Tax protester arguments
Encyclopedia
Tax protester arguments are a number of objections raised by individuals who deny that a person has a legal obligation to pay a tax for which the United States
government
has determined that person is liable.
Tax protester
arguments are typically based on an asserted belief that the United States government is acting outside of its legal authority when imposing such taxes. The label "tax protester" should be distinguished from "tax resister
", an individual who refuses to pay tax on moral rather than legal grounds.
This article discusses tax protester arguments with respect to the U.S. federal income tax
.
and not with other taxes such as the gift tax
, estate tax
, sales tax
, and property tax
(although some tax protesters have attacked the last category under allodial title
claims).
that the Sixteenth Amendment to the Constitution
(removing any apportionment requirement for income taxes) was never "properly ratified
" or that it was properly ratified but does not permit the taxation of individual income, or particular forms of individual income. One argument is based on the contention that the legislatures of various states passed bills of ratification with different capitalization, spelling of words, or punctuation marks (e.g., semi-colons instead of commas) (see, e.g., United States v. Thomas). Another argument made by some tax protesters is that because the United States Congress
did not pass an official proclamation recognizing Ohio's year 1803 admission to statehood until 1953 (see Ohio Constitution
), Ohio
was not a state until 1953 and therefore the Sixteenth Amendment was not properly ratified (see Ivey v. United States and Knoblauch v. Commissioner in the referenced article). Another tax protester argument is that the manner in which the income tax is enforced violates the Fifth Amendment
, which protects individuals from having to make self-incriminating statements. In particular, they argue that the Fifth Amendment protects individuals from being required to file a personal income tax return. This argument was ruled invalid by the United States Supreme Court in the case of United States v. Sullivan.
The argument that Federal Reserve Notes (paper money) are not real, lawful money and therefore do not constitute income as they are not backed by gold or silver and are issued by a quasi-private organisation is occasionally heard; in the case of the Posse Comitatus and similar groups and individuals, hybrid arguments incorporating elements of the below-mentioned conspiracy theories appear to predominate.
pursuant to its constitutional taxing power are defective, invalid (see e.g., the Irwin Schiff quote below), or that the statutes are misapplied by the IRS
, the courts, lawyers, CPA
s, law professors, and legal experts generally, and that the tax "protesters" are not liable for tax under the law (see below). Other protestors have argued that the term "income" is not defined in the Internal Revenue Code or the Constitution, and that the tax law should therefore be invalid. These protesters claim that without clear definitions, Chapter 1 of Title 26 of the Code of Federal Regulations
suggests IRS agents must rely on voluntary compliance. No court has upheld this argument, and many courts have rejected it, and 26 U.S.C. §§ 61-64 does define various classes of income ("Gross income," "[a]djusted gross income," "[t]axable income," and "[o]rdinary income defined").
states on his web site:
is enforced upon threat of imprisonment, and is akin to "government sanctioned extortion
", in which a citizen is forced to give up a percentage of their income in exchange for not being put in prison. Strictly speaking, a genuine inability to pay taxes is not a crime
(although "willful failure" to pay taxes is a crime). For the most part, unpaid tax bills are settled through civil actions rather than in the criminal courts. The government may seize assets, file liens, garnish wages and pursue other civil legal actions to satisfy the tax debt, but persons may not be jailed simply for failing to pay taxes. Instead, criminal charges arise from closely related actions, such as failing to file a tax return, filing a false tax return, concealing income or assets and certain other actions considered to be illegal tax evasion.
Frank Chodorov
wrote "... you come up with the fact that it gives the government a prior lien on all the property produced by its subjects." The government "unashamedly proclaims the doctrine of collectivized wealth. ... That which it does not take is a concession." Issues with civil liberties
are also charged at the tax system, such as social inequality
, economic inequality
, financial privacy
, self-incrimination
, unreasonable search and seizure, burden of proof, and due process
. For these reasons, some argue for the FairTax
proposal of implementing a national sales tax to replace the federal income tax.
