IRS Warns of Frivolous Tax Arguments - Nonfiler Enforcement
The IRS and Treasury have issued notices warning taxpayers that if returns are filed under the theory that U.S. citizens and residents aren't subject to tax on their wages and other income earned or derived within the United States, they may be subject to penalties. This argument is known as the "zero tax theory" and is possibly known by other names. Despite all the warnings about this and other frivolous arguments, some taxpayers insist on presenting frivolous arguments in court. The law allows the courts to impose a penalty of up to $25,000 when the court comes to any of three conclusions:
a taxpayer instituted a proceeding primarily for delay,
a position is frivolous or groundless, or
a taxpayer unreasonably failed to pursue administrative remedies.
On March 4, 2011, the Internal Revenue Service released the 2011 version of its discussion and rebuttal of many of the more common frivolous arguments made by individuals and groups that oppose compliance with federal tax laws. Anyone who contemplates arguing on legal grounds against paying their fair share of taxes should first read the 84-page document, The Truth About Frivolous Tax Arguments. This past year, the courts have not only rebuked these arguments numerous times, but also have imposed thousands of dollars in fines on taxpayers or their attorneys for pursuing frivolous cases. Some individuals have even be criminal prosecuted and sent to prison.