Frivolous tax arguments are amusing, but the IRS penalty is not

Thursday, March 24th, 2011 By

irs penalty

When it comes to frivolous tax arguments, the IRS has zero tolerance for clowning around in the name of tax evasion. Image: CC Stephen Brace/Flickr

When it comes to frivolous tax arguments, the IRS hears new ones every year. On an annual basis, the IRS releases an updated list of frivolous tax arguments made by people trying to avoid paying federal income taxes. Some frivolous tax arguments are amusing, but instead of a laugh, taxpayers who try to use them will get a hefty fine from the IRS.

A caution for would-be tax cheats

The Truth About Frivolous Tax Arguments is an annual report the IRS has just released for 2011. The 87-page document defines the most popular tax evasion scenarios of all time. The document also includes the official legal policies the government has used to get frivolous tax arguments rejected by courts, as well as the penalties and sanctions levied against would-be tax cheats as a result. Most of the arguments are spread on the Internet by a growing number of scam artists posing as brave crusaders against an unjust government and include refusal to pay federal income taxes for moral, religious, semantic or philosophical reasons.

The cost of frivolous tax arguments

Frivolous tax arguments listed by the agency include cases in which people claim not to be a “person” as defined by the IRS. Others have argued that the federal income tax is unconstitutional or that paying taxes is voluntary. To some taxpayers, military income is exempt and only foreign income is taxable. It has been estimated that every year at least 10,000 people attempt to evade taxes with a frivolous argument, and the number is growing. The IRS penalty for filing a frivolous tax return argument is $5,000. Taxpayers who go to court with their frivolous arguments can receive an IRS penalty up to $25,000. Since the 2000 tax year, the Department of Justice has filed injunctions against more than 455 companies and individuals for frivolous tax arguments.

Popular, and hopeless, tax evasion scenarios

Some of the most popular frivolous tax arguments, according to the IRS, include the claim that paying taxes is against one’s religion, that paying taxes violates the Fifth Amendment and that taxes are considered servitude, which violates the 13th Amendment. The Supreme Court often rules that saying “paying taxes is against my religion” simply will not fly. The Fifth Amendment says a person shall not be “deprived of life, liberty, or property, without due process of law.” But the law gives the government authority to collect taxes from U.S. citizens. The 13th Amendment outlaws slavery, but the claim that paying taxes is servitude has been consistently rejected by courts.

Sources

Main Street

Portfolio.com

Christian Science Monitor

  • CHIEFCOUNSEL

    The Declaration of Independence–the first LAW–makes personal consent an element of just government and taxation. The first instance of a power to tax (another) in Organic Law is in the 3rd Law for the USA called the Northwest Territory Ordinance. This was territory awarded to the United States of America, the confederacy by the King of England which around that time became known for the states formed within as United States. Because it was PROPERTY territory, the United States of America could make law for same. The settlers and inhabitants were made "subject to" pay the federal debt because they didn't own that property–the United States of America did. Nothing changes the origin of this power with the 4th law- [Constitution] for it simply re-affirms the proprietorial power the United States of America exercises over the United States—the property and other territory owned by and ceded to the United States of America. This you will find a President of the United States swears an employee oath to protect and defend this territory as a constituent-parts sense constitution of the Untied States. If you look up "taxpayer" in 26USC you will see the same "quality" of people from the Northwest Ordinance with the words "subject to." If you are upon the territory owned by or ceded to the United States or you claim a citizen or resident alien of that territory, you will be "subject to" pay a tax and file a return under a proprietary power over territory of ownership. If you clam otherwise yet claim you are a taxpayer, you will be found frivolous for its OBVIOUS that one-word "Taxpayers"–defined in law as "subject to" a tax–would be silly indeed. FYI: Very few people domicile or reside upon this territory but many–out of ignorance and deception–claim citizen-under upon forms of government signed under penalty of perjury.

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