The LTR 3391 is the IRS telling you that a return, claim, or submission you filed contains a position the IRS considers frivolous. If you don't correct it within 30 days, the IRS will assess a $5,000 frivolous return penalty under IRC Section 6702.
What Constitutes a Frivolous Position
The IRS maintains a published list of positions it considers frivolous. These include claims that wages aren't income, that the income tax is voluntary, that you can revoke your Social Security number and withdraw from the tax system, that only gold and silver constitute legal tender for tax purposes, and various arguments based on misinterpretations of the Constitution, treaties, or individual sovereignty.
Filing a return with zeros across all income lines when the IRS has information returns showing income is also considered frivolous. So is filing a return that is altered, marked up, or submitted with caveats designed to nullify the taxpayer's signature.
The $5,000 Penalty
The frivolous return penalty is $5,000 per filing. It's assessed in addition to any other penalties and interest. It cannot be abated through First-Time Abatement or reasonable cause. And it survives bankruptcy in some circumstances. The IRS takes frivolous positions very seriously because they clog the system and, when promoted to others, undermine voluntary compliance.
What to Do
If you received an LTR 3391, you have 30 days to correct the frivolous position. File an amended return removing the frivolous claim, pay any tax due, and move on. The penalty is only assessed if you fail to correct within the 30-day window.
If someone advised you to file this way, find different advice immediately. Tax protest arguments have been rejected by every court at every level for decades. People who promote these positions often face criminal prosecution themselves.
If you've received an LTR 3391, call us at (813) 229-7100. We can help you correct the filing and avoid the penalty.