rr-05-20.pdf

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Part III – Administrative, Procedural, and Miscellaneous

Sections – 6651, 6662-6664, 6702

Rev. Rul. 2005-20

PURPOSE

The Service is aware that some taxpayers are attempting to reduce or eliminate
their federal tax liability by taking the position that they are not required to pay taxes if
those taxes might be used to support government programs or policies with which they
disagree. Common examples include moral, ethical, or religious opposition to
government spending for weapons programs, military operations, or medical research.
The Service is also aware that promoters, including return preparers, are advising or
recommending that taxpayers take frivolous positions based on these arguments.
Some promoters market a package, kit, or other materials that claim to show taxpayers
how they can avoid paying taxes based on these and other meritless arguments.
This revenue ruling emphasizes to taxpayers and to promoters and return
preparers that liability for federal taxes does not depend on whether the taxpayer
agrees with the government programs or policies that are funded with tax receipts. Any
argument that taxpayers may refuse to report income or claim deductions because they
oppose particular government programs or policies is frivolous and has no merit.
The Service is committed to identifying taxpayers who attempt to avoid their tax
obligations by taking frivolous positions, including frivolous positions based on

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opposition to government programs or policies. The Service will take vigorous
enforcement action against these taxpayers and against promoters and return preparers
who assist taxpayers in taking these frivolous positions. Frivolous returns and other
similar documents submitted to the Service are processed through its Frivolous Return
Program. As part of this program, the Service confirms whether taxpayers who take
frivolous positions have filed all of their required tax returns, computes the correct
amount of tax and interest due, and determines whether civil and criminal penalties
should apply. The Service also determines whether civil or criminal penalties should
apply to return preparers, promoters, and others who assist taxpayers in taking frivolous
positions, and recommends whether a court injunction should be sought to halt these
activities. Other information about frivolous tax positions is available on the Service
website at www.irs.gov
.
ISSUE
Whether a taxpayer’s disagreement with government programs or policies on
moral, ethical, religious or other grounds allows the taxpayer to refuse to file federal tax
returns or to refuse to pay part or all of the taxpayer’s federal tax liability?
LAW AND ANALYSIS
Section 1 of the Internal Revenue Code imposes a tax on all taxable income.
There is no authority under the Internal Revenue Code or any other applicable law that
allows taxpayers to refuse to file tax returns because they do not agree with government
programs or policies. Further, it is well settled that deductions and credits are a matter

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of legislative grace and are not allowed unless specifically provided for in the Internal
Revenue Code. INDOPCO, Inc. v. Commissioner
, 503 U.S. 79, 84 (1992). There is no
provision in the Internal Revenue Code that permits taxpayers to file returns claiming
deductions or credits that reduce their taxable income by the percentage they estimate
the government spends on programs or policies with which they disagree.
These frivolous positions are variations of arguments taxpayers have made
about religion and taxation that have been repeatedly rejected by the courts. In United
States v. Lee, 455 U.S. 252 (1982), a member of a religious denomination claimed that
the payment of social security taxes violated his First Amendment right to free exercise
of religion. The United States Supreme Court rejected this argument, stating that “the
tax system could not function if denominations were allowed to challenge the tax system
because tax payments were spent in a manner that violates their religious belief.” Id
. at
260. The Court held that religious or moral beliefs that conflict with the payment of tax
provide no basis for resisting the tax. Id
.
Courts repeatedly have rejected these and similar arguments that a taxpayer’s
religious or moral beliefs permit the avoidance of federal taxes, and have imposed
penalties against taxpayers who make these arguments. See Schehl v. Commissioner,
855 F.2d 364, 367 (6
th
Cir. 1988) (“Alleged vocal opposition to taxes for a particular
reason, and refusal to pay taxes, even if all assertions were taken as true . . . are simply
not a basis to challenge an assessment of taxes.”); Nelson v. United States, 796 F.2d
164 (6
th
Cir. 1986) (upholding the applicability and constitutionality of a frivolous return
penalty imposed against a taxpayer who claimed a deduction based on religious

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objection to war expenditures); Randall v. Commissioner, 733 F.2d 1565, 1567 (11th
Cir. 1984) (“[A]rguments involving objections to the Government's military expenditures
as a basis for non-payment of taxes have been raised by taxpayers many times, and in
each instance the courts have rejected them.”).
CIVIL AND CRIMINAL PENALTIES
The Service will disallow deductions or other claimed tax benefits, including the
exclusion of income, based on frivolous arguments regarding opposition to government
programs or expenditures. In addition to liability for tax due plus statutory interest,
individuals who claim tax benefits on their returns based on these and other frivolous
arguments may face substantial civil and criminal penalties. Potentially applicable civil
penalties include: (1) the section 6662 accuracy-related penalty, which is equal to 20
percent of the amount of taxes the taxpayer should have paid; (2) the section 6663
penalty for civil fraud, which is equal to 75 percent of the amount of taxes the taxpayer
should have paid; (3) a $500 penalty under section 6702 for filing a frivolous return; and
(4) a penalty of up to $25,000 under section 6673 if the taxpayer makes frivolous
arguments in the United States Tax Court.
Taxpayers relying on these frivolous positions also may face criminal prosecution
for: (1) attempting to evade or defeat tax under section 7201, for which the penalty is a
significant fine and imprisonment for up to 5 years; or (2) making false statements on a
return under section 7206, for which the penalty is a significant fine and imprisonment
for up to 3 years.

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Persons who promote these frivolous positions and those who assist taxpayers in
claiming tax benefits based on these positions may be enjoined by a court pursuant to
sections 7407 and 7408 and also may face potential civil and criminal penalties.
Potential penalties include: (1) a $250 penalty under section 6694 for each return
prepared by an income tax return preparer who knew or should have known that the
taxpayer’s argument was frivolous (or $1,000 for each return if the return preparer’s
actions were willful, intentional, or reckless); (2) a penalty under section 6700 for
promoting abusive tax shelters; (3) a $1,000 penalty under section 6701 for aiding and
abetting the understatement of tax; and (4) criminal prosecution under section 7206, for
which the penalty is a significant fine and imprisonment for up to 3 years, for assisting or
advising about the preparation of a false return or other document under the internal
revenue laws.
HOLDING

Taxpayers may not refuse to file tax returns and may not claim deductions or
credits on their tax returns based on their opposition to government programs or
policies. Any claim that individuals may reduce their federal tax liability based on
objections to the use of the taxes to support government programs or policies is
frivolous and has no merit.
DRAFTING INFORMATION
The principal author of this revenue ruling is the Office of the Associate Chief
Counsel (Procedure & Administration) Administrative Provisions and Judicial Practice

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Division. For further information regarding this revenue ruling, contact that office on
(202) 622-7950 (not a toll-free call).