N 08 14 6702D
User Manual: 6702D
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Part III - Administrative, Procedural, and Miscellaneous
Frivolous Positions
Notice 2008-14
PURPOSE
Positions that are the same as or similar to the positions listed in this Notice are
identified as frivolous for purposes of the penalty for a “frivolous tax return” under
section 6702(a) of the Internal Revenue Code and the penalty for a “specified frivolous
submission” under section 6702(b). Persons who file a purported return of tax,
including an original or amended return, based on one or more of these positions are
subject to a penalty of $5,000 if the purported return of tax does not contain information
on which the substantial correctness of the self-assessed determination of tax may be
judged or contains information that on its face indicates the self-assessed determination
of tax is substantially incorrect. Likewise, persons who submit a “specified submission”
(namely, a request for a collection due process hearing or an application for an
installment agreement, offer-in-compromise, or taxpayer assistance order) based on
one or more of the positions listed in this Notice are subject to a penalty of $5,000. The
penalty may also be applied if the purported return or any portion of the specified
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submission is not based on a position set forth in this Notice, yet reflects a desire to
delay or impede the administration of Federal tax laws for purposes of section
6702(a)(2)(B) or 6702(b)(2)(A)(ii).
BACKGROUND
Section 407 of Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, 120
Stat. 2922, 2960-62 (2006), amended section 6702 to increase the amount of the
penalty for frivolous tax returns from $500 to $5,000 and to impose a penalty of $5,000
on any person who submits a “specified frivolous submission.” A submission is a
“specified frivolous submission” if it is a “specified submission” (defined in section
6702(b)(2)(B) as a request for a hearing under section 6320 or 6330 or an application
under section 6159, 7122 or 7811) and any portion of the submission (i) is based on a
position identified by the Secretary as frivolous or (ii) reflects a desire to delay or
impede administration of the Federal tax laws. Section 6702 was further amended to
add a new subsection (c) requiring the Secretary to prescribe, and periodically revise, a
list of positions identified as frivolous. Notice 2007-30, 2007-14 I.R.B. 883, contained
the prescribed list. This Notice revises the list to add more positions identified as
frivolous. The positions that have been added are found in paragraphs 9(g), 11, 14 and
25.
DISCUSSION
Frivolous Positions. Positions that are the same as or similar to the following are
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frivolous.
(1) Compliance with the internal revenue laws is voluntary or optional and not
required by law, including arguments that:
a. Filing a Federal tax or information return or paying tax is purely voluntary
under the law, or similar arguments described as frivolous in Rev. Rul.
2007-20, 2007-14 I.R.B. 863.
b. Nothing in the Internal Revenue Code imposes a requirement to file a
return or pay tax, or that a person is not required to file a tax return or pay
a tax unless the Internal Revenue Service responds to the person’s
questions, correspondence, or a request to identify a provision in the Code
requiring the filing of a return or the payment of tax.
c. There is no legal requirement to file a Federal income tax return because
the instructions to Forms 1040, 1040A, or 1040EZ or the Treasury
regulations associated with the filing of the forms do not display an OMB
control number as required by the Paperwork Reduction Act of 1980, 44
U.S.C. § 3501 et seq., or similar arguments described as frivolous in Rev.
Rul. 2006-21, 2006-1 C.B. 745.
d. Because filing a tax return is not required by law, the Service must
prepare a return for a taxpayer who does not file one in order to assess
and collect tax.
e. A taxpayer has an option under the law to file a document or set of
documents in lieu of a return or elect to file a tax return reporting zero
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taxable income and zero tax liability even if the taxpayer received taxable
income during the taxable period for which the return is filed, or similar
arguments described as frivolous in Rev. Rul. 2004-34, 2004-1. C.B. 619.
f. An employer is not legally obligated to withhold income or employment
taxes on employees’ wages.
g. Only persons who have contracted with the government by applying for a
governmental privilege or benefit, such as holding a Social Security
number, are subject to tax, and those who have contracted with the
government may choose to revoke the contract at will.
h. A taxpayer may lawfully decline to pay taxes if the taxpayer disagrees with
the government's use of tax revenues, or similar arguments described as
frivolous in Rev. Rul. 2005-20, 2005-1 C.B. 821.
i. An administrative summons issued by the Service is per se invalid and
compliance with a summons is not legally required.
(2) The Internal Revenue Code is not law (or “positive law”) or its provisions are
ineffective or inoperative, including the sections imposing an income tax or
requiring the filing of tax returns, because the provisions have not been
implemented by regulations even though the provisions in question either (a)
do not expressly require the Secretary to issue implementing regulations to
become effective or (b) expressly require implementing regulations which have
been issued.
(3) A taxpayer’s income is excluded from taxation when the taxpayer rejects or
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renounces United States citizenship because the taxpayer is a citizen
exclusively of a State (sometimes characterized as a “natural-born citizen” of a
“sovereign state”), that is claimed to be a separate country or otherwise not
subject to the laws of the United States. This position includes the argument
that the United States does not include all or a part of the physical territory of
the 50 States and instead consists of only places such as the District of
Columbia, Commonwealths and Territories (e.g., Puerto Rico), and Federal
enclaves (e.g., Native American reservations and military installations), or
similar arguments described as frivolous in Rev. Rul. 2004-28, 2004-1 C.B.
624, or Rev. Rul. 2007-22, 2007-14 I.R.B. 866.
(4) Wages, tips, and other compensation received for the performance of personal
services are not taxable income or are offset by an equivalent deduction for
the personal services rendered, including an argument that a taxpayer has a
“claim of right” to exclude the cost or value of the taxpayer’s labor from income
or that taxpayers have a basis in their labor equal to the fair market value of
the wages they receive, or similar arguments described as frivolous in Rev.
Rul. 2004-29, 2004-1 C.B. 627, or Rev. Rul. 2007-19, 2007-14 I.R.B. 843.
(5) United States citizens and residents are not subject to tax on their wages or
other income derived from sources within the United States, as only foreign-
based income or income received by nonresident aliens and foreign
corporations from sources within the United States is taxable, and similar
arguments described as frivolous in Rev. Rul. 2004-30, 2004-1 C.B. 622.
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(6) A taxpayer has been untaxed, detaxed, or removed or redeemed from the
Federal tax system though the taxpayer remains a United States citizen or
resident, or similar arguments described as frivolous in Rev. Rul. 2004-31,
2004-1 C.B. 617.
(7) Only certain types of taxpayers are subject to income and employment taxes,
such as employees of the Federal government, corporations, nonresident
aliens, or residents of the District of Columbia or the Federal territories, or
similar arguments described as frivolous in Rev. Rul. 2006-18, 2006-1 C.B.
743.
(8) Only certain types of income are taxable, for example, income that results from
the sale of alcohol, tobacco, or firearms or from transactions or activities that
take place in interstate commerce.
(9) Federal income taxes are unconstitutional or a taxpayer has a constitutional
right not to comply with the Federal tax laws for one of the following reasons:
a. The First Amendment permits a taxpayer to refuse to pay taxes based on
religious or moral beliefs.
b. A taxpayer may withhold payment of taxes or the filing of a tax return until
the Service or other government entity responds to a First Amendment
petition for redress of grievances.
c. Mandatory compliance with, or enforcement of, the tax laws invades a
taxpayer’s right to privacy under the Fourth Amendment.
d. The requirement to file a tax return is an unreasonable search and seizure
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contrary to the Fourth Amendment.
e. Income taxation, tax withholding, or the assessment or collection of tax is
a “taking” of property without due process of law or just compensation in
violation of the Fifth Amendment.
f. The Fifth Amendment privilege against self-incrimination grants taxpayers
the right not to file returns or the right to withhold all financial information
from the Service.
g. The Ninth Amendment exempts those with religious or other objections to
military spending from paying taxes to the extent the taxes will be used for
military spending.
h. Mandatory or compelled compliance with the internal revenue laws is a
form of involuntary servitude prohibited by the Thirteenth Amendment.
i. Individuals may not be taxed unless they are “citizens” within the meaning
of the Fourteenth Amendment.
j. The Sixteenth Amendment was not ratified, has no effect, contradicts the
Constitution as originally ratified, lacks an enabling clause, or does not
authorize a non-apportioned, direct income tax.
k. Taxation of income attributed to a trust, which is a form of contract,
violates the constitutional prohibition against impairment of contracts.
l. Similar constitutional arguments described as frivolous in Rev. Rul. 2005-
19, 2005-1 C.B. 819.
(10) A taxpayer is not a “person” within the meaning of section 7701(a)(14) or other
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provisions of the Internal Revenue Code, or similar arguments described as
frivolous in Rev. Rul. 2007-22, 2007-14 I.R.B. 866.
(11) Only fiduciaries are taxpayers, or only persons with a fiduciary relationship to
the United States are obligated to pay taxes, and the United States or the
Service must prove the fiduciary status or relationship.
