A frivolous tax submission refers to any tax return, form, or claim filed with the Internal Revenue Service (IRS) that blatantly violates tax laws or relies on invalid, often absurd, legal arguments to evade tax obligations. Such filings are not simply incorrect but are considered disrespectful or contemptuous of the tax system, prompting significant IRS penalties.
Historical Context and Examples
Since the IRS was established in 1862, some taxpayers have attempted to avoid tax responsibilities through unconventional and unfounded arguments. Common frivolous claims include assertions that income tax is illegal or unconstitutional, that wages do not constitute taxable income, or that filing taxes is voluntary due to conspiracy theories surrounding the tax system. For example, a taxpayer might file a standard Form 1040 but attach a statement claiming the income tax is unconstitutional, thereby submitting a frivolous return.
Real-world examples include:
- Filing returns claiming all received wages are loans rather than income.
- Sending blank tax forms or forms marked with phrases like “Tax Protester” or “No Tax Liability.”
- Asserting that the IRS lacks jurisdiction over individual taxpayers.
- Using nonsensical or irrelevant legal theories to refuse tax payments.
Impact and Who It Affects
Frivolous submissions can be made by any taxpayer, including individuals and small business owners, who have a filing obligation but attempt to shirk it through illegitimate means. Filing such returns does not eliminate liability; instead, it exposes taxpayers to civil penalties and potential criminal charges.
Consequences of Filing a Frivolous Return
The IRS imposes a minimum penalty of $5,000 for each frivolous submission under 26 U.S. Code § 6702. Additionally, the IRS can reject these returns, assess the taxes due along with applicable interest and regular penalties, and in severe cases, pursue criminal prosecution for tax evasion or fraud. Courts have consistently rejected frivolous tax arguments as lacking merit.
How to Avoid Frivolous Filings
- File your tax return based on actual income, expenses, and allowable deductions as outlined in IRS guidelines.
- Avoid following tax protester theories or unverified internet sources.
- Consult a qualified tax professional if unsure about your filing obligations or tax rules.
- Maintain proper documentation and records of your income and deductions.
Common Misunderstandings
| Misconception | Reality |
|---|---|
| “I don’t have to pay taxes.” | The IRS requires most individuals with income to file and pay taxes. |
| “The IRS has no authority over me.” | Courts have repeatedly upheld the IRS’s jurisdiction. |
| “Filing a frivolous return will go unnoticed.” | The IRS actively detects and penalizes frivolous filings. |
| “A frivolous return is the same as not filing.” | Both can lead to penalties, with frivolous returns often incurring higher fines. |
Additional Resources
For more detailed guidance, consult the IRS’s official page on Frivolous Tax Arguments and the comprehensive overview on Investopedia’s Frivolous Tax Return.
Filing honest, accurate tax returns in compliance with IRS rules is the safest way to avoid penalties and legal trouble. Frivolous tax submissions carry substantial risks including costly fines and possible criminal charges and should be avoided entirely.