If you do this on your tax return, that IRS will charge you a $5,000 penalty
The 2025 tax season is underway. As US filters prepare to submit their returns, they should be aware that this mistake could imply an automatic $5,000 fine.
Due to a concern over a rapid growth of taxpayers deliberately defying tax laws on frivolous grounds, Congress passed a law which can result in an automatic $5,000 fine on taxpayers who desire to delay or impede the administration of Federal tax laws. It’s intended to target those who file “protest” returns and not those who are unintentionally noncompliant by claiming an undue refund.
Thus, federal lawmakers also require the Internal Revenue Service to send those who trigger the fine a letter to allow them the opportunity to avoid application of the penalty by correcting the unintentional error within 30 days of being notified. So what should taxpayers watch out for to avoid getting hit by a surprise $5,000 fine?
How to avoid getting hit by a $5,000 fine by the IRS in the 2025 tax season
Truthfulness and accuracy are paramount when filing a tax return with the IRS. If the tax agency deems your position in your filing to be “frivolous,” not only you could incur an immediate $5,000 fine, but also you spouse if your file jointly. Under Section 326(a) of the Tax Equity and Fiscal Responsibility Act of 1982, section 6702 was added to the Code providing for a civil penalty for frivolous income tax returns.
This imposes an immediate penalty against a filer who submits what they declare to be an income tax return but “does not contain information on which the substantial correctness of the self-assessment may be judged or contains information that on its face indicates that the self-assessment is substantially incorrect,” states the IRS.
Additionally, the agency determines that “the filing of the purported return is due to either a position that is frivolous or a desire (which appears on the purported return) to delay or impede the administration of Federal income tax laws.”
On top of the $5,000 fine, any and all other potential penalties and fines may also be applied.
As mentioned, the IRS is obligated to send taxpayers a letter. If it appears that the filing has been prepared by a ‘ghost preparer’, when the tax return lacks a signature or Preparer Tax Identification Number (PTIN), red flags will instantly be raised about the tax declaration’s legitimacy when it is processed by the IRS.
Be aware though that if you unfortunately receive one of these letters, the wording may not be exactly clear as to where the error is in your filing warns the Taxpayer Advocate Service. The office within the IRS has managed to get some clarifying language put into letters but feels that it still doesn’t go far enough.
Your best bet is to check the IRS website for more information or contact the agency directly.
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