IRS Addresses More Frivolous Tax Claims

January 21, 2008

Nearly a century after the passage of the 16th Amendment, a handful of Americans still believe that no one is legally required to pay income taxes. Others acknowledge that the Constitution does allow collection of income taxes, but still look for sneaky ways to beat the system. Some people even make big money selling books that claim to teach others how to “legally” avoid paying taxes.

These arguments frequently center on either the claim that the 16th amendment was never ratified or on an argument involving one of the other amendments to the Constitution. The arguments are so numerous that the IRS has created a special document to refute them.

Periodically, the IRS addresses new arguments for legal tax avoidance. Last week the agency issued the following notice:

WASHINGTON – The Internal Revenue Service today issued a notice that lists four additional erroneous legal positions that taxpayers should refrain from using as an excuse to avoid paying their taxes.

An individual or group may not avoid paying their fair share of taxes by making “frivolous” legal arguments such as those listed in this notice. The IRS publicizes these frivolous claims to help taxpayers understand the law and avoid penalties.

Notice 2008-14 lists positions identified as frivolous for purposes of the penalty under section 6702 of the federal tax code for filing a frivolous tax return or submitting to the IRS a frivolous request for a collection due process hearing or application for an installment agreement, offer-in-compromise, or Taxpayer Assistance Order.

Taxpayers who file a tax return or make a submission based on a position listed in this notice are subject to a $5,000 penalty. This notice adds to the positions listed in Notice 2007-30, 2007-14 I.R.B. 883. The positions that have been added are found in paragraphs 9(g), 11, 14, and 25.

The four new frivolous claims pertain to the following:

  • Misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending.
  • Erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States or the IRS.
  • A nonexistent “Mariner’s Tax Deduction” (or the like) related to invalid deductions for meals.
  • Certain instances of misuse or excessive use of the section 6421 fuels credit.

In 2006, Congress increased the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.

It’s certainly understandable that some people want to avoid paying taxes, but anyone who thinks he has a legitimate, legal refutation of any aspect of the U.S. tax system would be wise to consult a lawyer or other tax professional before deciding to consider April 15 just another day.


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