting the instant case. See Takaba v.
Commissioner, 119 T.C. 285, 296-297 (2002).
In sum, Attorney Jerry R. Abraham has unreasonably and
vexatiously multiplied the proceedings and should therefore pay
personally the excess costs, expenses, and attorneys’ fees
reasonably incurred by respondent because of his conduct. Sec.
6673(a)(2)(A).
2. Amount of Counsel’s Liability
We turn now to the amount that Attorney Jerry R. Abraham
should pay.
This amount is a function of the time spent by respondent’s
counsel and the rate at which counsel should be compensated.
13
See Gillespie v. Commissioner, 102 AFTR 2d 6215, 2008-2
USTC par. 50,552 (7th Cir. 2008), a case in which the Tax Court
petition executed by the taxpayers’ attorney ignored sec.
6330(c)(2)(B) and challenged the existence or amount of the
underlying liability. In its Order, the Court of Appeals cited
sec. 6330(c)(2)(B) and stated that “The statute puts that subject
[how much the taxpayers owed] off limits”. The Court of Appeals
went on to state as follows:
The [taxpayers’] lawyer comes close to conceding [that
the petition was frivolous] and argues that counsel is
entitled to file a petition in order to stall for time
while trying to negotiate a settlement. That
effectively concedes an abuse of process. There is no
right to engage in frivolous litigation in order to
delay collection.
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The record includes a Declaration by respondent’s field
counsel in Detroit, Michigan detailing time spent by him in
dealing with the instant case, a total of 10 hours. Other than 2
hours to review “requirements for filing a motion for summary
judgment”, we find the time spent reasonable.14 In our view, 8
hours to review the petition and to file an answer, to draft a
motion for summary judgment, to attempt (on more than one
occasion) to contact Attorney Jerry R. Abraham to ascertain
petitioner’s position, to revise the motion, to review Attorney
Jerry R. Abraham’s response in opposition to the motion, to
review the Court’s June 27, 2008 Order And Order To Show Cause,
to coordinate with other members of Chief Counsel’s Office
regarding that matter and provide them with documentation, and to
prepare the Declaration is not “disproportionate and inaccurate”
as alleged by Attorney Jerry R. Abraham.15
Finally, respondent’s request that attorney time be
compensated at the rate of $150 per hour is reasonable.
Moreover, that rate is consistent with other cases. E.g.,
Gillespie v. Commissioner, T.C. Memo. 2007-202, affd. on other
14
We emphasize that the Declaration represents time spent
by respondent’s field counsel in Detroit, Michigan. Not included
is time spent by any of counsel’s supervisors or by respondent’s
other counsel (or supervisors) in preparing for and attending the
hearing in Washington, D.C.; that time has not been separately
listed in any other declaration filed with the Court.
15
We note that Attorney Jerry R. Abraham has not requested
a hearing on this matter.
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issues 102 AFTR 2d 6215, 2008-2 USTC par. 50,552 (7th Cir. 2008);
see also Takaba v. Commissioner, supra at 303-305; Matthews v.
Commissioner, T.C. Memo. 1995-577, affd. without published
opinion 106 F.3rd 386 (3d Cir. 1996). Finally, Attorney Jerry R.
Abraham has not suggested that any specific lesser rate is more
appropriate.
In sum, the “lodestar” amount, see Harper v. Commissioner,
99 T.C. 533, 549 (1992), for respondent’s counsel’s time is
$1,200 (8 hrs. x $150/hr.).
Conclusion
We shall enter an Order And Order And Decision: (1)
Granting respondent’s Motion For Summary Judgment, filed May 27,
2008; (2) deciding that respondent may proceed with collection
for the taxable year 2002 as determined in the notice of
determination dated January 18, 2008, upon which notice this case
is based; (3) making our June 27, 2008 order to show cause
absolute; (4) and ordering Attorney Jerry R. Abraham to pay
personally $1,200 to the United States as a penalty pursuant to
section 6673(a)(2)(A).
An order and order and
decision consistent with the
foregoing shall be entered.