IRS Debunks Frivolous Tax Arguments
Tired of paying income taxes? Thinking about challenging the laws that require people to file tax returns and pay taxes? Think again. Before you get on the Internet to research “novel” arguments, here are a few things the Internal Revenue Service would like for you to know.
The Internal Revenue Service has released the 2010 version of its discussion and rebuttal of many of the more common frivolous arguments made by individuals and groups that oppose compliance with federal tax laws.
Anyone who contemplates arguing on legal grounds against paying their fair share of taxes should first read the 83-page document, The Truth about Frivolous Tax Arguments, says the IRS.
The document explains many of the common frivolous arguments made in recent years and it describes the legal responses that refute these claims. It will help taxpayers avoid wasting their time and money with frivolous arguments and incurring penalties, the IRS says.
For example, promoters of tax-evasion schemes argue that the federal income tax system is “voluntary”; that taxes can be avoided by filing a “zero return” on the premise that income is not taxable; that taxing income violates the U. S. Constitution as a “taking of property”; that a taxpayer can refuse to pay taxes on religious or moral grounds by invoking the First Amendment, and so forth.
For example, courts have repeatedly penalized taxpayers for making the frivolous argument that the filing of a zero return can allow a taxpayer to avoid income tax liability or permit a refund of tax withheld by an employer.
In December 2005, a federal district court in Arizona permanently barred Beverly J. Hill and Darrell J. Hill (who were doing business as Superior Claims Management) from, among other things, preparing or filing federal tax returns for any person or entity other than themselves. The court found that the couple filed zero returns on behalf of their clients based on various frivolous tax arguments.
Congress in 2006 increased the amount of 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.
IRS highlights in the document about 40 new cases adjudicated in 2009. Highlights include cases involving injunctions against preparers and promoters of Form 1099-Original Issue Discount schemes and injunctions against preparers and promoters of false fuel tax credit schemes.