Opinion
6209-20
12-08-2023
YOSEPH JENAYE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Albert G. Lauber Judge
This case is one of about 20 similar cases involving the effect of a closing agreement on the availability of the foreign earned income exclusion for income derived from services performed on a U.S. military base in Australia. The Court has issued Opinions in several of these cases. See, e.g., Henaire v. Commissioner, T.C. Memo. 223-131. The taxpayer has filed an appeal in at least one of them. See Smith v. Commissioner, 159 T.C. 33 (2022), supplemented by T.C. Memo. 2023-6, appeal docketed, No. 23-1050 (D.C. Cir. Feb. 16, 2023); see also Baney v. United States, 168 Fed.Cl. 109 (2023), appeal docketed, No. 24-1085 (Fed. Cir. Oct. 26, 2023).
On December 1, 2023, petitioner filed a Motion to Impose Sanctions, requesting that the Court impose a $25,000 monetary sanction against respondent on account of a November 29, 2023, letter that respondent's attorney sent to petitioner. In this letter the attorney enclosed copies of judicial orders and opinions issued in the cases referenced above, all of which ruled against the taxpayer. She then added: "I also wish to draw your attention to I.R.C. § 6673(a), which states that, '[w]henever it appears to the Tax Court that (A) proceedings before it have been instituted or maintained by the taxpayer primarily for delay [or] (B) the taxpayer's position in such proceeding is frivolous or groundless, . . . the Tax Court, in its decision, may require the taxpayer to pay to the United States a penalty not in excess of $25,000.'" Petitioner contends that respondent's counsel acted improperly by "threatening to impose" this penalty.
We will deny the Motion. The IRS cannot "impose" a section 6673 penalty; imposition of this penalty is entirely within the discretion of the Court. In her letter respondent's attorney did not "threaten" petitioner. She simply brought to his attention a Code provision that he might wish to consider in determining the litigation hazards he conceivably could confront in this case, given that similar cases have been decided against similarly-situated taxpayers. If respondent were to suggest imposition of a section 6673 penalty, petitioner would be free to urge (as he does in his Motion) that the questions presented are not free from doubt because the appellate courts have not yet spoken.
Upon due consideration, it is
ORDERED that petitioner's Motion to Impose Sanctions, filed December 1, 2023, is denied. It is further
ORDERED that the parties shall file, on or before March 7, 2024, a status report detailing the then-present status of the case.