In the U.S., debtor’s prison was seen as an inhumane practice, and was mostly cancelled in the 19th century. Tax Protestors argue that prison for tax evasion is just as inhumane, for the same reasons. One owes a bank or a person, while the other owes the government. Some argue for gentler penalties instead of imprisonment, such as fines, community service
, wage garnishment, lien
on house, take tax money owed from bank account, repossess, and foreclosure
, much like the penalties of private or bank debt.
, is that these and similar tax protest arguments are frivolous
and, if adopted by taxpayers as a basis for failure to timely file tax returns or pay taxes, may subject such taxpayers to penalties. On its web site, the IRS states:
As stated in the Alaska District Court case of United States v. Rempel: "It is apparent ...that the defendants have at least had access to some of the publications of tax protester organizations. The publications of these organizations have a bad habit of giving lots of advice without explaining the consequences which can flow from the assertion of totally discredited legal positions and/or meritless factual positions."
See also Cheek v. United States
.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
has determined that person is liable.
Tax protester
Tax protester (United States)
A tax protester is someone who refuses to pay a tax on constitutional or legal grounds, typically because he or she believes that the tax laws are unconstitutional or otherwise invalid...
arguments are typically based on an asserted belief that the United States government is acting outside of its legal authority when imposing such taxes. The label "tax protester" should be distinguished from "tax resister
Tax resistance
Tax resistance is the refusal to pay tax because of opposition to the government that is imposing the tax or to government policy.Tax resistance is a form of civil disobedience and direct action...
", an individual who refuses to pay tax on moral rather than legal grounds.
This article discusses tax protester arguments with respect to the U.S. federal income tax
Income tax in the United States
In the United States, a tax is imposed on income by the Federal, most states, and many local governments. The income tax is determined by applying a tax rate, which may increase as income increases, to taxable income as defined. Individuals and corporations are directly taxable, and estates and...
.
Denial of tax liability
Arguments made by tax protesters generally deal with the U.S. Federal income taxIncome tax in the United States
In the United States, a tax is imposed on income by the Federal, most states, and many local governments. The income tax is determined by applying a tax rate, which may increase as income increases, to taxable income as defined. Individuals and corporations are directly taxable, and estates and...
and not with other taxes such as the gift tax
Gift tax
A gift tax is a tax imposed on the gratuitous transfer of ownership of property. The United States Internal Revenue Service says a gift is "Any transfer to an individual, either directly or indirectly, where full consideration is not received in return."When a taxable gift in the form of cash,...
, estate tax
Inheritance tax
An inheritance tax or estate tax is a levy paid by a person who inherits money or property or a tax on the estate of a person who has died...
, sales tax
Sales tax
A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....
, and property tax
Property tax
A property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality...
(although some tax protesters have attacked the last category under allodial title
Allodial title
Allodial title constitutes ownership of real property that is independent of any superior landlord, but it should not be confused with anarchy as the owner of allodial land is not independent of his sovereign...
claims).
Constitutional arguments
Some tax protesters may cite what they believe is evidenceTax protester Sixteenth Amendment arguments
Tax protester Sixteenth Amendment arguments are assertions that the imposition of the U.S. federal income tax is illegal because the Sixteenth Amendment to the United States Constitution, which reads "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived,...
that the Sixteenth Amendment to the Constitution
Sixteenth Amendment to the United States Constitution
The Sixteenth Amendment to the United States Constitution allows the Congress to levy an income tax without apportioning it among the states or basing it on Census results...
(removing any apportionment requirement for income taxes) was never "properly ratified
Ratification
Ratification is a principal's approval of an act of its agent where the agent lacked authority to legally bind the principal. The term applies to private contract law, international treaties, and constitutionals in federations such as the United States and Canada.- Private law :In contract law, the...
