Is Income Tax Legal?

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Category: Individual Taxes

Written by Madeline Delanni

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We hear this all the time from fringe groups and radicals. Seriously, if you think you aren't required to pay taxes because the 16th Amendment to the Constitution wasn't ratified and you don't pay your taxes to the IRS, you could find yourself owing large amounts beyond your taxes because of late fees, court fees, IRS audits and numerous penalties. What's more, you could end up in jail.

"But 16th Amendment Wasn't Ratified"

Oftentimes, individuals or groups will break out this claim whenever they're not particularly happy with a politician or simply don't want to pay their share of the tax burden. They aim to convince you that federal taxes are unconstitutional. Their argument is that federal taxes are unconstitutional because not all fifty states ratified the 16th Amendment to our constitution. What they fail to mention, or simply realize, is that it's not necessary for all fifty states to ratify an Amendment in order to implement it as U.S. law.

Some will go as far as advertising and conducting seminars (to make money for themselves, mind you) just to teach others how they can use the 16th Amendment to justify not paying federal income taxes, and people all across the country are falling for it! There are plenty of court rulings throughout the American court system that confirm the amendment was indeed ratified. It takes three-quarters of our fifty states to ratify an amendment to the US Constitution. Most Americans don't know that.

It's easy to fall victim to someone who wants to tell you information you're only too happy to hear. Their motive isn't altruistic, they want to sell you a book or assess a fee to attend an "exclusive" workshop or sell you a packet with all the materials you'll need to become a protester of federal taxes. Unfortunately, if you follow their advice, most likely you'll end up a convicted federal income tax evader. More money will be spent in penalties than you would have spent just paying your taxes up front. Do you really think these con artists follow their own advice?

The Top Excuses not to File Taxes

The IRS has an entire section on their website dedicated to "The Truth About Frivolous Tax Arguments." We encourage all those considering not paying their federal income taxes to visit their site IRS Tax Pros. "The Truth About Frivolous Tax Arguments" includes information on frivolous tax arguments in general, frivolous tax arguments in collection due process cases and penalties for pursuing frivolous tax arguments. According to the IRS, these are the arguments used against the requirement to pay federal income taxes:

• A. The Voluntary Nature of the Federal Income Tax System.
  1. Contention: The filing of a tax return is voluntary
  2. Contention: Payment of tax is voluntary
  3. Contention: Taxpayers can reduce their federal income tax liability by filing a "zero return."
  4. Contention: The IRS must prepare federal tax returns for a person who fails to file
  5. Contention: Compliance with an administrative summons issued by the IRS is voluntary
• B. The Meaning of Income: Taxable Income and Gross Income.
  1. Contention: Wages, tips, and other compensation received for personal services are not income
  2. Contention: Only foreign-source income is taxable
  3. Contention: Federal Reserve Notes are not income
• C. The Meaning of Certain Terms Used in the Internal Revenue Code.
  1. Contention: Taxpayer is not a "citizen" of the United States, thus not subject to the federal income tax laws
  2. Contention: The "United States" consists only of the District of Columbia, federal territories, and federal enclaves
  3. Contention: Taxpayer is not a "person" as defined by the Internal Revenue Code, thus is not subject to the federal income tax laws
  4. Contention: The only "employees" subject to federal income tax are employees of the federal government
• D. Constitutional Amendment Claims.
  1. Contention: Taxpayers can refuse to pay income taxes on religious or moral grounds by invoking the First Amendment
  2. Contention: Federal income taxes constitute a "taking" of property without due process of law, violating the Fifth Amendment
  3. Contention: Taxpayers do not have to file returns or provide financial information because of the protection against self-incrimination found in the Fifth Amendment
  4. Contention: Compelled compliance with the federal income tax laws is a form of servitude in violation of the Thirteenth Amendment
  5. Contention: The Sixteenth Amendment to the United States Constitution was not properly ratified, thus the federal income tax laws are unconstitutional
  6. Contention: The Sixteenth Amendment does not authorize a direct non-apportioned federal income tax on United States citizens
• E. Fictional Legal Bases.
  1. Contention: The Internal Revenue Service is not an agency of the United States
  2. Contention: Taxpayers are not required to file a federal income tax return, because the instructions and regulations associated with the Form 1040 do not display an OMB control number as required by the Paperwork Reduction Act
  3. Contention: African Americans can claim a special tax credit as reparations for slavery and other oppressive treatment
  4. Contention: Taxpayers are entitled to a refund of the Social Security taxes paid over their lifetime
  5. Contention: An "untaxing" package or trust provides a way of legally and permanently avoiding the obligation to file federal income tax returns and pay federal income taxes
  6. Contention: A "corporation sole" can be established and used for the purpose of avoiding federal income taxes

Sure, most of us would jump at the chance to not pay federal income taxes, but using any of the arguments above won't make that a reality. In spite of this, people continue to fall for the promises made by those claiming that paying federal income tax is avoidable if you simply follow their sage advice.

The IRS understands there are people out there trying to make a buck off of gullible taxpayers and have started going after these con artists. They've provided a form on their website for reporting abusive tax promotions and/or promoters. Visit Report Tax Cons for the form and instructions on how to submit it.

Significant Tax Protesting Court Cases

1. Miller v. United States, 868 F.2d 236, 241 (7 th Cir. 1989) (per curiam)
2. United States v. Stahl, 792 F.2d 1438, 1441 (9 th Cir. 1986), cert. denied, 479 U.S. 1036 (1987)
3. Knoblauch v. Commissioner, 749 F.2d 200, 201 (5 th Cir. 1984), cert. denied, 474 U.S. 830 (1986)
4. United States v. Foster, 789 F.2d 457 (7 th Cir.), cert. denied, 479 U.S. 883 (1986)

Please visit the IRS website for more information on relevant case law pertaining to anti-tax law evasion schemes: http://www.irs.gov/businesses/small/article/0,,id=106507,00.html

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