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Frivolous tax returns

On Behalf of | Oct 22, 2021 | Tax Crimes, Tax Evasion

Most people dread the thought of filing their taxes. It’s an arduous task that often takes hours to complete, and it can be pretty stressful when you’re not sure if you were able to get everything right. Not to mention, if you’re not careful, it can be easy to make mistakes or miss deductions that could have saved you time and money. Sometimes some people try to hoodwink the IRS by filing frivolous tax returns.

What is a frivolous tax return?

A frivolous tax return is filed when a taxpayer tries to take advantage of the system by claiming deductions or credits, they aren’t entitled to get a larger refund than what was owed.

Types of frivolous tax returns

There are many types of frivolous tax return claims. Some common examples include:

  • False deductions for charitable contributions
  • False business expenses
  • False business loss claims
  • False filing status
  • Excessive Claims for the Earned Income Credit (EIC)

Frivolous tax return penalties

Frivolous tax returns often sound believable at first, but they are easily seen as fraudulent upon further inspection. As the IRS is constantly monitoring for frivolous tax returns, they will quickly tell if there was an attempt to file a frivolous tax return.

There are many types of penalties you’ll need to be aware of. Frivolous returns often result in civil and criminal penalties for taxpayers. The IRS has the power to levy fines, seek damages and even ask the court to imprison you if necessary. 

Under 26 U.S. Code § 6702, any person guilty of frivolous tax returns shall be fined not more than $5000 for each such return. For this fine to be levied, then, the IRS shall look at two things:

  • The information at face value doesn’t seem believable, or,
  • There is no additional information that can be used to ascertain the correctness of the information submitted by the taxpayer.

Are all frivolous tax returns sanctionable?

If there are mistakes on your return that are not due to fraud by yourself or another party, then these errors can be corrected without penalty. However, if the deductions were willfully made to cheat the IRS, then you could be subject to a penalty for filing a frivolous return. 

Once frivolous tax returns have been submitted, the Secretary, as envisaged in Section 6702, can notify a taxpayer that their returns have been deemed frivolous. The Secretary would then give the taxpayer 30 days to recall such a submission. If this is done within the specified period, then the imposed penalty shall be vacated. If there is no response, then action can and most likely will be taken against them without further warning or notification.



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