Thursday, March 10, 2011

IRS Released 2011 Edition Of Its Discussion And Rebuttal Of Common Frivolous Arguments

IRS on March 4 released the 2011 edition of its discussion and rebuttal of common frivolous arguments “made by individuals and groups that oppose compliance with federal tax laws.” (IR 2011-23 —“The Truth About Frivolous Tax Arguments”) As described by the agency, the document explains many of the common frivolous arguments made in recent years and it describes the legal responses that refute these claims. It includes many cases that were recently decided. “Anyone who contemplates arguing on legal grounds against paying their fair share of taxes should first read the 84-page document,” IRS said. According to IRS, among the frivolous arguments “are 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.” The document also highlights cases involving injunctions against preparers and promoters of Form 1099-Original Issue Discount schemes, and the imposition of criminal and civil penalties on taxpayers who claimed they were not U.S. citizens for federal income tax purposes. In 2006, the penalty for frivolous tax returns was increased 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,” the agency said. The complete document can be found at,,id=159853,00.html.

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