" or that it was properly ratified but does not permit the taxation of individual income, or particular forms of individual income. One argument is based on the contention that the legislatures of various states passed bills of ratification with different capitalization, spelling of words, or punctuation marks (e.g., semi-colons instead of commas) (see, e.g., United States v. Thomas). Another argument made by some tax protesters is that because the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
did not pass an official proclamation recognizing Ohio's year 1803 admission to statehood until 1953 (see Ohio Constitution
Ohio Constitution
The Ohio Constitution is the basic governing document of the State of Ohio, which in 1803 became the 17th state to join the United States of America. Ohio has had two constitutions since statehood was granted....
), Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
was not a state until 1953 and therefore the Sixteenth Amendment was not properly ratified (see Ivey v. United States and Knoblauch v. Commissioner in the referenced article). Another tax protester argument is that the manner in which the income tax is enforced violates the Fifth Amendment
Fifth Amendment to the United States Constitution
The Fifth Amendment to the United States Constitution, which is part of the Bill of Rights, protects against abuse of government authority in a legal procedure. Its guarantees stem from English common law which traces back to the Magna Carta in 1215...
, which protects individuals from having to make self-incriminating statements. In particular, they argue that the Fifth Amendment protects individuals from being required to file a personal income tax return. This argument was ruled invalid by the United States Supreme Court in the case of United States v. Sullivan.
The argument that Federal Reserve Notes (paper money) are not real, lawful money and therefore do not constitute income as they are not backed by gold or silver and are issued by a quasi-private organisation is occasionally heard; in the case of the Posse Comitatus and similar groups and individuals, hybrid arguments incorporating elements of the below-mentioned conspiracy theories appear to predominate.
Statutory arguments
Some protestors have claimed that statutes enacted by the United States CongressUnited States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
pursuant to its constitutional taxing power are defective, invalid (see e.g., the Irwin Schiff quote below), or that the statutes are misapplied by the IRS
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
, the courts, lawyers, CPA
Certified Public Accountant
Certified Public Accountant is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA...
s, law professors, and legal experts generally, and that the tax "protesters" are not liable for tax under the law (see below). Other protestors have argued that the term "income" is not defined in the Internal Revenue Code or the Constitution, and that the tax law should therefore be invalid. These protesters claim that without clear definitions, Chapter 1 of Title 26 of the Code of Federal Regulations
Code of Federal Regulations
The Code of Federal Regulations is the codification of the general and permanent rules and regulations published in the Federal Register by the executive departments and agencies of the Federal Government of the United States.The CFR is published by the Office of the Federal Register, an agency...
suggests IRS agents must rely on voluntary compliance. No court has upheld this argument, and many courts have rejected it, and 26 U.S.C. §§ 61-64 does define various classes of income ("Gross income," "[a]djusted gross income," "[t]axable income," and "[o]rdinary income defined").
Conspiracy arguments
Some tax protesters claim that since the year 1913 (the year of the inception of the modern Federal income tax), several generations of IRS employees, Department of Justice employees, the United States Congress, Federal court judges, lawyers, certified public accountants, and other experts have engaged in various continuing conspiracies to conceal the above deficiencies. For example, convicted tax offender Irwin SchiffIrwin Schiff
Irwin A. Schiff is a prominent figure in the United States tax protester movement. Schiff is known for writing and promoting literature that claims the United States income tax is applied incorrectly. He has lost several civil cases against the federal government and has a record of multiple...
