• Can the IRS assess a “frivolous” tax return penalty against a married couple who reduced their federal income tax liability by 36% in order to avoid paying for “war preparation” contrary to their religious beliefs? Yes, concluded a federal district court in Maryland. The couple had attached a letter to the tax return in question, noting their objection to the government’s use of federal tax money for military preparedness and stating that use of their tax payments for military activities conflicted with their religious convictions. The IRS asserted negligence penalties and a $500 “frivolous return penalty” against the couple. The court, in upholding the frivolous return penalty, observed: “[D]eductions and credits are matters of legislative grace. If Congress has not specifically legislated them, they do not exist. There is no provision in the Internal Revenue Code authorizing the deductions taken by [the couple]. [The frivolous return penalty] was specifically enacted to deter non-payment of taxes based on a taxpayer’s disagreement with the uses to which tax payments will be put. The Court accordingly must find [the couple’s] deduction frivolous ….” Snyder v. United States, 714 F. Supp. 761 (D. Md. 1989).

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