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Former Revenue Commissioner Outlines Dangers of Filing a Frivolous Tax Return

The April 15th due date for filing taxes is quickly approaching. Each year thousands of taxpayes will be tempted to cut corners and get a bit creative. Find out what happens to those that file returns the IRS deems frivolous.
    WINCONSIN, March 08, 2011 /24-7PressRelease/ -- It's tax time and many people are scrambling to file their tax returns by April 15th. Every year, a few will attempt to cut corners by filing frivolous returns. Some will attempt to claim a family pet as a deduction and others will advance complex theories as to why they need not pay taxes. The IRS considers these positions frivolous and can levy steep penalties.

The Internet has caused an explosion of bad tax advice to be available to unsuspecting taxpayers. While the research that surrounds some of these theories may sometimes appear logical, those theories have all been tested in the courts and failed. These arguments range from legal "proof" that the tax code is voluntary to arguments that our right against self-incrimination protects us from filing returns.

Taxpayers who elect to take a frivolous position with the IRS or file overly creative returns can be fined $5000. If the case goes to court, the U.S. Tax Court can tack on an additional $25,000 penalty. These surcharges are in addition to accuracy related penalties of 25% of the actual additional tax owed or 75% if the IRS determines the position resulted from fraud.

Frivolous returns can also lead to criminal prosecution and prison. Filing a false return is a felony punishable by 3 years in prison.

Before you believe what you read from some tax freedom movement website, look at the IRS' website. This year the IRS has published an 84-page booklet describing most of the known frivolous tax arguments and what the courts have said about each. Just type "frivolous" in the search box or call the toll free IRS hotline and ask. A few minutes of careful research might save you thousands of dollars.

Mahany & Ertl, LLC is a Wisconsin based law firm concentrating in helping people and businesses with tax problems. Please call partner Brian Mahany at 414-704-6731 for more information.

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Brian Mahany
Mahany & Ertl, LLC

Milwaukee, WI
Voice: 414-704-6731
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