Despite driving a truck for a living, Kevin Holloway was confident he knew the ins and outs of the Constitution. And nowhere on that sacred parchment, Holloway would have you believe, is the IRS granted permission to levy and collect income taxes from U.S. citizens.
Holloway was so certain of this fact, he not only failed to file a tax return for the 2002-2006 tax years, he took a proactive approach to tax evasion by writing letters to the IRS explaining that his wage income was not taxable under his read of the Constitution. The Service’s failure to respond, argued Holloway, validated his position.
The IRS, quite obviously, disagreed with Holloway’s take on its powers, and recreated his returns for the years at issue using the W-2 he received from his employer, resulting in a tax deficiency and associated penalties in each year.
The Tax Court sided with the IRS, upholding the deficiencies, failure to file, and failure to pay penalties, explaining:
Individuals who have gross income that exceeds the threshold amount specified by section 6012(a) must file an income tax return. Sec. 6012(a). Petitioner’s gross income exceeded the section 6012(a) amount for the tax years at issue, and, as a result, petitioner was required to file a tax return for each year. Silence in response to petitioner’s letters questioning the taxability of his income did not, as he claims, relieve him from his obligation to file tax returns. See sec. 6012(a)(1).
Quite frankly, Holloway got off easy. The Tax Court could have held him responsible for a maximum $25,000 “frivolous argument” penalty under I.R.C. § 6673.