RONALD D. NEUFELD and NADINE M. NEUFELD v. Commissioner of Internal Revenue

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
The panel unanimously concludes this case is suitable for decision**
without oral argument. See Fed. R. App. P. 34(a)(2).
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
RONALD D. NEUFELD and NADINE M.
NEUFELD,
Petitioners - Appellants,
v.
COMMISSIONER OF INTERNAL
REVENUE,
Respondent - Appellee.
No. 08-74547
Tax Ct. No. 8101-06
MEMORANDUM*
Appeal from a Decision of the
United States Tax Court
Submitted December 14, 2010**
Before: GOODWIN, WALLACE, and W. FLETCHER, Circuit Judges.
Ronald D. Neufeld and Nadine M. Neufeld appeal pro se from the Tax
Court’s decision sustaining the assessment of the Commissioner of Internal
Revenue (“Commissioner”) regarding income tax deficiencies and accuracy-related
FILED
DEC 27 2010
MOLLY C. DWYER, CLERK
U .S. C O U R T O F AP PE ALS

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penalties for 2001 and 2002, and from the Tax Court’s imposition of a $1,000
penalty for maintaining a frivolous position. We have jurisdiction under 26 U.S.C.
§ 7482(a). We review de novo the Tax Court’s legal conclusions and for clear
error its factual findings, Kelley v. Comm’r, 45 F.3d 348, 350 (9th Cir. 1995), and
for an abuse of discretion its imposition of a penalty, Larsen v. Comm’r, 765 F.2d
939, 941 (9th Cir. 1985) (per curiam). We affirm.
Contrary to the Neufelds’ contention, their substantial understatement of tax
liability constituted an underpayment for purposes of the accuracy-related
penalties. See 26 U.S.C. §§ 6662(a), (b), (d), 6664(a).
The Tax Court’s finding that the underpayment was due to negligence was
not in clear error given the Neufelds’ admissions that they did not review or
discuss the tax documents prepared for them. See Hansen v. Comm’r, 471 F.3d
1021, 1028-29 (9th Cir. 2006) (explaining that the negligence inquiry looks to the
extent of the taxpayer’s effort to assess the proper tax liability and the correctness
of claimed deductions and exclusions).
The Tax Court did not abuse its discretion by imposing a penalty because the
Neufelds were warned that their arguments were frivolous but persisted with them.
See 26 U.S.C. § 6673(a)(1). The Neufelds had ample opportunity to respond to the
Commissioner’s request for a penalty before a penalty was imposed, and we are

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unpersuaded that the penalty was otherwise unconstitutional. See SEC v.
McCarthy, 322 F.3d 650, 659 (9th Cir. 2003) (stating that due process requires
notice and an opportunity to be heard); Larsen, 765 F.2d at 941 (rejecting as
frivolous the argument that the § 6673 penalty provision infringes upon First
Amendment rights).
The Neufelds’ remaining contentions are unpersuasive.
AFFIRMED.

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