Facts & Fiction of Frivolous Arguments - Nonfiler Enforcement
When the 16th Amendment to the Constitution was ratified (February 3, 1913) giving Congress the power "to lay and collect taxes on incomes" citizens began arguing that it was not properly ratified and income taxes are illegal. The Courts have repeatedly rejected their argument as frivolous, but unfortunately, some citizens continue to raise arguments in spite of the fact that they have no basis in law. Unscrupulous promoters and their followers have long employed frivolous arguments concerning the legality of the income tax as pretexts to enrich themselves or evade their taxes. Their motivation is usually monetary, not some legitimate purpose or belief.
Anti-taxation groups have been around for a long time, some using the frivolous argument mentioned here. These groups are small but vocal. In the past, organizations like We The People, The Save a Patriot Society, The Pilot Connection, and the Freeman all attracted followings. Though the leadership of these movements used different arguments to gain followers, they all share one thing in common; they received substantial sentences in a federal prison for their activities. Their followers also paid a steep price for following bad advice. Some were prosecuted, many more were involved in years of litigation and ultimately had to pay all taxes owed along with penalties and interest.
Complicated arguments against the American tax system are built by stringing together unrelated ideas plucked from widely conflicting court rulings, dictionary definitions, government regulations and other sources. " The Truth About Frivolous Tax Arguments" is a document that addresses false arguments about the legality of not paying taxes or filing returns. Some of the most popular anti-taxation arguments include the following:
Constitutional Argument - Filing an IRS Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy.
The Truth: The courts have consistently held that disclosure of the type of routine financial information required on a tax return does not incriminate an individual or violate the right to privacy.
Compensation Argument - Wages, tips and other compensation received for personal services are not income because there is allegedly no taxable gain when a person "exchanges" labor for money.
The Truth: The Internal Revenue Code defines gross income as income from whatever source derived and includes compensation for services.
Sixteenth Amendment Argument - As stated above, the Constitutional Amendment establishing the basis for income tax was never properly ratified.
The Truth: The 16th Amendment was properly ratified in 1913, and it states "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Religious Arguments - Individuals invoke the Freedom of Religion clause of the First Amendment by taking a vow of poverty or by fraudulently claiming charitable contributions of 50% or more of their adjusted gross income.
The Truth: Taking a purported vow of poverty or claiming fraudulent contributions to filter income through a church is not legal. Many fraudulent religious organizations use funds for personal expenses.
Internal Revenue Code Arguments -
There is no Internal Revenue Code that imposes taxes;
only "individuals" are required to pay taxes; or
IRS can only assess taxes against people who file returns; income taxes are voluntary
The Truth: The tax law is found in Title 26 of the United States Code. The requirement to file an income tax return is not voluntary and it is clearly set forth in the Internal Revenue Code (IRC) Sections 6011(a), 6012(a), et seq., and 6072(a). IRS was established July 1, 1862 by an act of Congress. Our system of taxation allows taxpayers to determine the correct amount of tax and complete the appropriate forms "voluntarily" rather than have the government do it for them. However, any taxpayer whose income falls below the statutory amount, does not have to file a return.
Forming a Trust Argument - Forming a business trust to hold your income and assets will avoid taxes. A family estate trust will allow you to reduce or eliminate your tax liability.
The Truth: Although there are legitimate trusts and legitimate reasons why individuals establish trusts, establishing a trust, foreign or domestic, for the sole purpose of hiding your income and assets from taxation is illegal and will not absolve you of your tax liability. The underlying claims for many "untaxing" trust packages rely on other frivolous arguments--arguments that have subjected promoters, as well as willing participants, to criminal penalties.
Some American citizens use these and other arguments advocating non-compliance with the tax laws. Don’t be misled. Inspect promotional material carefully. Aside from being false and misleading, it often contains elaborate disclaimers such as "this report is offered as a vehicle for discussion and debate and for general informational purposes only. It does not constitute legal or professional advice and should not be relied on as a substitute for proper research and inquiries into original sources of authority." Many of these "tax experts" don’t even follow their own advice but choose to file and pay their own taxes.
The IRS will:
Assist taxpayers who have been misled to correct their returns, and
Vigorously pursue prosecution and prison sentences for individuals who violate the tax laws.
How Do You Report Suspected Tax Fraud Activity?
If you have information about an individual or company you suspect is not complying with the tax law, report this activity.