Saturday, August 17, 2013
IRS Office of Chief Counsel Memorandum 20133303F (Aug. 16, 2013):
Application of Section 6702 Penalty to Taxpayer Who Files a Return with War Complaint
This memorandum responds to your request for advice regarding the application of the section 6702 penalty for frivolous tax submissions.
A taxpayer timely filed an income tax return listing all items of income and applicable deductions and credits. The taxpayer correctly calculated the tax due, but did not make a payment with the return. Instead, the taxpayer enclosed a letter describing a conscientious objection to the full payment of Federal income tax.
As a member of the Religious Society of Friends (Quakers), the taxpayer opposes war and the support of war. The taxpayer enclosed a letter with her return explaining this position. In the letter, the taxpayer recited statistics to claim that a certain percentage of Federal income tax dollars supports the military. The taxpayer then used this percentage to calculate the amount of tax she is willing to pay; she “withheld” payment of the rest of the tax due.
1. Does assessment of the section 6702 penalty against a taxpayer who presents a frivolous “conscientious objection” violate any constitutional provision or amendment?
2. Should the IRS assess a section 6702 penalty against a taxpayer who presents a frivolous “conscientious objection” in a letter enclosed with a complete and correct income tax return?
1. No. A taxpayer does not have the right to reduce Federal income taxes reported on a return based on religious or moral beliefs.
2. No. The section 6702 penalty should not be assessed in this very limited situation. When the taxpayer timely files a correct and complete return, the section 6702 penalty should not be assessed based solely on the fact that the taxpayer enclosed a letter with the return explaining why the taxpayer is not paying the self-assessed tax due. If a penalty has been assessed, it should be abated.
(Hat Tip: Bob Kamman.)