Indeed, most people want to pay only what they are legally required to pay in taxes as a matter of law. But consequences of using frivolous arguments in tax returns to avoid paying taxes should not be ignored. In addition to owing on past due taxes, one faces stiff penalties and interest. Nevertheless, according to an accountingtoday.com report, the IRS is having particular difficulty recognizing when such arguments are being offered.
The Treasury Inspector General for Tax Administration (TIGTA) found that more than 36,000 returns included one of 50 arguments identified as frivolous. This led to the payment of more than $ 27.2 million in improper refunds between 2012 and 2014 The TIGTA then determined that the IRS did not have proper procedures to flag returns with frivolous arguments.
The TIGTA investigation also found that IRS employees are not trained well enough to recognize frivolous arguments. This may be a function of employees not being required to take training courses on recognizing these questions. Prior to 2013, IRS employees went through annual training. Also two online courses have been made available.
Regardless, TIGTA recommended that the IRS resume the coursework requirement so that employees may properly identify frivolous tax returns. It appears that the IRS will adopt the recommendations so that tax returns will be properly evaluated. This means that businesses should be wary of justifying tax exemptions on frivolous arguments that have no legal basis.
If you have questions about whether a particular exemption may be included on your return, seek the opinion of an experienced tax attorney.