Taxpayer Fails Test on Frivolous Tax Claim 

Taxes | April 28, 2025

Taxpayer Fails Test on Frivolous Tax Claim 

Tax Court judges are notoriously a no-nonsense bunch. They consistently deny claims by taxpayers that are considered to be “frivolous” in nature.

Ken Berry, JD

Tax Court judges are notoriously a no-nonsense bunch. They consistently deny claims by taxpayers that are considered to be “frivolous” in nature. In one of the latest examples, Swanson, TC Memo 2024-105, 11/12/24, a high school teacher learned a tax lesson about frivolous tax cases the hard way.

Background: Essentially, a frivolous argument or claim is one that is used to support an unreasonable entry on returns or the failure to file a return. Numerous such claims have been denied by the IRS, as well as the courts, in recent years.  Specifically, some of the arguments that have been unsuccessfully asserted in the courts are as follows:

  • Filing tax returns or paying income tax is voluntary.
  • The IRS must prepare your returns.
  • Wages and tips don’t constitute taxable income.
  • Taxes are only owed to the state of your residence.
  • Imposing tax is a violation of the First Amendment religious rights.
  • IRS summonses violate Fourth Amendment protections against search and seizure.
  • Requiring individuals to file tax returns is akin to slavery and is prohibited by the Thirteenth Amendment
  • NO tax is owed because the taxpayer works for a private employer, not the federal government.

Typically, a frivolous tax claim or argument is based on a misguided theory that paying tax is unconstitutional. But that argument has been dismissed time and time again.

The penalties for filing frivolous returns can pile up on top of the back taxes and interest already owed. Currently, the maximum penalty for filing a frivolous return is $25,000.

Facts of the new case: The taxpayer, who was employed as a high school teacher in Georgia, earned $79,186 in teaching wages in 2018. He also received $6,510 in rental income that year. His wages and withholding were properly reported on Form 1099-MISC.

On his 2018 return, the taxpayer failed to report either the wages or rental income as taxable income. He claimed that the income from his teaching job was “capital,” and not wages, and therefore not subject to tax. The IRS assessed deficiencies for the 2018 tax year.

Among other arguments at trial, the taxpayer asserted that the Internal Revenue Code does not impose tax on public school teachers; that he did not receive any amounts in excess of the fair market value of his services; and that taxation of the amounts he did receive would violate the Uniformity Clause of the U.S. Constitution.

The taxpayer has previously stated the same or similar arguments in the courts regarding these matters. He has already been sanctioned by the Southern District of Georgia and permanently enjoined from filing refund suits in federal court for any tax year in which he has failed to report his wages as income.

Final grade: The decision was an easy one for the Tax Court. It sided with the IRS and assessed the maximum $25,000 penalty to the taxpayer.

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Tags: IRS, tax court, Taxes

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Ken Berry, JD

Ken Berry, JD

CPA Practice Advisor Tax Correspondent

Ken Berry, Esq., is a nationally-known writer and editor specializing in tax and financial planning matters. During a career of more than 35 years, he has served as managing editor of a publisher of content-based marketing tools and vice president of an online continuing education company in the financial services industry. As a freelance writer, Ken has authored thousands of articles for a wide variety of newsletters, magazines and other periodicals, emphasizing a sense of wit and clarity.