Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. The IRS has a list of frivolous tax arguments that taxpayers should avoid. These arguments are wrong and have been thrown out of court.
Those who promote or adopt frivolous positions risk a variety of penalties. For example, taxpayers could be responsible for an accuracy-related penalty, a civil fraud penalty, an erroneous refund claim penalty, or failure to file penalty. The Tax Court may also impose a penalty against taxpayers who make frivolous arguments in court.
Courtesy of the Internal Revenue Service Issue Number: 2014-16
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