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Frivolous Tax Arguments

January 23, 2015  |   Tax Advice   |   Tags: , ,  

Some taxpayers that are in tax debt try to avoid paying what they owe by using arguments that are not reasonable. A common example of a frivolous argument is that you don’t believe in taxes. Such arguments when presented before the court do not stand up, and therefore, should be avoided in the first place.

frivolous tax arguments

The Right to Challenge the IRS

Every taxpayer has the right to contest their tax liabilities and challenge IRS’ claims in court. This right is included in the Taxpayer Bill of Rights: “The Right to Challenge the IRS’s Position and Be Heard”. Taxpayers have the legal right to raise objections against IRS decisions and provide documentation in response to IRS actions, and expect a fair and timely response. At the same time, the arguments in defense of their claims must be sound.

Kinds of Frivolous Arguments

Sometimes, people are unaware of the fact that their argument is frivolous and go through the trouble of challenging the IRS in court, only to find that their argument will not stand. To avoid getting into such a situation, it’s important to know the type of arguments that will be dismissed by the IRS in court. These include:

  1. 1. Filing tax returns and paying income tax is voluntary
  2. 2. You can reduce your income tax liability by filing a “zero return”
  3. 3. The IRS is required to file your tax return if you fail to do so
  4. 4. Compliance with the IRS is voluntary
  5. 5. Wages, tips, etc. are not income
  6. 6. Only income from overseas is taxable
  7. 7. Federal Reserve notes are not income
  8. 8. You are not a “citizen” of the United States and therefore are not required to pay taxes
  9. 9. You are not a “person” as defined in the Internal Revenue Code
  10. 10. Only employees of the government are required to pay income tax

Penalties for Adopting Frivolous Arguments

Taxpayers that make frivolous arguments to avoid paying taxes may face a variety of civil and criminal penalties. Those that promote or encourage others to use frivolous arguments to not pay taxes can also be prosecuted. However, those who promote such schemes face lesser penalties than those who adopt these positions to contest laws.

Those relying upon frivolous arguments to avoid filing a return and paying taxes are subject to an addition to tax under Section 6651(a)(1), and Sections 6651(a)(2) and 6654 respectively. Taxpayers making frivolous arguments may attract various penalties under Section 6662, Section 6672 and Section 6676.

When contesting IRS’ claims, it is important to provide documentation to validate your case. Factual information cannot be refuted and provides you a much better chance of convincing the IRS or the court of the legitimacy of your claims. It is wise to prepare your arguments and your case before taking action. Relying on an experienced tax professional may be essential in having a successful outcome.