Practices and Procedures · Sanctionable acts

Frivolous submissions (returns and documents)

A frivolous submission penalty is not a penalty for being wrong. It is a penalty for filing something that either advances a position the Secretary has already published as frivolous, or that is on its face designed to delay. The distinction matters because the second branch has no list, and because a practitioner who transmits a client’s frivolous position has exposure of their own that no client waiver removes.

The rule

Frivolous returns. A person pays $5,000 per frivolous return or specified frivolous submission^TY2026 if they file what purports to be a return that either does not contain information on which the substantial correctness of the self-assessment may be judged, or contains information that on its face indicates the self-assessment is substantially incorrect — and the conduct is either based on a position the Secretary has identified as frivolous, or reflects a desire to delay or impede administration of the federal tax laws (IRC § 6702(a)).

Both halves are required. A return that is substantively wrong but complete and honestly meant fails the first condition, and a return advancing a listed position but containing a judgeable self-assessment fails it too.

Specified frivolous submissions. The same amount applies where any portion of a specified submission rests on a listed frivolous position or reflects a desire to delay (IRC § 6702(b)(1), (b)(2)(A)). A specified submission is exhaustively defined: a request for a hearing under § 6320 or § 6330, or an application under § 6159 (installment agreements), § 7122 (compromises) or § 7811 (taxpayer assistance orders) (IRC § 6702(b)(2)(B)). Nothing else is a specified submission, however frivolous.

The withdrawal escape. If the IRS notifies a person that a submission is a specified frivolous submission and the person withdraws it within 30 days after the IRS notifies the person that a submission is a specified frivolous submission^TY2026, the penalty does not apply to that submission (IRC § 6702(b)(3)). There is no equivalent escape for a frivolous return under § 6702(a).

The list. The Secretary must prescribe and periodically revise the list of frivolous positions, and may not include a position that meets the § 6662(d)(2)(B)(ii)(II) test (IRC § 6702(c)). The current list is Notice 2010-33, which modified and superseded Notice 2008-14 and is effective for submissions made and issues raised after 7 April 2010. It sets out 46 numbered positions, each covering positions that are the same as or similar to it^TY2026, and its residual item sweeps in any position described as frivolous in published guidance in existence when the position was adopted.

Where the penalty bites. It is imposed only when the frivolous position or the desire to delay appears on the face of the return, purported return or specified submission, including attachments (Notice 2010-33 § I). It is in addition to any other penalty (IRC § 6702(e)), and the Secretary may reduce it where doing so would promote compliance (IRC § 6702(d)).

In court. The Tax Court may impose up to $25,000 imposed by the Tax Court, and up to $10,000 in a section 7433 proceeding in another court^TY2026 where proceedings were instituted or maintained primarily for delay, the taxpayer’s position is frivolous or groundless, or the taxpayer unreasonably failed to pursue available administrative remedies (IRC § 6673(a)(1), (b)(1)). Counsel who multiplies proceedings unreasonably and vexatiously can be made to pay excess costs personally (IRC § 6673(a)(2)).

Current figures

How it works in practice

The listed positions are not obscure. They are the familiar arguments: that compliance is voluntary, that the Code is not positive law, that wages are not income, that Federal Reserve notes are not taxable, that the taxpayer is not a “person” under § 7701(a)(14), that a “straw man” entity separate from the taxpayer bears the liability, and that the IRS is a private corporation. Reading the list once is worth more than memorising it, because the point is recognition — a client arriving with any of them is asking the practitioner to file something that carries a penalty on its face.

Position (19) deserves separate attention: altering a return, including striking out the penalty-of-perjury declaration, is a listed frivolous position. A jurat alteration is therefore § 6702 conduct, and it stacks — the return is also unfiled for failure-to-file purposes if the alteration invalidates the signature, so the § 6651 additions run alongside.

