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Frivolous Tax Positions

Identified Frivolous Positions

In accordance with Revenue and Taxation Code Section 19179(d)(1), FTB adopts the U.S. Secretary of the Treasury's list of frivolous positions. Please refer to IRS Notice 2008-14 for submissions filed between January 14, 2008 and April 7, 2010, IRS Notice 2010-33 for submissions after April 7, 2010, and to IRS publication, The Truth About Frivolous Tax Arguments. This publication is updated by the IRS at least once a year.

In addition, for submissions after April 26, 2010, FTB hereby identifies as a frivolous position any claim or assertion that the Information Practices Act (commencing with Section 1798.35 of the Civil Code) applies, directly or indirectly, to the requirement to make and file a valid tax return or to the determination of the existence or possible existence of liability (or the amount thereof) of any person for any tax, penalty, or fee authorized under Part 10 or Part 10.2 of the Revenue and Taxation Code.

Frivolous Submission Penalty (R&TC Section 19179)

The Franchise Tax Board (FTB) began imposing penalties on July 20, 2009 for specified frivolous submissions. Any person who submits a “specified frivolous submission” shall pay a penalty of five thousand dollars ($5,000). The penalty will not apply if the person withdraws the submission in writing within 30 days of FTB's notice that states the submission is a “specified frivolous submission.”

A “specified frivolous submission” is a submission that includes material that meets either of the following definitions:

  • Is based on a position FTB identifies as frivolous.
  • Reflects a desire to delay or impede the administration of federal income tax laws determined by the IRS, or California income or franchise tax laws determined by FTB.

Relief From Frivolous Submission Penalty

There are two ways to contest the frivolous submission penalty. You can do either or both of the following:

  • You can request relief from the penalty by submitting form FTB 626, Request for Chief Counsel to Relieve Penalties.
  • After you pay the penalty in full, you can also file a claim for refund. You must file your claim within the statute of limitations (R&TC Section 19306).

Frivolous Return Penalty (R&TC Section 19179)

A penalty shall be imposed for filing a frivolous return and shall be determined in accordance with Section 6702 of the Internal Revenue Code, except as otherwise provided.

The frivolous return penalty is $500 for returns filed prior to January 1, 2011 and $5,000 for returns filed on or after January 1, 2011.

A frivolous return penalty is imposed if all of the following apply:

  • The taxpayer submits what is purported to be a required return.
  • The purported return does not contain sufficient information to judge the substantial correctness of the self-assessment or contains information that, on its face, indicates that the self-assessment is substantially incorrect.
  • The purported return is based on a frivolous position or reflects an attempt to delay or impede administration of the tax laws.

Relief From Frivolous Return Penalty

There are two ways to contest the frivolous return penalty. You can do either or both of the following:

  • You can request relief from the penalty by submitting form FTB 626, Request for Chief Counsel to Relieve Penalties.
  • After you pay the penalty in full, you can also file a claim for refund. You must file your claim within the statute of limitations (R&TC Section 19306).