Taxes are big in the new right now. There’s lots of talk about tax reform and tax cuts and the Tea Party is in the news on a daily basis. Whenever a topic becomes that popular, you can be sure that someone will try to take advantage of the public’s interest. So if someone tries to sell or give you a sure fire way to not pay income taxes – be very careful. This “tip” will probably come under the IRS’s Frivolous Tax Arguments. Not only will they not get you out of paying taxes, but they could cost you extra penalties and possibly jail time.
To most of us, frivolous is something silly- a trifle. But to the IRS, frivolous tax positions are positions that have been denied by the courts and they are a serious issue. Taxpayers who use these arguments have no chance of winning at any level and they are being used as a time waster to tie up the IRS and courts.
The IRS breaks the frivolous arguments into two groups, ones that apply to taxes in general and those which deal with collections. Advocates of these arguments make all kinds of claims; that income tax amendment was not properly ratified, they dispute the definitions of income and wage, they mis-define “voluntary” as used in the Constitution, they insist that the IRS is not part of the US government, and the list goes on. (There are over 40 to choose from.) The tax protestors are a creative bunch. However, their arguments have lost the legal battle and will not work.
If you choose to try one of frivolous arguments, you find yourself paying the taxes you own plus a lot more. Penalties can range from 20% of the tax from the frivolous argument to $250,000 and jail time. Actual penalties, will depend on how vigorously the taxpayer pushes the argument and if they are promoting the arguments to other taxpayers.
There are legal ways of reducing your tax and proper ways to change the laws. Taking a position that has been shown not to work will just get you in trouble. So if someone offers to sell or tell you about a way to get out of paying income tax, do your research.