Frivolous Tax Return Letter
Often, good citizens call our office after getting a letter from the IRS—a form letter that accuses them of raising tax arguments that are “frivolous and have no basis in the law.” Further, it says: “People who violate the tax laws also may be subject to federal criminal prosecution and imprisonment.” (Of course, “persecution” is often a better description of what occurs than “prosecution.”)
1099 OID, Charitable Organizations, Trusts and Other Complex Tax Plans
Citizens using these tax forms or entities might have gone to seminars and followed credentialed advisers, specifically because they wanted to follow the law. They studied reams of material about the Form 1099 Original Issue Discount (OID), (also known as the 1099-OID); Earned Income Tax Credit; Form 4852 (Substitute Form W-2); and deductions for charitable organizations, private annuity trusts, foreign trusts, and so forth. But, even with all of this study, the tax laws are complicated. These citizens often relied upon seemingly knowledgeable advisors, who may have even filled out their tax returns.
Frivolous Tax Return Letters and IRS Responses
After getting the “frivolous” letter, many citizens have called or written to the IRS . . . sometimes repeatedly! Often, even begging for help. And, a number of citizens have reported to us that, after spending hours on hold, they eventually encountered a person at the IRS who said that he or she could not give tax advice. Many are left not knowing who to turn to for help. Eventually, these frustrated citizens reach our office in their search for help.
If you have received an IRS letter accusing you of filing a frivolous tax return, then you should seek a lawyer right away. You have Constitutional rights and are not a criminal. Although the IRS may forget at times, citizens are innocent unless and until proven guilty in a court of law.
For more information, see Criminal Tax Evasion/Fraud, Tax Evasion, and Tax Avoidance.