Frivolous tax arguments are amusing, but the IRS penalty is not

irs penalty

When it comes to frivolous tax arguments, the IRS has zero tolerance for clowning around in the name of tax evasion. Image: CC Stephen Brace/Flickr

When it comes to frivolous tax arguments, the IRS hears new ones every year. On an annual basis, the IRS releases an updated list of frivolous tax arguments made by people trying to avoid paying federal income taxes. Some frivolous tax arguments are amusing, but instead of a laugh, taxpayers who try to use them will get a hefty fine from the IRS.

A caution for would-be tax cheats

The Truth About Frivolous Tax Arguments is an annual report the IRS has just released for 2011. The 87-page document defines the most popular tax evasion scenarios of all time. The document also includes the official legal policies the government has used to get frivolous tax arguments rejected by courts, as well as the penalties and sanctions levied against would-be tax cheats as a result. Most of the arguments are spread on the Internet by a growing number of scam artists posing as brave crusaders against an unjust government and include refusal to pay federal income taxes for moral, religious, semantic or philosophical reasons.

The cost of frivolous tax arguments

Frivolous tax arguments listed by the agency include cases in which people claim not to be a “person” as defined by the IRS. Others have argued that the federal income tax is unconstitutional or that paying taxes is voluntary. To some taxpayers, military income is exempt and only foreign income is taxable. It has been estimated that every year at least 10,000 people attempt to evade taxes with a frivolous argument, and the number is growing. The IRS penalty for filing a frivolous tax return argument is $5,000. Taxpayers who go to court with their frivolous arguments can receive an IRS penalty up to $25,000. Since the 2000 tax year, the Department of Justice has filed injunctions against more than 455 companies and individuals for frivolous tax arguments.

Popular, and hopeless, tax evasion scenarios

Some of the most popular frivolous tax arguments, according to the IRS, include the claim that paying taxes is against one’s religion, that paying taxes violates the Fifth Amendment and that taxes are considered servitude, which violates the 13th Amendment. The Supreme Court often rules that saying “paying taxes is against my religion” simply will not fly. The Fifth Amendment says a person shall not be “deprived of life, liberty, or property, without due process of law.” But the law gives the government authority to collect taxes from U.S. citizens. The 13th Amendment outlaws slavery, but the claim that paying taxes is servitude has been consistently rejected by courts.


Main Street

Christian Science Monitor

Other recent posts by bryanh