Tax Tips & Calculators

The IRS reminds taxpayers to steer clear of frivolous tax arguments and schemes designed to avoid paying your taxes. The penalty for frivolous tax returns is $5,000. The 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.

The IRS rejects these common frivolous arguments:

• Filing a tax return or payment of tax is voluntary.
  
• Only federal employees and persons living in Washington, D.C., are subject to federal income tax.
  
• Native Americans can avoid federal income tax because of a "Native American Treaty."
  
• Taxpayers can validate invalid returns or other invalid tax positions or documents by writing or stamping the phrase "nunc pro tunc" on the face of the return.
  
• Income and expenses can be attributed to a purported trust to avoid federal income tax liability.
  
• Taxpayers are not required to file an income tax return because of the Paperwork Reduction Act of 1980.
  
• Taxes are only owed on foreign income under tax code Section 861.
  
• Taxpayers have basis in their labor equal to the fair market value of their wages, and therefore have no taxable gain.
  
• Taxpayers who reside in the U.S. are not citizens or persons within the meaning of the tax code.
  
• U.S. residents living abroad who can exclude U.S. taxable income under tax code Section 911 are in fact residents of a foreign country.
  
• Taxpayers can buy or sell the right to claim a child for purposes of the Earned Income Credit.
  
• Taxpayers can deduct all of their nonbusiness-related household expenses if they establish home businesses.
  
• Employer withholding of employment taxes is voluntary.
  
• The 9th Amendment exempts those with religious or other objections to military spending from paying taxes to the extent the taxes will be used for military spending.
  
• Only fiduciaries (a person to whom property or power is entrusted for the benefit of another) are obligated to pay taxes, and the U.S. must prove the fiduciary status or relationship.
  
• A taxpayer who is employed on board a ship that provides meals at no cost to the taxpayer as part of the employment may claim a so-called "Mariner's Tax Deduction," allowing the taxpayer to deduct from gross income the cost of the meals as an employee business expense.
  
• A taxpayer may claim the section 6421 Fuels Tax Credit even though the taxpayer didn't purchase and use gasoline during the taxable period for which the credit is claimed.
  

None of these or any of the other arguments on the IRS's full list of frivolous arguments will excuse you from filing a return or paying your taxes.