What is IRS Letter 2205?

IRS Letter 2205 notifies you that the IRS has determined your tax return is 'frivolous' under Internal Revenue Code § 6702 and is imposing a $5,000 penalty. The IRS maintains a list of positions that make a return frivolous — common examples include: claiming wages are not taxable income, asserting the income tax is voluntary, claiming zero income when W-2s report earnings, or using a 'non-statutory' form that doesn't actually report income. The § 6702 penalty is a civil penalty assessed per return, per tax period — meaning it can be assessed for each frivolous return filed and for each tax year.

Can I challenge a Letter 2205 penalty?

Yes, you can challenge a frivolous return penalty through several avenues: (1) Pay 15% of the penalty and file an administrative claim for refund with the IRS (Form 843), then sue for refund in federal district court or the Court of Federal Claims if denied. (2) Petition the U.S. Tax Court — the § 6702 penalty assessment is subject to deficiency procedures, meaning you can file a Tax Court petition without paying first. (3) File a Collection Due Process hearing request if the penalty goes to collection. The IRS may also waive the penalty if you withdraw the frivolous return and file a proper, corrected return.

Frivolous tax return penalty notice with IRS correspondence on desk

$5,000 Frivolous Return Penalty

IRS Letter 2205: $5,000 Frivolous Return Penalty

The IRS is fining you $5,000 per return for filing what it considers a frivolous tax return under IRC § 6702. This penalty can stack — $5,000 per tax year — and it comes with interest. You can challenge it, but you need to act correctly. Here's how.

Get 2205 Penalty Help Call 310-597-2254

Get Your Free Tax Relief Review

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Get Free 2205 Help

Get Your Free Tax Relief Review

A specialist will review your case and outline your options — completely free.

What Is Letter 2205?

IRS Letter 2205 notifies you that the IRS has determined your tax return contains a position that the IRS considers "frivolous" under Internal Revenue Code § 6702 and is imposing a $5,000 civil penalty per return. The IRS publishes a list of frivolous positions that trigger this penalty — the most common ones include: arguing that only federal employees owe income tax, asserting wages are not taxable income, claiming the 16th Amendment was not properly ratified, or filing a return that reports zero income when the IRS has W-2 or 1099 records showing income was earned.

This penalty stacks. The § 6702 penalty is assessed per return, per tax period — if you filed frivolous returns for 2022, 2023, and 2024, you could face $15,000 in penalties plus interest. The IRS also has a separate penalty under § 6702 for specified frivolous submissions (up to $5,000 per submission) and can impose a higher penalty of $25,000 for frivolous Tax Court petitions under § 6673. The key is to address this quickly before the penalties compound across multiple tax years.

Common Frivolous Return Triggers

Zero Income Return with W-2s/1099s

Filing a return showing zero income when the IRS has third-party records (W-2s, 1099s) proving you earned wages or other income.

Wages Not Income

Asserting that wages or compensation for personal services are not taxable income under the Constitution.

Tax is Voluntary

Claiming that filing a return or paying income tax is voluntary and therefore you are not required to pay.

Invalidated 16th Amendment

Claiming the 16th Amendment was not properly ratified or is otherwise invalid.

Non-Statutory Forms

Filing a document that does not actually report income but instead makes legal arguments disguised as a tax return.

Sovereign Citizen Arguments

Claims that you are not a 'United States person' subject to tax, or similar sovereign citizen / tax protestor positions.

Challenge the 2205 Penalty Before It Grows

We review your return, determine if the penalty can be challenged or abated, and help you file corrected returns to stop the penalties from stacking across multiple tax years. Free review.

Get Free 2205 Help Call 310-597-2254