Have you recently read somewhere or heard someone claim that you don’t need to file a frivolous return with the IRS? Don’t fall for it—frivolous tax arguments are a scam. The IRS is concerned that people may fall victim to con artists and promoters who sell these schemes and then leave the taxpayer to fend for themselves once they’re caught; they therefore include frivolous tax arguments within their “Dirty Dozen” warning list of known scams.
Whatever your sentiments may be, frivolous arguments against income tax are null and void in the eyes of the law. Don’t let someone talk you into thinking that taxes are optional or unnecessary; if you owe income tax and choose not to file, you are breaking the law. If you’re confused and asking yourself, “What is a frivolous tax return?”, keep reading to learn more. Without making yourself aware, you could get duped by a scammer and face some serious consequences.
What is a Frivolous Tax Return?
The word “frivolous” means without purpose or value. A frivolous tax return is one that does not include enough information to verify whether the tax was correct, or contains information clearly showing that the reported tax was incorrect.
Consider the following example to understand what a frivolous tax return is: John Smith does not want to pay taxes. Someone told him that he only has to pay taxes on the gross income he reports to the IRS. Therefore, he reports making no income on his Form 1040 to achieve a tax bill of $0.
John may think he’s clever, but he and anyone else who submits a frivolous tax return will be subject to strict IRS penalties. If you live in the United States and meet the required amount of earned income, you are required to pay taxes—it’s the law.
Arguments against Income Tax
Over the years, many tax protestors and con artists have created a long list of convoluted arguments used to convince themselves and/or others that filing a tax return is unnecessary. They believe that tax laws can be ignored, and as a result of their frivolous tax arguments, they wind up incurring sizable civil penalties and fees.
The IRS has listed dozens of cases in which individuals challenged the court and ultimately lost their argument against income tax. Unfortunately, many of these people proclaim to be professional tax preparers and charged their clients for services, who in turn suffered a frivolous tax return penalty for access to so-called “secret loopholes”.
If someone presents you with one of these faulty, frivolous tax arguments against income tax, be smart and don’t adopt it.
- “The filing of a tax return or paying income tax is voluntary.”
- “The IRS must prepare tax returns for those who fail to file.”
- “Only federal employees pay federal income tax.”
- “My wages or tips are not considered gross income.”
- “I don’t have to pay because I am a citizen of my state, not the United States.”
- “The First Amendment protects religion, and it’s against my religion to give money to the government.”
- “IRS summonses violate the Fourth Amendment protections against search and seizure.”
- “Collecting income tax is like taking my property without due process of law, which is against the Fifth Amendment” or “I can take the Fifth to avoid self-incrimination.”
- “The Sixteenth Amendment wasn’t properly ratified.”
- “Compelled compliance for filing a tax return is like slavery, which is prohibited by the Thirteenth Amendment.”
These examples are only ten of the most common frivolous tax arguments, and don’t come close to exhausting the list of over 40 arguments against income tax presented in this PDF from the IRS.
Frivolous Tax Return Penalty
It’s a taxpayer’s right to contest his or her tax liabilities, but no one has the right to disobey the law or disregard their tax responsibility. Those who act on frivolous positions and pursue frivolous tax arguments risk a variety of criminal and civil penalties. Quoted from the tax court in United States v. Sloan (1991), “Like moths to a flame, some people find themselves irresistibly drawn to the tax protester movement’s illusory claim that there is no legal requirement to pay federal income tax. And, like moths, these people sometimes get burned.”
There are many frivolous tax return penalties you may be subjected to if you adopt an argument against income tax, including:
- Failure-to-file penalty
- Failure-to-pay penalty
- Accuracy-related penalty (20% of the underpayment attributable to negligence or disregard of rules and regulations)
- Civil fraud penalty (75% of the underpayment attributable to fraud)
- Erroneous claim for refund penalty (20% of the excessive amount)
- Fraudulent failure to timely file penalty (triple the amount of the standard failure-to-file penalty
- $5,000 penalty for frivolous tax returns
Note that any frivolous tax return penalty will be imposed on top of the outstanding tax debt, and taxpayers who appeal a decision on frivolous grounds may be subject to additional sanctions (including double the costs and damages).
Frivolous tax arguments may result in criminal persecution, as well. These taxpayers may be charged with a felony for attempting to evade or defeat tax, which comes with a penalty of up to $100,000 and imprisonment for up to five years.
Pursuing arguments against income tax presents far more risks than rewards. The next time you hear someone peddling frivolous tax arguments, don’t fall for it.
Professional Tax Advice from Community Tax
If you’re unsure about the tax strategy you’re considering, talk to the professionals at Community Tax before filing. Our trusted tax practitioners will ensure you remain fully compliant with the federal law. Those who are exploring frivolous tax arguments because they don’t want to go through the hassle of filing a tax return will benefit from our seamless tax preparation services. Or, if paying the taxes is what you protest, you might be surprised by how much money Community Tax may get you back on your return—legally, with proper credits and deductions, not using bogus claims. Stay clear of con artists and frivolous tax arguments by relying on the expert advice of tax professionals.