The IRS considers a tax position or deduction to be frivolous if it is:
- Clearly contrary to the law. This means that the position or deduction has no legal basis whatsoever.
- Patently improper. This means that the position or deduction is so absurd or unreasonable that it has no chance of being successful.
- Advanced primarily for the purpose of delay. This means that the position or deduction is being used to delay or hinder the IRS in its tax collection efforts.
Some examples of frivolous tax positions and deductions, according to IRS Notice 2010-33, include:
- Filing a tax return or paying taxes is voluntary.
- The IRS must respond to a taxpayer’s questions, correspondence, or request to identify the IRC provision requiring filing or paying before the taxpayer is legally obligated to file or pay.
- Taxpayers are not legally obligated to file a return because the IRS Form 1040, 1040A, or 1040EZ instructions do not have OMB control numbers.
- Taxpayers may file a zero income and zero tax liability return even when they received income in the period covered by the return.
- Taxpayers may refuse to pay income taxes on religious or moral grounds.
- Forced compliance with tax laws is a form of servitude prohibited by the Thirteenth Amendment.
- The Sixteenth Amendment was never properly ratified, so income taxes are unconstitutional.
- The IRS was not created by Congress and is not an agency of the United States, so it lacks the authority to enforce the Internal Revenue Code (IRC).
- Taxpayers may untax, detax, or otherwise remove themselves from the tax system.
- The prohibition against self-incrimination in the Fifth Amendment permits taxpayers to withhold financial information from the IRS.
- The requirement to file a tax return is an unreasonable search and seizure prohibited by the Fourth Amendment.
If the IRS determines that a taxpayer has filed a frivolous tax position or deduction, the taxpayer may be subject to a penalty of $5,000 under IRC §6702.
It is important to note that the IRS has a broad discretion in determining what constitutes a frivolous tax position or deduction. If you are unsure whether a particular position or deduction is frivolous, it is best to consult with a tax professional.