What is a "Frivolous Tax Position?"

A taxpayer takes a frivolous tax position or argument when filing a frivolous tax return. In Montana, a frivolous tax return or report is one that:

• omits information necessary to determine the taxpayer’s tax liability
• shows a substantially incorrect tax
• is based on a frivolous position as identified in Internal Revenue Code 6702
• is based on the taxpayer’s action to impede collection of taxes (15-1-216(6), MCA)

Montana imposes a frivolous return penalty of $2,500 when a taxpayer relies on a frivolous argument to evade state taxes. The penalty amount applies when a person submits a tax return, or other specified submission, and any portion of the submission is based on a position the state identifies as frivolous.

In addition to the frivolous return penalty, the department may assess other interest and penalties as required. The government and courts are not precluded from penalizing taxpayers who raise a frivolous argument not addressed in this document.

The information provided on this page, including the relevant legal authorities cited, is not intended to provide an exhaustive list of frivolous tax positions. A tax position may be still considered frivolous even if such position or argument is not included in the information described here.

Resources:

IRS information about frivolous tax arguments: The Truth About Frivolous Tax Arguments, IRS.gov, March 2022

Internal Revenue Service notices of updates to frivolous tax positions