Holland v. Commissioner
T.C. Memo. 2021-129

On November 18, 2021, the Tax Court issued a Memorandum Opinion in the case of Holland v. Commissioner (T.C. Memo. 2021-129). The primary issue presented in Holland was whether petitioner is taxable on retirement income he received during 2017.


#Protester? Yes.
#Winning? Not so much.

Basics of Argument in Holland v. Commissioner

Although the petitioner conceded that he retirement income received payments…he nonetheless asserted that such payments did not constitute “taxable income” because they were received in exchange for his prior labor and were “unconnected with his exercise of any Federal privilege.”


Holland v. Commissioner
In this GIF, Judge Lauber is played by Ryan Gosling.


Background to Holland v. Commissioner

Holland Labor MovementThe petitioner was retired during 2017. He had previously been employed as a service technician by PepsiCo. He drove a truck for a period of time and was a member of the Teamsters union.

During 2017 petitioner received Social Security benefits of $26,292. The Social Security Administration (SSA) reported these payments to petitioner and the IRS on a Form SSA-1099 (Social Security Benefit Statement). The SSA withheld no tax from these payments.

WritingDuring 2017, the petitioner received a distribution of $20,928 from a retirement plan of which Fidelity Investments (Fidelity) was the custodian. Fidelity reported this distribution to petitioner and the IRS on a Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.), checking the box for distribution code “7,” indicating a normal distribution. Fidelity withheld no tax from this distribution.

In preparing his Form 1040, U.S. Individual Income Tax Return, for 2017, petitioner did not use the information reported to him on the Forms 1099-R. Rather, he attached to his return two Forms 4852, Substitute for Form W-2 or Form 1099-R, that he himself drafted.

You may remember such antics from the Silver v. Commissioner case from earlier this year.  Frivolous taxpayers are among our favorites, as we noted in this article, entitled Frivolous Taxpayers and the Jurists who Loathe Them.

The petitioner in Holland v. Commissioner reported on his return retirement plan distributions of zero, taxable Social Security benefits of zero, and taxable income of zero. He reported tax payments of $2,892, whereas only $194 had actually been withheld by his payors. He asked that his purported overpayment be refunded to him.

Editor’s Note

Mr. Holland was a tax protester. I get it. I don’t agree with it or condone it, but I get it. What I don’t understand is rejecting the federal system of taxation, and then embracing it with open arms when you think that you can claw back money “owed” to you by said federal system.

Holland v. Commissioner

Mr. Holland, likely, has a “Don’t Tread on Me” sticker on his Chevy. Again, I don’t begrudge him this. What I do so begrudge is rejecting something when you don’t like it, whilst embracing it when it serves you. Stick to one side, Mr. Holland.

You are likely why Austin Powers didn’t trust the Dutch.

:End Rant:

Gross Income Includes, well, Income

IRC § 61(a) provides that “gross income means all income from whatever source derived,” including “[c]ompensation for services.”[1] In cases of unreported income, the IRS must generally establish an evidentiary foundation connecting the taxpayer to the income-producing activity,[2] or demonstrate that the taxpayer actually received income.[3] Information supplied to the IRS on Forms W-2 and 1099 is sufficient to meet this burden.[4] Once the IRS makes the required threshold showing, the burden shifts to the taxpayer to prove by a preponderance of the evidence that the Commissioner’s determinations are arbitrary or erroneous.[5]

Reports of Income from Third-Party Source (Like a Form 1099)

Agreeable WalrusThe IRS may not rely solely on a third-party report of income, such as a Form 1099, if the taxpayer raises a reasonable dispute concerning the accuracy of the report.[6]

However, when the petitioner agrees wholeheartedly that it received the “remuneration,” but he argues, instead, that this was not “income,” the burden shifts to the petitioner.

The Crazy Comes to Roost

In contending that this income was immune from Federal income tax, the petitioner offers a familiar array of arguments lifted from the tax-protester arsenal.

Crazy Comes to Roost

The petitioner in Holland v. Commissioner contends that retirement benefits are essentially deferred wages, which are supposedly tax-exempt because received as an equal exchange for labor. Ignoring the Sixteenth Amendment to the Constitution, he asserts that, “once someone has come into ownership of money or property, by fulfilling the terms of a [labor] contract, that property can only be taxed by means of an apportioned tax.”

He asserts that he could never have received wages to begin with because he was never a Federal employee, citing the definition in IRC § 3401(c) that the term employee “includes” an officer or employee of the United States. And he asserts that “outside of Federal geographical jurisdiction work cannot be taxed indirectly by the Federal government.”

The Tax Court wasn’t having it, and it dismissed the arguments summarily. In doing so, the Tax Court observed that “[t]hese are all time-worn tax-protester arguments that no court has ever accepted.”

Judge Lauber is Too Nice

Yes, the petitioner’s arguments were patently frivolous.

Yes, there is a penalty for frivolous arguments under IRC § 6673(a)(1).

Yes, the petitioner checked all the necessary (crazy) boxes.

But, in the end, Judge Lauber is a most forgiving judge:

This appears to be petitioner’s first appearance in this Court, and he cooperated with Chief Counsel by executing stipulations of fact and preparing the case for submission without trial under Rule 122. [The Tax Court] will thus refrain from imposing any penalty at this time. But [the Tax Court] warns petitioner that he will risk a severe penalty if he advances frivolous positions in any future appearance before this Court.

Holland Stop It
As Uncle Joe sagely advised: “Cut. It. Out.”


(T.C. Memo. 2021-129) Holland v. Commissioner

  1. IRC § 61(a)(1).
  2. Weimerskirch v. Commissioner, 596 F.2d 358, 361 (9th Cir. 1979), rev’g 67 T.C. 672 (1977).
  3. Edwards v. Commissioner, 680 F.2d 1268, 1270 (9th Cir. 1982).
  4. See Hardy v. Commissioner, 181 F.3d 1002, 1005 (9th Cir. 1999), aff’g T.C. Memo. 1997-97.
  5. See Williams v. Commissioner, 999 F.2d 760, 763 (4th Cir. 1993), aff’g T.C. Memo. 1992-153.
  6. See IRC § 6201(d).
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