IRS Won’t Abate Frivolous Position Penalty for Mental Incompetence

Posted on July 01, 2016

An individual suffering from mental incompetence filed a tax return stating that he is a private governmental entity and not subject to taxation. He also stated that the levy placed by the IRS on his disability pension payments violates due process under the 5th and 14th amendments to the Constitution.

The IRS subsequently determined that his statements were frivolous positions and assessed a frivolous return penalty against this individual. The IRS later concluded that it does not have the discretion to abate the frivolous return penalty even though the taxpayer suffers from mental incompetence.

Rather, the IRS can only reduce the penalty if it determines that the reduction would promote compliance with and administration of the federal tax laws. The IRS stated that it would consider reducing the penalty if the individual’s representative or guardian asks the IRS to reduce the penalty. However, the IRS stated that it is unable to completely abate the frivolous return penalty. What do you think?