Legal Question in Tax Law in California

What are my options when I get a Frivolous Position letter from the IRS?

I recently got a letter from the IRS stating that in my ammended return I took a frivolous position and that if I didn't sign a couple of forms (which they forgot to include) I would be assessed a $500 penalty. Further, it states that if I file additional documents taking the same position they will assess me an additional $500 for each document. This is a PRE-1040X letter so they have not actually decided on my return.

I do not feel my position was frivolous. What can I do? It seems that if I just stand my ground I will be penalized. Since they haven't decided on my return yet I can't even appeal. This seems somewhat 1984 to me.

Thank you for your consideration.


Asked on 5/08/03, 7:58 pm

1 Answer from Attorneys
Ken Koenen Koenen & Tokunaga, P.C.

Re: What are my options when I get a Frivolous Position letter from the IRS?

You have two choices. You can disagree with them, in which case you they may issue an assessment and the penalty, which you would need to appeal.

The second choice is to pay the tax they are asking for, then file for a refund based on your position. That prevents the penalty and accumulation of interest.

Depending on how much is involved will help you determine if you want a tax attorney involved.

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Answered on 5/08/03, 8:17 pm


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