9 June 2015
 Categories: , Blog

Those who file a federal income tax return and make the claim they owe no tax based a very frivolous claim could find themselves in a lot of trouble. Several categories of protest are commonly used by filers in an attempt to evade paying tax. Citing any one of these categories while filing a blank or "zero tax due" return automatically leads to the submission being deemed a frivolous filing. Once a tax return has been judged a frivolous, you could be hit with a significant penalty.

Upon being assessed with the penalty, steps should be taken to request a motion on the statutory decision so as to reduce the fine.

The Fine for a Frivolous Filing

Anyone who files a frivolous return could be fined $5,000 unless they respond to a warning letter and correct the return. Those who do not respond within the allocated time and find the fine assessed are required to pay the fine or else face liens or levies. A lot of trouble can be avoided if you, as the taxpayer, take advantage of a special statute designed to offer relief to frivolous filers.

Rules for the Motion

IRS statutes provide for a means for reducing the assessed fine amount through statutory reconsideration. Basically, that means you are asking an IRS employee to reconsider the matter as opposed to seeking a remedy in tax court. The $5,000 can be dropped to $500 provided "frivolous positions are abandoned" along with meeting other requirements.

So, if you are making a claim no taxes are owed based on one of the common frivolous arguments, the appeal letter for reconsideration of the fine surely should include an explicit statement that you are abandoning the position. Stating that you are only rescinding your claim under duress or to avoid financial hardship might not help the cause. It likely would be a good idea to note you fully intend to file an accurate and complete tax return immediately.

Complying with Tax Requirements

Now that you have abandoned your frivolous claim, you should get to work on filing a tax return. To avoid any further problems with the Internal Revenue Service, leave the preparation of the return to a professional accountant. Additionally, an experienced accountant or tax lawyer should also handle the submission of any letters requesting a reduction of the penalty. You do not want any errors or mistakes to complicate matters and lead to more civil penalties and tax troubles.

To learn more, contact a company like Capital Accounting And Tax Service Inc. with any questions or concerns you have.