IRS won’t buy most arguments
‘Frivolous’ objections carry stiff penalties
That’s essentially the message from the Internal Revenue Service, which recently released its annual list of “frivolous tax arguments” made by those trying to avoid paying federal taxes.
The arguments, all of which have been tossed out by courts, often with penalties and sanctions, cover moral, religious, semantic and philosophical grounds. Some are touted by individual crusaders against the federal tax system; others are instigated by unscrupulous tax preparers or scam artists.
Among them: Taxes are voluntary. Taxes are unconstitutional. Only foreign income is taxable. Military income doesn’t count. IRS agents don’t carry the proper badges.
Releasing the list is intended to “help taxpayers avoid wasting their time and money with frivolous arguments” that could incur penalties, the IRS said.
The growth of frivolous tax arguments has been spurred by the Internet, IRS spokesman Jesse Weller said Friday.
“In the old days, a scammer had to rent a room and pay for an ad promoting a seminar for a bogus scheme. Now, the Web makes it very easy to pitch their scams,” he said. “Unfortunately, the people who fall for these frivolous arguments can suffer civil and criminal penalties, not just the promoters.”
While some of the nonpayment arguments sound humorous, the IRS and federal courts aren’t amused.
Penalties are stiff, up to $25,000 for taxpayers who file frivolous lawsuits deemed by the courts as groundless or as delay tactics. In 2006, the IRS penalty for filing a tax return with frivolous information went from $500 to $5,000.
In the past decade, the federal Department of Justice obtained injunctions against more than 455 tax preparers and tax-fraud promoters.
Among the recent cases cited by the IRS was that of a Placerville, Calif., tax preparer, Teresa Marty, who was accused of filing more than 110 fraudulent tax returns using phony 1099 forms that led to refund claims as large as $2.7 million per customer. Marty, former owner of Advanced Financial Services LLC, was permanently barred from preparing federal tax returns in March 2010.