IRS Debunks Frivolous Tax Arguments

irs logo

WASHINGTON – The Internal Revenue Service today released the 2014 version of “The Truth about Frivolous Tax Arguments.” The document describes and responds to some of the common frivolous tax arguments made by those who oppose compliance with federal tax laws. The cases cited demonstrate how frivolous arguments are treated by the IRS and the courts. The 2014 version includes numerous recently-decided cases that demonstrate that the courts continue to regard such arguments as illegitimate.

Examples of frivolous arguments include contentions that taxpayers can refuse to pay income taxes on religious or moral grounds by invoking the First Amendment; that the only “employees” subject to federal income tax are employees of the federal government; and that only foreign-source income is taxable.

Frivolous Arguments appeared on the IRS annual “Dirty Dozen” list of tax scams that was released on February 19.

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. While taxpayers have the right to contest their tax liabilities, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000. The penalty is applied to anyone who submits a tax return or other specified submission, if any portion of the submission is based on a position the IRS identifies as frivolous.

Those who promote or adopt frivolous positions also risk a variety of other penalties. For example, taxpayers could be responsible for an accuracy-related penalty, a civil fraud penalty, an erroneous refund claim penalty, or a failure to file penalty. The Tax Court may also impose a penalty against taxpayers who make frivolous arguments in court.

Taxpayers who rely on frivolous arguments and schemes may also face criminal prosecution for attempting to evade or defeat tax. Similarly, taxpayers may be convicted of a felony for willfully making and signing under penalties of perjury any return, statement, or other document that the person does not believe to be true and correct as to every material matter.

Persons who promote frivolous arguments and those who assist taxpayers in claiming tax benefits based on frivolous arguments may be prosecuted for a criminal felony.

No Author Biography has been linked to this Article.

Related Articles

October 20, 2019
By Herb Beskin, Chapter 13 Trustee and Edward M. Wayland, Esq. (Charlottesville, VA) Trustees are not privy to the struggles of Debtors as they emerge from Chapter 13 and work to re-establish (establish?) their credit worthiness. A crucial factor in this process is the Debtor’s credit report. In this article, we discuss the Fair Credit Reporting Act (“FCRA”), the rules...
Members
Copy of Hildebrand-2016
April 17, 2022
In re Galloway, 2022 WL 1017951 (Bankr. N.D. Ill. April 5, 2022) A Chapter 13 trustee’s final audit and notice of completion of payments is not necessary or a precondition to the court granting a discharge to a debtor who has satisfied the requirements of § 1328. (Judge Thorne) Case Summary Tara Galloway filed a Chapter 13 petition in May...
Members
Copy of Hildebrand-2016
August 21, 2022
Where a Chapter 13 plan treats a claim as secured only by the debtor’s mobile home under § 506 and not real property, the effect of a notice of fees, costs and charges is irrelevant. (Coleman) In re White, 2022 WL 2826531 (Bankr. S.D. Ga. July 19, 2022) Case Summary Shalonda White filed a Chapter 13 petition in July of...
Members
September 29, 2019
By Academy Staff Jeffrey M. Kellner graduated from THE Ohio State University in 1975. Between then and entering law school, Jeff worked in Montana for the park service. He graduated from Capital University College of Law in 1985. After law school, he worked for two years as a law clerk for Judge Calhoun in Columbus, OH. He then went to...
emily-connor-kennedy
July 24, 2022
I hope that you’ve enjoyed the articles from Mark Leffler and Steve Relyea discussing how our firm began litigating against creditors in bankruptcy court and mortgage servicers in federal district court. In this (final) installment, I will discuss our entry into Fair Credit Reporting Act litigation. Our firm’s history with Fair Credit Reporting Act litigation is intertwined with the relationships...
Members
gendron-1
April 2, 2023
Section in 109(g)(2) of the Bankruptcy Code bars a debtor from filing a new case for 180 days if the Debtor voluntarily dismisses a case “following” a motion for relief. Not surprisingly, courts are split on how they interpret the word “following” as used in § 109(g)(2). After all, the word “following” is not limited to one definition, or even...
Members
June 21, 2020
By The Honorable William Houston Brown (Retired) Objection to proof of claim barred by preclusion. The Chapter 13 debtor objected to Wells Fargo’s proof of claim in an adversary proceeding that alleged the note had been procured by fraud and was unenforceable; but the debtor had previously litigated those and other issues in the state court. Preclusive effect of the...
Members
October 13, 2019
By Cathy Moran, Esq. (Redwood City, CA) Bankruptcy lawyers are accustomed to evaluating the dischargeability of taxes when deciding when to file a client's bankruptcy case. But as we approach the end of the tax year, a client’s current year tax situation becomes another moving part in the “when do we file” analysis. In the simplest situation, the client owes...
Members
February 21, 2021
By John M. Hauber, Chapter 13 Standing Trustee (Indianapolis, IN) I have recently written an article for the NACTT Quarterly, that may or may not be published at the time of this writing, which is simply a stream-of-conscious style response to Senator Elizabeth Warren’s desire to modify the Bankruptcy Code based upon her perception that debtors’ attorneys get rich off...
EAV2010
July 31, 2022
Helen Morris, the Standing Chapter 13 and 12 Trustee for West Virginia is retiring at the end of this fiscal year. I first met Helen over lunch at NACTT, where we chatted about a non-legal interest we both share, writing fiction. I was delighted to discover, then as now, a friend with a razor wit, a wicked sense of humor...

Looking to Become a Member?

ConsiderChapter13.org offers a forum to advance continuing education of consumer bankruptcy via access to insightful articles, informative webinars, and the latest industry news. Join now to benefit from expert resources and stay informed.

Webinars

These informative sessions are led by industry experts and cover a range of consumer bankruptcy topics.

Member Articles

Written by industry experts, these articles provide in-depth analysis and practical guidance on consumer bankruptcy topics.

Industry News

The Academy is the go-to source for the latest news and analysis in the Chapter 13 bankruptcy industry.

To get started, please let us know which of these best fits your current position: