What tax positions does the IRS consider frivolous?

The IRS publishes a list of positions it has identified as frivolous in IRS Notice 2010-33 (updated periodically). Common examples include: claims that wages are not taxable income; arguments that the income tax is unconstitutional or voluntary; claims based on the 'gold standard' argument that the tax code does not apply since the dollar is not backed by gold; arguments that filing a return violates Fifth Amendment rights; and claims that a taxpayer is not a 'person' subject to tax law. These positions have no legal basis and have been consistently rejected by courts.

Can the frivolous return penalty be assessed on an amended return?

Yes. The $5,000 frivolous return penalty under IRC Section 6702 applies to any return or return amendment that contains a position the IRS identifies as frivolous. Filing an amended return to add frivolous positions to a previously valid return can trigger a separate $5,000 penalty on the amendment in addition to any penalty on the original.

Is the frivolous return penalty separate from the accuracy-related penalty?

Yes. They are distinct penalties under different code sections. The accuracy-related penalty (IRC Section 6662) is 20% of the underpaid tax caused by negligence or substantial understatement. The frivolous return penalty (IRC Section 6702) is a flat $5,000 per return based on submitting legally baseless positions, regardless of whether any tax was actually underpaid. Both can apply simultaneously to the same return in extreme cases.

What is the frivolous return penalty?