(12) Federal Reserve Notes are not taxable income when paid to a taxpayer
because they are not gold or silver and may not be redeemed for gold or
silver.
(13) In a transaction using gold and silver coins, the value of the coins is excluded
from income or the amount realized in the transaction is the face value of the
coins and not their fair market value for purposes of determining taxable
income.
(14) A taxpayer who is employed on board a ship that provides meals at no cost to
the taxpayer as part of the employment may claim a so-called “Mariner’s Tax
Deduction” (or the like) allowing the taxpayer to deduct from gross income the
cost of the meals as an employee business expense.
(15) A taxpayer may purport to operate a home-based business as a basis to
deduct as business expenses the taxpayer’s personal expenses or the costs of
maintaining the taxpayer’s household when the maintenance items or amounts
as reported do not correspond to a bona fide home business, such as when
they are grossly excessive in relation to the conceivable costs for some portion
of the home being used exclusively and regularly as a business, or similar
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arguments described as frivolous by Rev. Rul. 2004-32, 2004-1 C.B. 621.
(16) A ”reparations” tax credit exists, including arguments that African-American
taxpayers may claim a tax credit on their Federal income tax returns as
reparations for slavery or other historical mistreatment, that Native Americans
are entitled to an analogous credit (or are exempt from Federal income tax on
the basis of a treaty), or similar arguments described as frivolous in Rev. Rul.
2004-33, 2004-1 C.B. 628, or Rev. Rul. 2006-20, 2006-1 C.B. 746.
(17) A Native American or other taxpayer who is not an employer engaged in a
trade or business may nevertheless claim (for example, in an amount
exceeding all reported income) the Indian Employment Credit under section
45A, which explicitly requires, among other criteria, that the taxpayer be an
employer engaged in a trade or business to claim the credit.
(18) A taxpayer’s wages are excluded from Social Security taxes if the taxpayer
waives the right to receive Social Security benefits, or a taxpayer is entitled to
a refund of, or may claim a charitable-contribution deduction for, the Social
Security taxes that the taxpayer has paid, or similar arguments described as
frivolous in Rev. Rul. 2005-17, 2005-1 C.B. 823.
(19) Taxpayers may reduce or eliminate their Federal tax liability by altering a tax
return, including striking out the penalty-of-perjury declaration, or attaching
documents to the return, such as a disclaimer of liability, or similar arguments
described as frivolous in Rev. Rul. 2005-18, 2005-1 C.B. 817.
(20) A taxpayer is not obligated to pay income tax because the government has
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created an entity separate and distinct from the taxpayer—a “straw man”—that
is distinguishable from the taxpayer by some variation of the taxpayer’s name,
and any tax obligations are exclusively those of the “straw man,” or similar
arguments described as frivolous in Rev. Rul. 2005-21, 2005-1 C.B. 822.
(21) Inserting the phrase “nunc pro tunc” on a return or other document filed with or
submitted to the Service has a legal effect, such as reducing a taxpayer’s tax
liability, or similar arguments described as frivolous in Rev. Rul. 2006-17,
2006-1 C.B. 748.
(22) A taxpayer may avoid tax on income by attributing the income to a trust,
including the argument that a taxpayer can put all of the taxpayer’s assets into
a trust to avoid income tax while still retaining substantial powers of ownership
and control over those assets or that a taxpayer may claim an expense
deduction for the income attributed to a trust, or similar arguments described
as frivolous in Rev. Rul. 2006-19, 2006-1 C.B. 749.
(23) A taxpayer may lawfully avoid income tax by sending income offshore,
including depositing income into a foreign bank account.
(24) A taxpayer can claim the section 44 Disabled Access Credit to reduce tax or
generate a refund, for example, by purportedly having purchased equipment or
services for an inflated price (which may or may not have been actually paid),
even though it is apparent that the taxpayer did not operate a small business
that purchased the equipment or services to comply with the requirements of
the Americans with Disabilities Act.
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(25) A taxpayer may claim the section 6421 fuels tax credit, which is limited to
gasoline used in an off-highway business use, even though the taxpayer did
not purchase and use gasoline during the taxable period for which the credit is
claimed for an off-highway business use. Also, if the taxpayer claims an
amount of credit that is so disproportionately excessive to any (including zero)
business income reported on the taxpayer’s income tax return as to be
patently unallowable (e.g., a credit that is 150 percent of business income
reported on Form 1040) or facially reflects an impossible quantity of gasoline
given the business use, if any, as reported by the taxpayer.
