The Internal Revenue Service issued guidance identifying dozens of frivolous positions that taxpayers should avoid when filing their tax returns.The guidance lists 40 positions which have no basis for validity in existing law or which have been deemed frivolous by the U.S. Tax Court, or another federal court. If these or other frivolous positions are contained in a tax return, taxpayers could face a $5,000 penalty -- 10 times the previous maximum.

In 2006, Congress increased the amount of the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return, or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.

Four revenue rulings issued in conjunction with the notice address specific frivolous claims often made to the IRS. Those rulings center on false arguments that:

  • Wages are not taxable income;
  • Filing returns and paying taxes are voluntary;
  • The IRS must provide taxpayers with a summary record of assessment before overdue taxes may be collected; and,
  • Income is not subject to taxation when a taxpayer declares that they are a citizen of an individual state -- and not the United States, or that they are not a person as defined by the tax code.

More information, and the rulings, is available at,,id=168637,00.html.

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