Tax Protestor
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[edit] Definition
A Tax Protestor is one who advances worthless pseudolegal arguments in an attempt to prove that the laws of the United States do not require him to pay income tax.
[edit] The Law
U.S.C. Title 26 §63 defines taxable income as gross income minus certain deductions.
U.S.C. Title 26 §1 imposes a tax on taxable income.
[edit] Tax Protest Myths
In this section we deal with some of the more popular arguments on which the tax protestors seek to build their case. For each argument we have included a single sample of what a judge has had to say about such arguments; a much larger collection of case law will be found by following the links at the end of this article.
Myth : The Constitution says that only gold and silver are legal tender. Therefore, Federal Reserve Notes (aka "the green stuff") aren't really money, and you can't be taxed on them.
Fact : The Constitution prohibits individual States of the Union from issuing any currency other than gold or silver coinage. Congress, on the other hand, is under no such limitation.
Ruling : "It remains only for us to state that the US Congress is the only entity empowered to declare what shall be deemed legal tender. Congress has so declared. 31 USC sec. 392 provides that FRNs shall be legal tender for all debts and taxes. This unique and broad power of Congress to declare what shall be money and to regulate its value for all purposes has been constitutionally recognized." (United States v. Anderson)
Myth : Wages are not income. The argument here is that since you are paid wages for an amount of work of equal value, your net income from the transaction is zero.
Fact : This would be a curious way to interpret even the phrase "net income". However, Section 61 of the Internal Revenue Code specifies that gross income is taxable, defining "gross income" as "all income from whatever source derived" and specifies "compensation for services" (i.e. wages) in particular.
Ruling : "Irrefutably, wages earned in compensation for services are "income" pursuant to the federal tax laws." (Boubel v. United States)
Myth : Only certain sources of income count as "gross income", and these are listed in section 861 of the tax code, which deals only with income from overseas sources.
Fact : As stated above, "gross income" is defined as "income from whatever source derived". A special provision, as in section 861, for the taxation of certain sources of income, does not exclude other people or sources of income, especially when they have, elsewhere in the tax code, been explicitly included. It is as though an arsonist should argue that he should go free because there is a statute saying that rapists should be jailed.
Ruling : "Petitioners argue that their compensation for services, unemployment compensation, and interest do not constitute gross income because these items of income are not listed in section 1.861-8(f), Income Tax Regs. Their argument is misplaced and takes section 1.861-8(f), Income Tax Regs., out of context. The rules of sections 861-865 have significance in determining whether income is considered from sources within or without the United States. The source rules do not exclude from U.S. taxation income earned by U.S. citizens from sources within the United States." (Corcoran v. Commissioner)
Myth : The Sixteenth Amendment, which empowers Congress to impose an income tax, was never properly ratified, and so is not law.
Fact : The Sixteenth Amendment was ratified by more than three-quarters of States, which is sufficient for ratification. And even before it was ratified, Congress had the power to impose an income tax; the first Federal income tax was imposed in 1861, and was ruled Constitutional by the U.S. Supreme Court. The 16th Amendment's purpose was to override an 1894 Supreme Court case in which the Court ruled that taxes on income derived from property were Direct taxes in need of apportionment.
Ruling : "The validity of that process [adopting the 16th Amendment] and of the resulting constitutional amendment are no longer open questions." (Miller v. United States)
Myth : Tax protestors are not citizens of the USA unless they live in an area under Federal control such as Washington DC. Otherwise they are citizens of their respective States, and cannot be taxed by the federal government.
Fact : This combines two errors. In the first place, the Fourteenth Amendment makes it clear that such a person holds dual citizenship:
- All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State in which they reside.
In the second place, there is nothing in the Constitution which restricts Congress' power of taxation to citizens.
