As I said two years ago, “(T)he punchline from a horrific but hilarious example of schadenfreude (the full text of which is manifestly unfit for a blog like mine, intended for family reading), tells the story.” And it unhappily fits the plight of Tony Patrinicola and Barbara Patrinicola, T. C. Memo. 2023-16, filed 2/14/23.

This is Tony’s & Pat’s fourth appearance on this my blog. None of the previous three (count ’em, three) sheds any light on the gravamen of Tony’s bœuf with IRS, so I’ll leave out references to any thereof.

It’s one word, and Judge Goeke, vice Judge David Gustafson, gets right to the point.

“… petitioners argue that the pension distributions are not subject to income tax because monthly pension payments are not taxable under a law that they refer to as the ‘Congressional Annual Notice of Monthly Pension Payments,’ which they understand to provide that ‘[m]onthly pension payments will be subject to Federal income tax withholding if the taxable portion of the sum equals to or exceeds are less than $1,990.00 per month. Your pension is not taxable if it is in the allowable range.’” T. C. Memo. 2023-16, at p. 3.

Judge Goeke says there ain’t no such statute or reg, but Tony focused on the wrong word.

“It appears that Mr. Patrinicola received information about withholding obligations from a payer of one of his pensions that resulted in a misunderstanding of his tax obligations. Federal income tax withholding is not the same thing as the federal income tax that is owed on the pension distributions. Withholding is the amount that the payer deducts from the pension payments and sends to the IRS on the taxpayer’s behalf. In general, pensions are subject to federal income tax withholding, but taxpayers can choose not to have federal income tax withheld. Taxpayers use Form W–4P, Withholding Certificate for Periodic Pension or Annuity Payments, to elect the amount of withholding from periodic pension payments to ensure the correct amount is withheld to satisfy their individual tax obligations. Alternatively, taxpayers may use Form W–4P to choose not to have federal income tax withheld from pension payments at the risk that they will not have paid sufficient estimated tax throughout the year to cover their tax liability on the pension and other income. Pension distributions are included in the taxable income regardless of the taxpayer’s decision regarding withholding.” T. C. Memo. 2023-16, at p. 3.

Taishoff says it’s ridiculous that it took four (count ’em, four) years since Tony & Pat petitioned, and 124 (count ’em, 124) docket entries, to get here. Yes, IRS conceded a whole bunch (hi, Judge Holmes) income items, plus chops. But all this for one word?