states on his web site:
- In 1986, 99.5 million Americans were tricked into filing and paying federal income taxes when, legally, they didn't have to do either. If this statement shocks you, it is only because you and the rest of the nation have been thoroughly deceived by the federal government (with federal courts playing the key role), and an army of accountants, lawyers, and other tax preparers. All of these have a vested interest in keeping you ignorant concerning the real nature of federal income taxes.... [N]o provision of the Internal Revenue Code requires anyone to file or pay income taxes. This tax, unlike other internal revenue taxes, is strictly (censored
voluntary).... However, in order to deceive Americans of this, as well as provide federal courts and the IRS with deceptive passages on which to hang illegal prosecutions and illegal seizures, the Internal Revenue Code was written to make paying income taxes appear mandatory. The government succeeded in doing this by tricking the public
Other arguments
Some tax protesters argue that an income taxIncome tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
is enforced upon threat of imprisonment, and is akin to "government sanctioned extortion
Extortion
Extortion is a criminal offence which occurs when a person unlawfully obtains either money, property or services from a person, entity, or institution, through coercion. Refraining from doing harm is sometimes euphemistically called protection. Extortion is commonly practiced by organized crime...
", in which a citizen is forced to give up a percentage of their income in exchange for not being put in prison. Strictly speaking, a genuine inability to pay taxes is not a crime
Crime
Crime is the breach of rules or laws for which some governing authority can ultimately prescribe a conviction...
(although "willful failure" to pay taxes is a crime). For the most part, unpaid tax bills are settled through civil actions rather than in the criminal courts. The government may seize assets, file liens, garnish wages and pursue other civil legal actions to satisfy the tax debt, but persons may not be jailed simply for failing to pay taxes. Instead, criminal charges arise from closely related actions, such as failing to file a tax return, filing a false tax return, concealing income or assets and certain other actions considered to be illegal tax evasion.
Frank Chodorov
Frank Chodorov
Frank Chodorov was an American member of the Old Right, a group of libertarian thinkers who were non-interventionist in foreign policy and anti–New Deal...
wrote "... you come up with the fact that it gives the government a prior lien on all the property produced by its subjects." The government "unashamedly proclaims the doctrine of collectivized wealth. ... That which it does not take is a concession." Issues with civil liberties
Civil liberties of the United States
Civil liberties of the United States are certain inalienable rights retained by citizens of the United States under the Constitution of the United States, as interpreted and clarified by the Supreme Court of the United States and lower federal courts...
are also charged at the tax system, such as social inequality
Social inequality
Social inequality refers to a situation in which individual groups in a society do not have equal social status. Areas of potential social inequality include voting rights, freedom of speech and assembly, the extent of property rights and access to education, health care, quality housing and other...
, economic inequality
Economic inequality
Economic inequality comprises all disparities in the distribution of economic assets and income. The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. The issue of economic inequality is related to the ideas of...
, financial privacy
Financial privacy
Financial Privacy is a blanket term for a multitude of privacy issues:*Financial Institutions ensuring that their customers information remains private to those outside the institution. Issues include the Patriot Act, and other debates of privacy vs...
, self-incrimination
Self-incrimination
Self-incrimination is the act of accusing oneself of a crime for which a person can then be prosecuted. Self-incrimination can occur either directly or indirectly: directly, by means of interrogation where information of a self-incriminatory nature is disclosed; indirectly, when information of a...
, unreasonable search and seizure, burden of proof, and due process
Due process
Due process is the legal code that the state must venerate all of the legal rights that are owed to a person under the principle. Due process balances the power of the state law of the land and thus protects individual persons from it...
. For these reasons, some argue for the FairTax
FairTax
The FairTax is a tax reform proposal for the federal government of the United States that would replace all federal taxes on personal and corporate income with a single broad national consumption tax on retail sales. The Fair Tax Act would apply a tax once at the point of purchase on all new goods...
proposal of implementing a national sales tax to replace the federal income tax.
In the U.S., debtor’s prison was seen as an inhumane practice, and was mostly cancelled in the 19th century. Tax Protestors argue that prison for tax evasion is just as inhumane, for the same reasons. One owes a bank or a person, while the other owes the government. Some argue for gentler penalties instead of imprisonment, such as fines, community service
Community service
Community service is donated service or activity that is performed by someone or a group of people for the benefit of the public or its institutions....
