Dr. Caligari wrote:It's not a terrible brief, and at least one of the issues raised seems to have some potential merit (whether a 6701 penalty applies to a CDP submission).
Tax liability can be raised at a CDP hearing unless the taxpayer actually received a Notice of Deficiency or otherwise had a prior opportunity to dispute the liability. Section 6330(c)(2)(B). If the liability at issue was self-reported on tax returns, the taxpayer claim that the returns were incorrect and that true liability was lower. Montgomery v CIR
, 122 T.C. 1 (2004).
The language of 6701 would seem to be broad enough to apply to a liability challenge in the CDP setting:
(a) Imposition of penalty. Any person—
(1) who aids or assists in, procures, or advises with respect to, the preparation or presentation of any portion of a return, affidavit, claim, or other document,
(2) who knows (or has reason to believe) that such portion will be used in connection with any material matter arising under the internal revenue laws, and
(3) who knows that such portion (if so used) would result in an understatement of the liability for tax of another person,
shall pay a penalty with respect to each such document in the amount determined under subsection (b).