Originally Published on forbes.com on August 3rd, 2011
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I comb through original source tax material looking for stuff that is of practical use to my firms clients (Forbes is great, but I’m hanging on to my day job for now), is interesting, provides matter for reflection or is funny. Funny is actually my favorite like the anchorwoman who wanted to deduct her underwear. The IRS has a different attitude. No nonsense. There is actually a penalty of $5,000 for frivolous submissions. Code Section 6702, you can look it up.
The Chief Counsel’s office has just clarified that they can charge anybody who sends them something frivolous the five grand even if it is not about their own taxes. So that would include representatives like me. What’s even worse is that if its about your own stuff they might give you 30 days to take it back and not charge you the 5 grand. If a representative submits something frivolous and the client fires him, he’s screwed, because then he won’t be allowed to take it back. The CCA isn’t that long so I can give you the full text:
CCA 201129040
Section 6702(b)(1) imposes a $5000 penalty on “any person who submits a specified frivolous submission.” The statute does not expressly require that the person subject to the penalty must also be the subject of the submission. “Submit” means to offer something for another’s consideration. That language would seem to extend to, and include, a person who submits something on another person’s behalf. So, we believe the section 6702(b) penalty could apply to a person’s representative who sends to the IRS a specified frivolous submission on behalf of another person. We note, however, that the representative should not be able to withdraw the submission under section 6702(b)(3) unless a power of attorney authorizes the representative to do so.
In the early eighties the atmosphere in regional public accounting was different. There was still a lot of relatively mindless work adding long columns of numbers and extending trial balances that took forever to balance and the like. Lots of people smoked during tax season, in the office mind you, even when they otherwise didn’t. We used to work till 10:30 PM and around 9:00, when there weren’t any partners around, I would go get a six pack and distribute it. It was predominately male particularly the late night crowd. So we used to have these sayings. One of them was “Well, if he can’t take a joke __________ Oh this is Forbes, never mind.