Ruling : "Plaintiff claims that he is a nonresident alien or 'foreign individual of America' in relation to the United States, and that his residence and citizenship rest solely with the States of Washington, 'a free, independent, sovereign, territory' ... Despite plaintiff's creative argument, the court takes judicial notice of the fact that the state of Washington is one of the fifty states that comprise the United States of America, entering the Union in 1889 as the forty-second state. The Fourteenth Amendment states that '[a]ll persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.' U.S. Const., Amend. XIV, section 1 ... As a United States citizen, plaintiff is required to pay federal income tax." (Betz v. United States)
Myth : The requirement to file an income tax return violates the Fifth Amendment provision against a person being required to incriminate himself.
Fact : The Fifth Amendment applies only to criminal proceedings and not to civil cases, such as those involving the collection of taxes.
Ruling : "The Fifth Amendment does not serve as a defence for failing to make any tax return." (United States v. Stillhammer)
Myth : The requirement to pay income tax violates the Fifth Amendment provision against seizure of property without due process.
Fact : The first article of the Constitution specifically empowers Congress to raise taxes. For Congress to impose a tax, and to delegate its collection to agents of the US Treasury, is the "due process".
Ruling : "So far as the due process clause of the 5th Amendment is relied upon, it suffices to say that there is no basis for such reliance, since it is equally well settled that such clause is not a limitation upon the taxing power conferred upon Congress by the Constitution; in other words, that the Constitution does not conflict with itself by conferring, upon the one hand, a taxing power, and taking the same power away, on the other, by the limitations of the due process clause." (Treat v. White)
Myth : The requirement to file an income tax return constitutes an "unreasonable search and seizure", contrary to the Fourth Amendment.
Fact : The courts have found that this requirement is "reasonable" within the meaning of the Fourth Amendment:
Ruling : "It is urged in a number of the cases that in a certain feature of the statute there is a violation of the 4th Amendment of the Constitution, protecting against unreasonable searches and seizures. ... Certainly the amendment was not intended to prevent the ordinary procedure in use in many, perhaps most, of the states, of requiring tax returns to be made, often under oath." (Flint v. Stone Tracy Co)
Myth : Filing an income tax return, or payment of taxes, is voluntary.
Fact : The income tax system has been described as "voluntary" because by and large it relies on the citizen to complete his or her own form and to do so accurately. Obviously, this does not mean that there are no pains and penalties involved in not doing so!
Ruling : "To the extent that income taxes are said to be voluntary, however, they are only voluntary in that one files the returns and pays the taxes without the IRS first telling each individual the amount due and then forcing payment of that amount. The payment of income taxes is not optional, however, ... and the average citizen knows that the payment of income taxes is legally required." (Schiff v. United States)
[edit] The scammers
The person who uses these frivolous arguments is often sincere. The people who supply him with these arguments are often not. The scammers may charge hundreds or thousands of dollars for worthless advice, of the sort exampled above, on how to avoid paying income tax. They will typically assure their victims that they have had many satisfied customers, and that they themselves employ these methods as a way of avoiding tax.
The fact is that these arguments have not, ever, been found valid by a court; and courts look very severely on people who use such arguments. The person who pays out money for such worthless advice is the poorer by this fee; will in fact have to pay his income tax; will be required to pay the legal costs of his case; may well be fined for employing frivolous arguments; and may face criminal proceedings for tax fraud. All in all, it seems easier just to pay the tax. To quote the court in the case of United States v. Sloan:
- The real tragedy of this case is the unconscionable waste of Mr. Sloan’s time, resources, and emotion in continuing to pursue these wholly defective and unsuccessful arguments ... We are not unmindful of the sincerity of his beliefs. On the other hand, we are less sure of the sincerity of the professional tax protesters who promote their views in literature and meetings to persons like Mr. Sloan, yet are unlikely ever to face the type of penalties incurred by him.
[edit] Links and References
- The IRS on frivolous tax arguments
- Idiot Legal Arguments
- The Truth About Frivolous Tax Arguments
- Tax Protestor Arguments (.pdf format)
- Dan Evans' Tax Protestor FAQ
