Taperman articles

Taxpayers Should be Aware of New Tax Penalty

In addition to the 140+ tax penalties being imposed in the country, Congress has again added a new one.  Dubbed as the “frivolous submissions penalty,”  this new law authorizes the IRS to charge a $5,000 fee against a taxpayers who put forward a “frivolous submission” to the IRS.

The law signifies that a “frivolous submission”  is  “any offer in compromise, installment agreement, collection due process hearing, or taxpayer assistance order request submitted with the intent to delay processing of cases.” 

According to the Daily Tax News Update, the IRS has already identified 40 frivolous positions that have been deemed frivolous by courts and have no basis for validity in existing law. Specifically, the penalty applies to a) a purported return which does not allow a considerable correctness of the self-assessed tax to be audited; b) a purported return contains information indicating that the self assessed  tax is incorrect; c) the submission is based on the frivolous positions mentioned and d) the alleged return aims to delay the administration of federal tax laws.

Taxpayers should pay attention to this law because the IRS has the power to determine if a penalty is deemed just and in order and to determine if the submission is indeed frivolous..”

Congress of  course has provided a cushion for taxpayers in order to prevent any untoward harassments from the IRS itself.  There should be a written notice to the taxpayer that he committed a frivolous submission and he did not withdraw the said submission within 30 days.

If a taxpayer in the future receives a notice of “frivolous submission,” he should seek immediately the advice or services of a tax attorney to avoid trouble.

Meanwhile, the IRS has advised all taxpayers to be “ultimately responsible for the contents of their returns and warned them against unscrupulous tax preparers and review their returns. 

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