The Cost of Pursuing Meritless Tax Claims

Claim outcomes could result in a $25,000 fine.

Each year thousands of taxpayers pursue meritless arguments that have been rejected by every court that has ever considered them. Examples include the following: (1) the Constitution prohibits the assessment of income taxes; (2) wages are a nontaxable exchange for services rendered rather than taxable income; (3) only foreign income is taxable; (4) the first amendment guaranty of religious freedom prevents the government from taxing income of persons who are opposed to paying taxes as a result of their religious beliefs. The IRS recently warned taxpayers that pursuing frivolous claims such as these in court can be expensive. The law allows the courts to impose a penalty of up to $25,000 when they come to any of three conclusions: (1) a taxpayer instituted a proceeding primarily for delay; (2) a position is frivolous or groundless; or (3) a taxpayer unreasonably failed to pursue administrative remedies. This penalty is in addition to the back taxes and interest that are owed. IRS News Release IR-2001-59.

This content originally appeared in Church Treasurer Alert, August 2001.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Related Topics:

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

ajax-loader-largecaret-downcloseHamburger Menuicon_amazonApple PodcastsBio Iconicon_cards_grid_caretChild Abuse Reporting Laws by State IconChurchSalary Iconicon_facebookGoogle Podcastsicon_instagramLegal Library IconLegal Library Iconicon_linkedinLock IconMegaphone IconOnline Learning IconPodcast IconRecent Legal Developments IconRecommended Reading IconRSS IconSubmiticon_select-arrowSpotify IconAlaska State MapAlabama State MapArkansas State MapArizona State MapCalifornia State MapColorado State MapConnecticut State MapWashington DC State MapDelaware State MapFederal MapFlorida State MapGeorgia State MapHawaii State MapIowa State MapIdaho State MapIllinois State MapIndiana State MapKansas State MapKentucky State MapLouisiana State MapMassachusetts State MapMaryland State MapMaine State MapMichigan State MapMinnesota State MapMissouri State MapMississippi State MapMontana State MapMulti State MapNorth Carolina State MapNorth Dakota State MapNebraska State MapNew Hampshire State MapNew Jersey State MapNew Mexico IconNevada State MapNew York State MapOhio State MapOklahoma State MapOregon State MapPennsylvania State MapRhode Island State MapSouth Carolina State MapSouth Dakota State MapTennessee State MapTexas State MapUtah State MapVirginia State MapVermont State MapWashington State MapWisconsin State MapWest Virginia State MapWyoming State IconShopping Cart IconTax Calendar Iconicon_twitteryoutubepauseplay