Multiple frivolous refund requests may trigger return penalties

Plain-English summary

Chief Counsel identified cases supporting an IRC § 6702(a) penalty when a taxpayer makes multiple refund requests for the same tax year using frivolous arguments. The cited decisions treat documents requesting refunds as purported returns. They also indicate that a taxpayer cannot avoid that characterization by labeling correspondence otherwise when it includes enough information to request a refund. The advice therefore supports applying the frivolous-return penalty in the described situation.

Ruling snapshot

• Question: Can IRC § 6702(a) apply to multiple frivolous refund requests for the same tax year?
• Outcome: Advice given that cited cases support the penalty
• Key authorities: IRC § 6702(a); Callahan v. Commissioner; Kelly v. United States; Olson v. United States; Lovell v. United States

Full text (IRS public release)

ID: CCA_2014121716185644 [Third Party Communication:

UILC: 6702.00-00 Date of Communication: Month DD, YYYY]

Number: 201502013
Release Date: 1/9/2015
From:
Sent: Wednesday, December 17, 2014 4:18:57 PM
To:
Cc:
Bcc:
Subject: Section 6702(a) penalty

As discussed, the following cases support the application of the section 6702(a) penalty
in a case in which there are multiple requests for refund for the same tax year
containing frivolous arguments:

• Callahan v. CIR, 130 T.C. 44, 53 (2008) (documents requesting refunds are purported returns)

• Kelly v. United States, 789 F.2d 94 (1st Cir. 1986) (taxpayer cannot disclaim that correspondence
  is not a purported return when the taxpayer has included sufficient documentation to request a
  refund). See also Olson v. United States, 760 F.2d 1003 (9th Cir. 1985); Lovell v. United States,
  755 F.2d 517 (7th Cir. 1984).

Please let us know if you need any additional information.

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