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Monday, April 21, 2003

Tax Court Plays Hide the Ball in Case of Robert Rodriguez

Rodriguez disputes IRS's determination of amounts owed and penalties for various years that the IRS filed for him because he did not file. He claims the IRS lacks adequate evidence of the income and is wrong not to let let him take certain deduction that Tax Court does not enumerate. Yet Mr. Rodriguez presented no evidence in his own behalf, and did not even testify, citing the Fifth Amendment right against self-incrimination. Tax Court not only finds for IRS, but, on a total due of taxes and penalties of $9,032.46, Tax Court also imposes a frivolous suit penalty of $10,000.

So what the hell is going on here. $10,000 is significantly higher than most protesters get, and Mr. Rodriguez does not appear to be a protester. Tax Court does not tell us what IRS's evidence of income is, and as usual they do not explain how they calculated the penalty. My guess is that IRS is claiming Rodriguez had illegal income (which would explain why they were denying deductions). If this is correct, Tax Court's frivolousness penalty of $10,000 for lack of evidence may actually be punishing Mr. Rodriguez for the legitimate exercise of a constitutional right. This extraordinary penalty sure looks to me like Tax Court was trying to get Mr. Rodriguez for more than just wasting their time.

I wonder if anyone has ever appealed these frivolousness penalties on the grounds that Tax Court does not provide enough of an explanation of how they are calculated to allow an appeals court to determine if they have abused their discretion?

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