Don't Try These on Your Tax Return

Filing a tax return is voluntary; you don’t have to if you don’t want to. The same goes for paying your income taxes. Along with daffodils and crocuses, every Spring brings out a rash of frivolous arguments like these that taxpayers use to try to avoid paying Uncle Sam his due. And every year, the IRS nails several of these tax cheats, assesses penalties, and sometimes hauls them into court, where the agency is almost always the winner.

Among the many specious arguments that some individuals and groups promote are these:

- The 16th Amendment to the Constitution, which authorized the income tax, was never properly ratified. Only income from foreign sources is taxable.

- Federal Reserve notes are not valid currency because they can’t be redeemed for silver or gold, so income paid in these notes isn’t taxable.

- The taxpayer is a citizen of an individual state and not of the United States and therefore does not have to pay federal income tax.

- The taxpayer is not a “person” as defined by the Internal Revenue Code and therefore is not subject to federal tax laws.

As eager as you might be to avoid paying your income taxes, using any of these ploys could put you in financial peril, since filing a frivolous return can earn you a penalty of up to $25,000 in addition to as much as 75% of any underpayments. You could also face criminal prosecution, where the penalty could be as high as $250,000 along with possible jail time. And if you decide to argue your case in court, your chances of prevailing are slim, since the tax court has almost uniformly sided with the IRS in such cases.