Frivolous Tax Positions

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)

Penalties for Filing a Frivolous Return in Montana

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.

Important Notes About Frivolous Positions

  • Courts and government agencies can still penalize taxpayers who raise frivolous arguments not explicitly listed in this document.
  • This page does not provide an exhaustive list of all possible frivolous tax positions. A tax argument may still be considered frivolous even if it isn’t mentioned here.

Additional Resources