Now that the latest tax season is over, many payers are reeling from the tax bill — especially those who weren’t expecting the surtaxes that come with Obamacare.
When you are surprised by your tax bill, it’s tempting to argue that you don’t owe what Uncle Sam says you do. While you can make your case, the reality is that there are many tax arguments that the IRS considers frivolous.
You have to watch out for these frivolous arguments, since using them can result in penalties and fines, not to mention you still owe taxes. As part of its “Dirty Dozen” tax scams, the IRS mentioned frivolous arguments, and outlined some of the penalties:
Those who promote or adopt frivolous positions risk a variety of 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.
You don’t want to be one of those who make frivolous tax arguments in an attempt to reduce — or avoid — paying what you owe.
Here are some of the arguments that the IRS considers frivolous. These are all arguments that have been identified as frivolous in a federal court, including the United States Tax Court:
- Wages are not taxable income
- You don’t have to pay taxes because it’s “voluntary” to pay taxes
Before the IRS can collect overdue taxes, it must provide you with a summary record of assessment
- If you claim to be an individual citizen of an individual state, rather than a U.S. citizen, you don’t have to pay taxes.
- You can avoid paying taxes by claiming that you are not a person, as defined by IRS code.
You can file a “zero return” to reduce tax liability.
- Only federal government employees are subject to federal income tax.
- The First Amendment allows you to avoid paying taxes on religious grounds.
- The Sixteenth Amendment was never properly ratified, and so income tax isn’t Constitutional.
- If you don’t file a tax return, a statutory notice of deficiency is invalid.
The Secretary of the Treasury has to sign certain paperwork in order for it to be valid.
All of these arguments — and many others — have been used before. However, no matter what an unscrupulous tax preparer tells you, the reality is that these arguments have been termed frivolous, and those that made them have been hit with fines, along with a requirement to pay what they owe.
Even those that try to hide their assets can find themselves facing actions like liens, levies, and garnishments. Trying to use these types of arguments to get out of paying your income taxes can be problematic, and only make the situation worse.
It’s one thing to take a legal tax deduction or claim a credit that you are entitled to. These are legal ways to reduce your tax liability, and proper tax planning can help you reduce what you owe without getting you in trouble with the IRS or even with the law. A reputable tax professional can help you find legal ways to reduce your tax liability, and won’t try to get you to make frivolous arguments about the “legality” of paying taxes.