On August 9, 2021, the Tax Court issued a Memorandum Opinion in the case of Silver v. Commissioner (T.C. Memo. 2021-98). The primary issue presented in Silver v. Commissioner was whether the petitioner’s arguments were frivolous, and if so whether the imposition of a penalty for bringing a frivolous or groundless position was warranted.

Background to Silver v. Commissioner

The petitioner, Mr. Silver, received $28,155 in wages and $5,000 as other income in tax year 2012. Not unsurprisingly, the 12 businesses that Mr. Silver worked for to earn $33,155 over two years did not withhold. His return for 2012, which was filed in March of 2016, reported no gross income and no tax liability. The return had a number of novel attachments, including eleven “substitutes” for Forms W-2, one “corrected” Form 1099-MISC, and one stub of a train ticket straight to crazytown.

The “corrected” (the quotes and side-eye are straight from Judge Copeland’s opinion) Form 1099-MISC stated as follows:

This corrected form 1099-MISC is submitted to rebut a document known to have been submitted by the party identified as “PAYOR” which erroneously alleges payment to the party identified as “Recipient” of “gains, profit, or income” made in the course of a “trade or business” within the meaning of relevant law.

Tarnished Silver

Wages are considered to be an accession to wealth and thus are includible in gross income; indeed, “they are the very paradigm of income.” See Commissioner v. Dunkin, 500 F.3d 1065, 1069 (9th Cir. 2007), rev’g 124 T.C. 180 (2005). Therefore, the $28,155 in wages that Mr. Silver received in tax year 2012 should have been included in his gross income for that tax year.

The Whack-a-doodle Comes Home to Roost

During the course of this case Mr. Silver has filed numerous documents asserting common tax-protester arguments, such as:

1. He is not a taxpayer within the meaning of IRC § 7701(a)(14), which defines a taxpayer as “any person subject to any internal revenue tax;”
3. He did not receive taxable compensation in tax year 2012 but rather exchanged his labor and services for remuneration paid to him;
4. His wages are not taxable because they were paid by a private sector employer;
5. Only wages paid by a public sector employer to a public sector employee are taxable;
6. The Internal Revenue Service is attempting to apply a direct tax without apportionment in violation of the United States Constitution; and
7. He is not a United States citizen, but rather a “private American citizen within the States of the Union.”

Mr. Silver’s contentions are of the type that the Tax Court has repeatedly addressed and rejected as groundless and frivolous. See, e.g., Wnuck v. Commissioner, 136 T.C. 498 (2011); Waltner v. Commissioner, T.C. Memo. 2014-35, aff’d, 659 F. App’x 440 (9th Cir. 2016). Therefore, the Tax Court “will not refute [Mr. Silver’s] arguments with somber reasoning and copious citation of precedent because to do so might suggest that these arguments have some colorable merit.” See Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984).

The Tax Court then slapped Mr. Silver on the back of the hand with a peacock feather, warning him sternly that if he were to try this shit again, the Court would not be so forgiving (and would impose the frivolous position penalty).

(T.C. Memo. 2021-98) Silver v. Commissioner

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