The two branches behave differently on second chances. A specified frivolous submission can be withdrawn within thirty days of IRS notice and the penalty falls away entirely. A frivolous return has no such provision. Practitioners sometimes assume the withdrawal right is general; it is not, and the difference decides whether there is anything to do after the notice arrives.

For the practitioner, the exposure is direct, and the standard depends on what is being filed. For returns and claims for refund, Circular 230 § 10.34(a) sets the bar at reasonable basis — a practitioner may not willfully, recklessly or through gross incompetence sign, or advise a position on, a return that lacks a reasonable basis, is an unreasonable position under § 6694(a)(2), or is a willful attempt to understate. For documents, affidavits and other papers, § 10.34(b)(1) sets the bar lower: the position need only be not frivolous. Section 10.34(b)(2) then separately bars advising a client to submit any paper whose purpose is to delay or impede, that is frivolous, or that intentionally disregards a rule without a good faith challenge. Reasonable basis is the higher standard, so a position frivolous enough to draw § 6702 fails § 10.34 on either branch — but the two branches are not interchangeable and the exam tests which applies to which document. And § 10.51(a)(7) makes willfully assisting or counselling a client in violating a federal tax law disreputable conduct in itself, which routes the matter to OPR independently of any penalty on the client.

How this has changed

Section 6702 dates from 1982, when it carried a tenth of the current amount and reached only frivolous returns. The Tax Relief and Health Care Act of 2006 (Pub. L. 109-432 § 407) raised it to the figure above and added the specified frivolous submission branch, along with the thirty-day withdrawal. The list has been revised several times — Notice 2010-33 modified and superseded Notice 2008-14 and applies to submissions made and issues raised after 7 April 2010. Because § 6702(c) requires periodic revision, the operative question on any given file is which notice was current when the position was adopted, and item (46) of the current list makes that explicit by sweeping in positions described as frivolous in guidance in existence at that time.

Exam focus

Know both conditions in § 6702(a) and that a merely incorrect return does not meet them. Learn the closed definition of a specified submission — the two hearing requests and the three applications — because that is the most testable list on this topic. Know the thirty-day withdrawal and that it does not extend to returns. Recognise the common listed positions well enough to identify one in a fact pattern, and know that jurat alteration is among them. Expect the § 6673 court sanctions to appear as a distractor or as the second half of a question.

Check yourself

1. Which of the following is a “specified submission” for IRC 6702(b)? (A) An amended return on Form 1040-X (B) A request for a collection due process hearing under § 6330 (C) A protest to Appeals following a 30-day letter (D) A Form 843 claim for refund Answer: B. The definition covers § 6320 and § 6330 hearing requests and applications under §§ 6159, 7122 and 7811.

2. A taxpayer files a return reporting wages accurately but claiming a deduction a court later rejects as untenable. The IRC 6702 penalty: (A) Applies, because the position was rejected (B) Does not apply, because the return permits the self-assessment to be judged and the position is not listed (C) Applies at half the usual amount (D) Applies only if the taxpayer is represented Answer: B.

3. The IRS notifies a taxpayer that his installment agreement application is a specified frivolous submission. To avoid the penalty he must: (A) Pay the tax in full within 30 days (B) Withdraw the submission within 30 days of the notice (C) Request a CDP hearing (D) Nothing; the penalty is already fixed Answer: B. IRC § 6702(b)(3).

4. A client’s return strikes out the penalty-of-perjury declaration above the signature line. This is: (A) A harmless formality (B) A listed frivolous position under Notice 2010-33, with failure-to-file exposure alongside (C) Only a Circular 230 matter (D) Grounds for the accuracy-related penalty alone Answer: B.

5. A practitioner files a return advancing a listed frivolous position at the client’s insistence, disclosing it on Form 8275. The practitioner: (A) Is protected, disclosure having been made (B) Faces Circular 230 § 10.34(b) exposure and, on willfulness, § 10.51(a)(7), disclosure being irrelevant to a frivolous position (C) Faces no exposure, the position being the client’s (D) Must file but should resign afterwards Answer: B.