And they’ve prepared a special “memo” addressing reasons why you shouldn’t…
On March 16, 2006, the IRS published IRS Notice 2006-31 describing 26 frivolous arguments that taxpayers should avoid when filing their returns. Basically, these arguments include your run of the mill “if it’s too good to be true, it probably is” schemes such as trusts to avoid federal income tax liability, that a general “Native American treaty” exists allegedly providing tax-exempt status, and that only federal employees and persons residing in Washington, D.C. or federal territories and enclaves are subject to federal tax.
And be forewarned: the IRS will fine you $500 plus up to 75% of the underpaid tax for trying out one of these arguments on your return. Take one of these arguments to court and it could cost you $25,000.