Top Tax Excuses: You owe no taxes if you file a zero return

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This post was written as part of a series on tax excuses that don't work.

Tax protestors suggest filing a tax return that shows zero income, so that your resulting income tax will be zero. That's all fine and well, unless of course you have income. Then that nifty "zero return" is a lie, and you're opening yourself up to lots of problems.

It gets really fun when a taxpayer has had income tax withheld on their wages, and they file the "zero return" to try to get that money back. The taxpayer attaches a W-2 to the tax return, and the IRS quickly sees that they didn't have zero income. They had the income on the W-2 and the income tax return is immediately flagged as incorrect.

And you don't only have to pay taxes owed when you file this false "zero return." Now you may have to contend with penalties for filing a frivolous return and for failure to file (failing... because you didn't provide anything close to the right information). The IRS says you didn't make a reasonable attempt to comply with the law, so now you get penalties.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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