(26) A taxpayer is allowed to buy or sell the right to claim a child as a qualifying
child for purposes of the Earned Income Tax Credit.
(27) An IRS Form 23C, Assessment Certificate - Summary Record of Assessment,
is an invalid record of assessment for purposes of section 6203 and Treas.
Reg. § 301.6203-1, the Form 23C must be personally signed by the Secretary
of the Treasury for an assessment to be valid, the Service must provide a copy
of the Form 23C to a taxpayer if requested before taking collection action, or
similar arguments described as frivolous in Rev. Rul. 2007-21, 2007-14 I.R.B.
865.
(28) A tax assessment is invalid because the assessment was made from a section
6020(b) substitute for return, which is not a valid return.
(29) A statutory notice of deficiency is invalid because the taxpayer to whom the
notice was sent did not file an income tax return reporting the deficiency or
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because the statutory notice of deficiency was unsigned or not signed by the
Secretary of the Treasury or by someone with delegated authority.
(30) A Notice of Federal Tax Lien is invalid because it is not signed by a particular
official (such as by the Secretary of the Treasury), or because it was filed by
someone without delegated authority.
(31) The form or content of a Notice of Federal Tax Lien is controlled by or subject
to a state or local law, and a Notice of Federal Tax Lien that does not comply
in form or content with a state or local law is invalid.
(32) A collection due process notice under section 6320 or 6330 is invalid if it is not
signed by the Secretary of the Treasury or other particular official, or if no
certificate of assessment is attached.
(33) Verification under section 6330 that the requirements of any applicable law or
administrative procedure have been met may only be based on one or more
particular forms or documents (which must be in a certain format), such as a
summary record of assessment, or that the particular forms or documents or
the ones on which verification was actually determined must be provided to a
taxpayer at a collection due process hearing.
(34) A Notice and Demand is invalid because it was not signed, was not on the
correct form (e.g., a Form 17), or was not accompanied by a certificate of
assessment when mailed.
(35) The United States Tax Court is an illegitimate court or does not, for any
purported constitutional or other reason, have the authority to hear and decide
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matters within its jurisdiction.
(36) Federal courts may not enforce the internal revenue laws because their
jurisdiction is limited to admiralty or maritime cases or issues.
(37) Revenue Officers are not authorized to issue levies or Notices of Federal Tax
Lien or to seize property in satisfaction of unpaid taxes.
(38) A Service employee lacks the authority to carry out the employee’s duties
because the employee does not possess a certain type of identification or
credential, for example, a pocket commission or a badge, or it is not in the
correct form or on the right medium.
(39) A person may represent a taxpayer before the Service or in court proceedings
even if the person does not have a power of attorney from the taxpayer, has
not been enrolled to practice before the Service, or has not been admitted to
practice before the court.
(40) A civil action to collect unpaid taxes or penalties must be personally authorized
by the Secretary of the Treasury and the Attorney General.
(41) A taxpayer’s income is not taxable if the taxpayer assigns or attributes the
income to a religious organization (a “corporation sole” or ministerial trust)
claimed to be tax-exempt under section 501(c)(3), or similar arguments
described as frivolous in Rev. Rul. 2004-27, 2004-1 C.B. 625.
(42) The Service is not an agency of the United States government but rather a
private-sector corporation or an agency of a State or Territory without authority
to administer the internal revenue laws.
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(43) Any position described as frivolous in any revenue ruling or other published
guidance in existence when the return adopting the position is filed with or the
specified submission adopting the position is submitted to the Service.
Returns or submissions that contain positions not listed above, which on their
face have no basis for validity in existing law, or which have been deemed frivolous in a
published opinion of the United States Tax Court or other court of competent
jurisdiction, may be determined to reflect a desire to delay or impede the administration
of Federal tax laws and thereby subject to the $5,000 penalty.
The list of frivolous positions above will be periodically revised as required by
section 6702(c).
EFFECTIVE DATE
This Notice is effective for submissions made and issues raised after Jan. 14,
2008. For submissions made and issues raised between March 16, 2007, and Jan. 14,
2008, Notice 2007-30 applies.
EFFECT ON OTHER DOCUMENTS
Notice 2007-30 is modified and superseded.
DRAFTING INFORMATION
The principal author of this notice is the Office of the Associate Chief Counsel
(Procedure and Administration). For further information regarding this notice, contact
the Office of the Associate Chief Counsel (Procedure and Administration), Branch 2,
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at (202) 622-4940 (not a toll-free call).
