Daily Tax Update - March 15, 2007

IRS CITES 40 “FRIVOLOUS POSITIONS” TO AVOID ON TAX RETURNS: Today, the IRS issued guidance which lists numerous positions which have no basis for validity in existing law or which have been deemed frivolous by the U.S. Tax Court or other federal courts.  The IRS said that taxpayers could face a $5,000 penalty—10 times the previous maximum for asserting these frivolous positions.

Some of the positions listed by the IRS include:

  • Wages are not taxable income.
  • Filing returns and paying taxes are voluntary.
  • The IRS must provide taxpayers with a summary record of assessment made on a Form 23C, “Assessment Certificate-Summary Record of Assessments”, before overdue taxes may be collected.
  • Income is not subject to taxation when the taxpayer declares that he is not a United States citizen because he is a citizen of an individual State or claims he is not a person as defined by the Internal Revenue Code.
  • IRS Commissioner Mark Everson said, “People should remember they are ultimately responsible for what is on their tax return even if some unscrupulous preparers have steered them in the wrong direction. The truth about these frivolous arguments is simple: They don’t work.”
  • IRS Chief Counsel Donald Korb said, “Our rulings on frivolous arguments emphasize that the IRS and the courts reject these arguments about the validity of the income tax and ‘too good to be true’ schemes to eliminate tax liability."
  • Additional information can be accessed via: http://www.irs.gov/newsroom/article/0,,id=168637,00.html


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