Frivolous Arguments

In this world, nothing is certain but death and taxes.” – Benjamin Franklin

Frivolous Arguments Don’t Work

Mike Habib, EA

Yes, folks, it’s a matter of fact. If you have earned income in the last year, you must file a tax return. There isn’t a way around it. If someone is claiming that there is a way to get around it, they are mistaken and it could cost you plenty in penalties for following such advice – in fact up to $5,000. The Internal Revenue Service has recently expanded its list of frivolous legal positions that taxpayers should stay away from. The list of twenty-four different arguments breaks down into five different categories that include: The Voluntary Nature of the Federal Income Tax System, The Meaning of Income, The Meaning of Certain Terms Used in the Internal Revenue Code, Constitutional Amendment Claims and Fictional Legal Bases.

Under the category of “The Voluntary Nature of the Federal Income Tax System” the arguments range from “The filing of a tax return in voluntary,” to “Payment of tax is voluntary,” and “Taxpayers can reduce their federal income tax liability by filing a ‘zero return’.” There are additional arguments that have been put forth, but the bottom line is that the Federal Income Tax System is not voluntary. The system allows taxpayers to determine the correct amount of tax and complete the appropriate forms for filing their return rather than have the government determine the tax for them. If you think about it, this really is the preferential way for taxpayers to handle tax responsibility.

The interpretation of “The Meaning of Income,” is also high on the list, but only includes three current arguments: “Wages, tips, and other compensation received for personal services are not income,” “Only foreign-source income is taxable,” and “Federal Reserve Notes are not income.” Now seriously – wages, tips and other compensation for personal service are not income? It is the main source of income for the majority of the population. The official stance on this is that “Gross income, for federal tax purposes means all income from whatever source derived and includes compensation for services.” Income is income – claim it, claim your deductions, and pay your taxes.

In the last three categories, there are claims that range from stating that a “Taxpayer is not a ‘citizen’ of the United States, thus not subject to the federal income tax laws,” to “Taxpayers can refuse to pay income taxes on religious or moral grounds by invoking the First Amendment,” and “A ‘corporation sole’ can be established and used for the purpose of avoiding income taxes.” While there are additional arguments being put forth, it is best to use your good judgment and possibly take a look at the full list of arguments on the IRS website to ensure that you are not utilizing one that has been proven to be false.

The bottom line is this: there isn’t a way around filing your tax returns. As a citizen of the United States, you are obligated to file tax returns. Our taxes fund programs beyond those which are controversial and may be used for justification of why an individual might not want to file his or her taxes. If you are being advised by a tax preparer to utilize one of the arguments considered to be frivolous by the IRS, both you and the preparer could be penalized. The complete list of frivolous arguments is on the IRS Web site at IRS.gov.

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