The IRS doesn’t like frivolity when it comes to returns. And they can count on Albert Lauber, my favorite tax court judge, to back them up when they’re right. Eric D. Here is the story, according to Lauber.


Mr. Clarkson failed to file timely federal income tax returns for each year from 2003 to 2016. The IRS prepared alternative returns for each year and issued notices of deficiency. As of June 2020, the tab is over a quarter of a million. When reading the tax court decision, one of the lines that could indicate that things won’t go well for the taxpayer is “The petitioner is no stranger to this court.” There have actually been two bouts of litigation over actually paying taxes in some years.

The IRS is sending letters to Mr. Clarkson asking, among other things, to file returns for 2013-2015. He finally responded by submitting the 2003-2015 returns. Only there was a problem with those returns. Attach Form 4852 to correct W-2s to show zero pay. I also attach the 1099s that “corrected” the 1099s that he got to zero.

The IRS warned him that the returns were futile and subject to a $5,000 penalty and gave him a chance to withdraw them, but they weren’t dice.

He asserted that he did not receive “wages as defined in Section 3401(a)” and that the “corrected” 1099-MISC forms were intended to “disprove the allegations of others” that he had received taxable compensation. He disagreed with the IRS’ characterization of his Forms 1040 as “submissions,” and insisted that they were appropriate “returns” that the IRS should accept and process. He stressed that this “return” cannot legally be “withdrawn.”[n] and replace it[d]Even if he wanted to.

the fine

By following the required steps including supervisory approval, the IRS has assessed 14 penalties of $5,000 each. Shockingly, Mr. Clarkson did not pay the fines. The IRS issued a Notice of Intent to Levy on November 25, 2019. Mr. Clarkson requested a legal hearing.

As the basis for his defiance, he asserted that he did not owe the penalties because he had “never made any frivolous admissions”. He demanded the IRS “release the seizure.” [his] returns” and “processed.” He reiterated his earlier arguments that he had no federal tax obligations because he was not “a federal employee or engaged in any privileged governmental activity that would result in any federal tax obligation.” He did not seek a replacement for the group.

There was a lot of back and forth with the Settlement Administrator (SO), and eventually the SO agreed to penalties and tax. As noted, Mr. Clarkson is no stranger to tax court. Filed a petition on May 17, 2021. On February 10, 2022, the IRS (the respondent) filed a request for summary judgment, which Mr. Clarkson (the petitioner) contested. This is what Judge Lauber had to deal with,

The opinion

There are three requirements for Section 6702 - Petty Tax Return - Penalty that must be upheld. There should be a document that "claims" to be a return. (By the way, when you see some form of the word so-called in a tax court decision, you can be pretty sure things won't go well for the taxpayer.) The alleged return must have information on its face indicating that the self-assessment was grossly incorrect. Finally, the petitioners' behavior was based on a position that the Minister identified as frivolous.

The petitioner's "zero returns" were based on his assertions that wages are not income and that the federal government has no authority to tax private sector income. Similar "no-return" statements often accompany tax pretenders.

Judge Lauber cites a number of recent cases to make the point including one I've covered - Hendrickson v. Commissioner, T. C. Memo. 2019-10.

Judge Lauber concludes with a warning to Mr. Clarkson that reminds me of a story I have heard many times from those who are older than me. The story was that if they were slapped at school, they would keep quiet about it, because if their parents heard about it, they would be slapped again. The Tax Court can also impose a penalty on people who make frivolous arguments - Section 6673(a). It can be up to $25,000. Judge Lauber showed mercy.

Because we have not yet had the opportunity to warn the petitioner about the danger to him under Section 6673(a) (1), we will not impose a penalty at this time. But it is advised that he is likely to be punished if he continues to raise frivolous arguments, either in this procedure or in any future proceeding in this court.


I reached out to Peter Hendrickson for his reasoning, especially since the W-2 technique reminded me of his recommendations. Hendrickson's response was too long for this article, so I've posted it here. Mr. Hendrickson is the author of the book Cracking the Law - The Cool Truth About Taxes in America (CtC). He refers to people who follow his methods as "CtC Learners". The general implication of his comment was that it appears that Mr. Clarkson did not do it properly.

No file marked by CtC simply "inserts all zeros" into anything. Sure, it often happens that -0- is the correct entry here and there in a file, even though tax agencies hate this number on the "income" parts of the forms. But such entries are not made by anyone familiar with the law as a matter of policy only - they are made as a matter of precision, and each is determined individually by the appropriate application of all relevant provisions of the law.

Legal analysis is available on their Lost Horizons website - Income tax is a premium tax that arises only when distinct taxable events occur. I'm still not convinced. This is the most disturbing argument.

Moreover, of course, the more than 250,000 concrete admissions by the IRS and state tax agencies that have been made over the years since prior tax information was compiled and first published in 2003 emphasizes even more strongly the invalidity of applying the tax to nondistinguished earnings. . As detailed in a 2017 analysis, such “confessions-for-interest” reveal in the most compelling way that a government that publishes and cites forgeries about the Brushaber rule in the hope of perpetuating the desired revenue stream knows itself better, and will admit it when the application is properly made. .

I find it disturbing that if you follow Mr. Hendrickson's instructions and request a refund of all the withholdings, there is a good chance you will receive it. In the event that you are one of the unlucky people who have been challenged by the IRS, don't use the arguments in tax court, it may cost you extra.

Other coverage

Freeman's law covered the case in Tax Litigation: Week of September 5, 2022 until September 9, 2022. It's a good summary.

If you like Be careful what you order - Rediffus.

Eric gets what he wants. His decade in the 1940s goes back; But it's also petty, and he gets the chops.