The Internal Revenue Service issued a notice on Friday that lists four illegal positions people choose that can sometimes send them to federal prison. For decades people have been coming up with a variety of schemes and arguments that are supposed to exempt them from paying taxes. None of those schemes work and the people who promote them are either deliberately deceptive or a few bricks short of a full load.
Notice 2008-14 lists positions identified as frivolous for purposes of the penalty under section 6702 of the federal tax code for filing a frivolous tax return or submitting to the IRS a frivolous request for a collection due process hearing or application for an installment agreement, offer-in-compromise, or Taxpayer Assistance Order.
Taxpayers who file a tax return or make a submission based on a position listed in this notice are subject to a $5,000 penalty. This notice adds to the positions listed in Notice 2007-30, 2007-14 I.R.B. 883. The positions that have been added are found in paragraphs 9(g), 11, 14, and 25.
The four new frivolous claims pertain to the following:
- Misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending.
- Erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States or the IRS.
- A nonexistent “Mariner’s Tax Deduction” (or the like) related to invalid deductions for meals.
- Certain instances of misuse or excessive use of the section 6421 fuels credit.
In 2006, Congress increased 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.
Notice 2008-14 will be published in the Internal Revenue Bulletin 2008-4 dated Jan. 28, 2008.
Other relevant links:
- IRS Debunks Frivolous Tax Arguments
-
The Truth About Frivolous Tax Arguments
- Tax Scams and How to Avoid Them
- Tax Avoidance and Tax Evasion: the Difference
- Taxpayer Advocate Service (an independent branch of the IRS)
- Franchise Tax Board (State of California)
- IRS Tax Relief for California Storm & Flooding Victims
- Law Offices of Robert L. Goldstein (established tax law firm in San Francisco - San Jose)
- IRS phone numbers and contact info
- Tax Protester Agruments
- The Tax Protest Movement in America
- Illegal Tax Protests - from the U.S. Dept. of Justice
- Tax Fraud Alerts - from the IRS Criminal Division
- IRS Criminal Investigation Division
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