, wage garnishment, lien
Tax lien
A tax lien is a lien imposed by law upon a property to secure the payment of taxes. A tax lien may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay income taxes or other taxes....
on house, take tax money owed from bank account, repossess, and foreclosure
Foreclosure
Foreclosure is the legal process by which a mortgage lender , or other lien holder, obtains a termination of a mortgage borrower 's equitable right of redemption, either by court order or by operation of law...
, much like the penalties of private or bank debt.
The position of the Internal Revenue Service
The position of the Internal Revenue Service based upon the statutes and upon the related legal precedents in case lawCase law
In law, case law is the set of reported judicial decisions of selected appellate courts and other courts of first instance which make new interpretations of the law and, therefore, can be cited as precedents in a process known as stare decisis...
, is that these and similar tax protest arguments are frivolous
Frivolous or vexatious
In the law of several jurisdictions, such as Ireland and New Zealand, frivolous or vexatious, when used to describe an action such as a complaint or a legal proceeding, is a term used to deny its being heard, or to dismiss or strike out any ensuing judicial or non-judicial processes.While the term...
and, if adopted by taxpayers as a basis for failure to timely file tax returns or pay taxes, may subject such taxpayers to penalties. On its web site, the IRS states:
- Some [people] assert that they are not required to file federal tax returns because the filing of a tax return is voluntary. Proponents point to the fact that the IRS itself tells taxpayers in the Form 1040 instruction book that the tax system is voluntary. Additionally, the Supreme Court's opinion in Flora v. United StatesFlora v. United StatesFlora v. United States, 357 U.S. 63 , aff'd on rehearing, 362 U.S. 145 , was a case in which the United States Supreme Court held that a taxpayer generally must pay the full amount of an income tax deficiency assessed by the Commissioner of Internal Revenue before he may challenge its correctness...
, 362 U.S. 145, 176 (1960), is often quoted for the proposition that "our system of taxation is based upon voluntary assessment and payment, not upon distraint."
- The Law: The word "voluntary," as used in Flora and in IRS publications, refers to our system of allowing taxpayers to determine the correct amount of tax and complete the appropriate returns, rather than have the government determine tax for them. The requirement to file an income tax return is not voluntary and is clearly set forth in Internal Revenue Code §§ 6011(a) , 6012(a) , et seq., and 6072(a). See also Treas. Reg. § 1.6011-1(a).
- Any taxpayer who has received more than a statutorily determined amount of gross income is obligated to file a return. Failure to file a tax return could subject the noncomplying individual to criminal penalties, including fines and imprisonment, as well as civil penalties.
As stated in the Alaska District Court case of United States v. Rempel: "It is apparent ...that the defendants have at least had access to some of the publications of tax protester organizations. The publications of these organizations have a bad habit of giving lots of advice without explaining the consequences which can flow from the assertion of totally discredited legal positions and/or meritless factual positions."
Belief about the law as a defense in criminal cases
In criminal cases, the law distinguishes between beliefs about constitutionality of the tax law from other beliefs about the tax law:- A defendant's good-faith belief that he is not required to file a tax return is a valid defense to the element of willfulness, and the belief need not be reasonable if actually held in good faith. It is not, however, within the prerogative of the taxpayer to make a personalized finding of constitutionality. Thus, a good-faith belief that the tax laws are unconstitutional does not constitute a good-faith defense....
See also Cheek v. United States
Cheek v. United States
In Cheek v. United States, 498 U.S. 192 , the United States Supreme Court reversed the conviction of John L. Cheek, a tax protester, for willful failure to file tax returns and pay tax...
.
See also
- America: Freedom to Fascism, a film that promotes tax protester arguments
- Zeitgeist: The Movie, another film that promotes tax protester arguments
External links
- The Truth About Frivolous Tax Arguments, US Internal Revenue Service, January 1, 2010
- Criminal Tax Manual, § 40.00: “Tax Protesters” — From the Tax Division of the U.S. Department of Justice
- Income Tax: Voluntary or Mandatory? A law professor describes his views on errors in some popular tax protester arguments.