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In taxes, IRS gets first call on what's a frivolous argument

What is silly? What is frivolous? To call the sky yellow on a clear day surely fits the bill. Someone might try to make an argument for yellow skies, but most people will write it off as nonsense. At best, it might be dismissed as that person's opinion.

In the legal context, courts don't suffer frivolous arguments well. This is perhaps especially true if the debate subject is a dispute over taxes. And what Minnesota and Wisconsin readers need to know is that in the area of tax law, Congress has granted the IRS the power to make the first call on what constitutes a frivolous claim. And those who choose to continue pressing their argument run the risk of incurring harsh financial penalties and even criminal charges.

Forewarned is forearmed goes the saying, so it might be helpful to understand what the IRS deems to be meaningless arguments.

  • The federal income tax system is voluntary. Such claims, whether applied to filing annual returns, paying what's owed, or responding to a notice from the IRS, have long been dismissed by the agency and courts have affirmed the findings.
  • Claiming certain income is not taxable income. Argue as you might, wages and other compensation for personal services are taxable. It has also been debunked that income tax applies only to income earned from foreign sources.
  • Certain terms in the tax code don't mean what the IRS says they mean. Many have tried and failed to challenge official and legal interpretations of what it means to be a "citizen" of the United States. Arguments that seek to distinguish a taxpayer from the definition of "person" or "employee" have met similar fates. '

This does not mean taxpayers who seek to challenge the validity of a tax assessment have to accept it if the IRS declares the argument frivolous. There may be a possible avenue of appeal. But to be sure of the best possible outcome, it's important to understand what your legal options are and what is likely to fly.

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