Frivolous Arguments on Tax Returns

419 Lafayette St.
New York, NY 10003

+1 877 NINJATAX
+1 877 646 5282

(reveal e-mail address)
http://www.ninjatax.com

November 3, 2009

Many people object to federal income taxation and routinely claim they don't owe taxes. While we're not experts on such topics as Constitutional law and the history of income taxation in general, we do know that the IRS and courts almost universally rule against such "frivolous" arguments.

Frivolous tax arguments include:

• Income tax return filing is voluntary
• Payment of income tax is voluntary
• Taxpayers can reduce their income tax liability by filing a "zero return"
• Wages, etc. are not income
• Taxpayers can refuse to pay income taxes on religious or moral grounds

The tax code and related regulations do allow taxpayers a lot of leeway in determining their income tax liability. Taxpayers are generally allowed to take non-frivolous positions on their income tax return, even if they stretch boundaries, if there is a reasonable basis for taking the position (and, depending on the level of authority involved, whether the position is disclosed on the return).

However, the IRS and courts regularly reject such frivolous arguments. The IRS has the right to disallow a face-to-face hearing with a taxpayer if the taxpayer doesn't show he intends to make non-frivolous arguments. And significant penalties can be imposed on taxpayers that make frivolous arguments, those who promote such arguments and preparers that sign returns taking frivolous positions. In a recent Tax Court case, the court imposed a $25,000 penalty on an individual taxpayer after he repeatedly brought frivolous cases to the court (he had been fined in prior cases as well).

So, the bottom line is that, if you're considering taking the position you don't have income or you don't owe taxes (and that's not entirely true), guess again. The IRS will find out, and you'll likely owe taxes, interest and penalties -- and spend a lot of time dealing with the issue.

While we recognize that taxpayers are entitled to pay the least amount of taxes under the law, we cannot and will not put forth such arguments. Doing so would jeopardize our reputation (and, potentially, our enrollment to practice before the IRS). However, if you find yourself in a situation where you need help on a tax matter, we are happy to help you, including representing you before the IRS. Let us know how we can help.