Each year, the IRS comes out with the “Dirty Dozen” Tax Scams list to help prevent the public from becoming victims of tax-related fraud, scams, and penalties. This year, the IRS is focusing on frivolous arguments and preventing people from being duped into trying to use a frivolous argument to get out of paying taxes.
But what is a “frivolous argument” and how do scammers use them? There have been many arguments through the years of people claiming that, for one reason or another, they do not have to file taxes. The reasons vary. People have claimed that the filing of a tax return is voluntary, that wages, tips, and other compensation received for personal services are not income, or that the only employees subject to federal income tax are employed by the federal government. These are not true. The IRS published The Truth About Frivolous Arguments in 2016 that outlines several frivolous arguments and discredits them.
Scammers use these ploys to try to convince people that with the right argument, they can avoid paying taxes. There are countless court cases that set precedent for these frivolous claims, so it’s best to learn from other’s mistakes and not get caught in a scheme.
The fine for submitting a frivolous tax return is $5,000. The person who submits the tax return is responsible for paying the fine. If a frivolous return is filed, the person filing is subject to many other fines as well - accuracy-related penalties, civil fraud penalties, and erroneous refund claim penalties can all occur. Visit the IRS website to learn more.
These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.