## Facts

- The IRS issued a notice of deficiency for Wally Harper’s 1983 federal income tax, determining a $12,001 deficiency and additions to tax under I.R.C. §§ 6651(a)(1) and 6653(a)(1)–(2).
- Harper petitioned the United States Tax Court for redetermination, represented by attorney Herbert G. Feinson.
- The case was calendared for trial in New York City in December 1990; no one appeared for Harper at the calendar call, and the court dismissed for failure to prosecute under Tax Court Rule 123(b).
- Harper moved to vacate, and the court reinstated the case, finding the nonappearance resulted from counsel’s oversight and that Harper should not be penalized for it.
- The case was recalendared for trial in November 1991, and the court again served a standing pretrial order requiring document exchange, stipulations of fact to the maximum extent possible, and trial memoranda.
- Before the second trial date, Feinson failed to comply with the pretrial order, including refusing to provide documents to IRS counsel in a usable manner, failing to stipulate facts, and failing to submit a trial memorandum.
- The IRS moved to compel discovery, to dismiss for failure to prosecute under Rule 123(b), and for monetary sanctions under I.R.C. § 6673(a), including attorney’s fees attributable to counsel’s conduct.
- Feinson filed a motion for summary judgment while simultaneously asserting that a material fact was in dispute and advancing meritless contentions about the validity of IRS documents.

## Issues

1. Whether dismissal under Tax Court Rule 123(b) was warranted due to failure to properly prosecute and noncompliance with court orders and pretrial obligations.
2. Whether the court should impose a penalty on the taxpayer under I.R.C. § 6673(a)(1) for maintaining a frivolous case or for delay.
3. Whether the taxpayer’s attorney should be required to pay excess costs, expenses, and attorney’s fees under I.R.C. § 6673(a)(2) for unreasonable and vexatious conduct.

## Decision

- The court granted the IRS’s motion to dismiss under Rule 123(b) for failure properly to prosecute and sustained the deficiency and additions to tax.
- The court denied sanctions against Harper under § 6673(a)(1), finding the record did not show Harper personally pursued frivolous positions or delay.
- The court granted sanctions against Feinson under § 6673(a)(2), ordering payment of excess costs and attorney’s fees reasonably incurred because of his unreasonable and vexatious conduct, in an amount set in the court’s discretion.

## Legal Principles

- Tax Court Rule 123(b) authorizes dismissal when a petitioner fails to properly prosecute or fails to comply with the Tax Court Rules or a court order, including standing pretrial orders.
- Effective Tax Court administration depends on compliance with pretrial orders, cooperation in document exchange, and stipulations of fact as required by the Rules.
- I.R.C. § 6673(a)(1) permits penalties against taxpayers who institute or maintain proceedings primarily for delay or who advance frivolous or groundless positions; the court may decline the penalty when misconduct is attributable to counsel rather than the taxpayer.
- I.R.C. § 6673(a)(2) authorizes shifting excess costs, expenses, and attorney’s fees to an attorney whose unreasonable and vexatious conduct causes the government to incur unnecessary litigation costs.
- Sanctions under § 6673(a)(2) are discretionary and must be tied to costs reasonably incurred because of the sanctionable conduct.

## Conclusion

The Tax Court dismissed the case for failure to prosecute after repeated noncompliance with pretrial obligations, declined to penalize the taxpayer where the record did not show personal responsibility for delay or frivolous litigation, and imposed monetary sanctions on counsel under § 6673(a)(2) for conduct that unreasonably increased the government’s costs.


Harper v. Commissioner, 99 T.C. 533 (1992)