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NextGen Magazine


IRS Reminds Taxpayers That 'Unreasonable and Outlandish' Legal Claims Don't Work

Chris Gaetano
Published Date:
Mar 18, 2019


It's one thing to argue that the spare room with your apartment should count as a home office, qualifying you for a deduction. It's quite another to claim that the First Amendment makes income tax illegal on constitutional grounds and so therefore you don't have to pay anything. The IRS warned taxpayers against making such arguments, saying they have never worked in court. Such claims are part of the overall category the IRS refers to as "frivolous tax arguments," which rest on significant misunderstandings of not just tax law but law in general and the nature of the constitution.

The IRS has seen many such arguments crop up in its history, such as that federal reserve notes aren't income (they are), that the United States only refers to Washington, D.C., and federal lands (it does not), and that the IRS is not a U.S. government agency and is in fact a private corporation. 

The IRS warned that such arguments never work in court, and that making them before a judge will likely not help one's case. 

“Don’t be fooled by people citing dubious legal schemes to avoid paying taxes,” said IRS Commissioner Chuck Rettig. “Despite what con artists may tell you, there is no secret way to avoid paying what you legally owe. Taxpayers should be on the lookout for these and other common tax scams.”

Besides risking criminal prosecution, taxpayers can also face a variety of civil penalties for engaging in these schemes. Key among them is the $5,000 penalty for filing a frivolous tax return. The penalty applies to anyone who submits a frivolous tax return or other specified submissions, such as a request for a collection due process hearing, installment agreement, offer-in-compromise or taxpayer assistance order if any part of these submissions are based on a frivolous position. A list of more than 40 such positions can be found in Notice 2010-33, 2010-17 I.R.B.609. The list is not all inclusive, and the IRS and the courts may add to it at any time.