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Tax protesters in the United States advance a number of conspiracy arguments asserting that Congress, the courts and various agencies within the federal government—primarily the Internal Revenue Service (IRS)—are involved in a deception deliberately designed to procure from individuals or entities their wealth or profits in contravention of law. Conspiracy arguments are distinct from, though related to, constitutional, statutory, and administrative arguments. Proponents of such arguments contend that all three branches of the United States government are working covertly to defraud the taxpayers of the United States through the illegal imposition, assessment and collection of a federal income tax.
Tax protester Irwin Schiff, following his criminal conviction for tax fraud that resulted in the imposition of a 13-year prison sentence, released a statement asserting in part that "the entire federal judiciary is involved in a monumental, criminal conspiracy to collect income taxes in violation of law". Schiff's web site continues to state: "Since the income tax was repealed in 1954 when Congress adopted the 1954 Code, it is clear that for 50 years federal judges in conspiracy with U. S. Department of Injustice [ sic ] prosecutors have been illegally and criminally prosecuting people for crimes that do not exist in connection with a tax that nobody owes." [1]
One tax protester web site, called www.tax-freedom.com, quotes from an article by William Cooper titled "BATF/IRS - Criminal Fraud", from the publication Veritas (issue no. 6, September 1995), as follows:
Investigation of the alleged Internal Revenue Service and the Bureau of Alcohol, Tobacco and Firearms has disclosed a broad, premeditated conspiracy to defraud the Citizens of the United States of America. Examination of the United States Code, the Code of Federal Regulations, the Statutes at Large, Congressional Record, the Federal Register, and Internal Revenue manuals too numerous to list, reveals a crime of such magnitude that words cannot adequately describe the betrayal of the American people. What we uncovered has clearly been designed to circumvent the limitations of the Constitution for the United States of America and to implement the Communist Manifesto within the 50 States. Marx and Engels claimed that, in the effort to create a classless society, a "graduated income tax" could be used as a weapon to destroy the middle class. ... Through the clever use of language, the government promotes the fraud. [2]
Claims made in support of the income tax conspiracy include:
Defendant Greenstreet's response to Plaintiff's motion for summary judgment identifies this Court as an 'Admiralty Court' without further discussing his allegation. If his reference is to be construed as a jurisdictional challenge, his motion is denied. Others have attempted to persuade the judiciary that fringe on a United States flag denotes a court of admiralty. In light of the fact that this Court has such a flag in its courtroom, the issue is addressed. The concept behind the theory the proponent asserts is that if a courtroom is adorned with a flag which happens to be fringed around the edges, such decor indicates that the court is one of admiralty jurisdiction exclusively. To think that a fringed flag adorning the courtroom somehow limits this Court's jurisdiction is frivolous ... Unfortunately for Defendant Greenstreet, decor is not a determinant for jurisdiction." [4]
Some tax protesters (and occasionally persons brought before courts [5] ) have argued that because the titles of court cases identify the parties in all capital letters, the persons thus identified are "fictitious entities". In other words, a court hearing a case titled "STATE v. JOHN Q. SMITH" has no authority over the defendant, "John Q. Smith", because the capitalization of the name means the court is addressing a person who does not exist. Such an argument was made by Eddie Ray Kahn, a co-defendant of Wesley Snipes in the latter's high-profile tax evasion case. Kahn "made several missteps and peculiar motions. For example, he sought to be immediately freed because the indictment lists his name in all capital letters, and he claimed U.S. attorneys have no jurisdiction because Florida supposedly was never ceded to the federal government". The court denied these motions. [6]
No court has ever upheld such an argument. See, e.g. United States v. Frech [7] ("Defendants' assertion that the capitalization of their names in court documents constitutes constructive fraud, thereby depriving the district court of jurisdiction and venue, is without any basis in law or fact"); United States v. Washington [8] ("defendant contends that the Indictment must be dismissed because 'KURT WASHINGTON,' spelled out in capital letters, is a fictitious name used by the Government to tax him improperly as a business, and that the correct spelling and presentation of his name is 'Kurt Washington.' This contention is baseless"). See also United States v. Ford [9] (taxpayer's argument—that an IRS summons was invalid because the IRS capitalized all the letters in the taxpayer's name in the caption of a petition—was ruled to be frivolous). Similar arguments have been raised unsuccessfully about things such as the presence or absence of punctuation, or of a middle name or middle initial, or of unusual punctuation such as hyphenation peculiarly used by the party using the argument.
One group, calling itself "We the People", has stated that government personnel are engaged in a conspiracy in connection with Federal tax forms and "OMB [Office of Management and Budget] control numbers" in connection with a criminal tax case involving a tax protester:
In sum, the PRA [the Paperwork Reduction Act] requires that all government agencies display valid OMB control numbers and certain disclosures directly on all information collection forms that the public is requested to file. [The defendant's] sole defense was he was not required to file an IRS Form 1040 because it displays an invalid OMB control number. Government officials knew that if the case went to trial, it would expose the fraudulent, counterfeit 1040. They also must have known that a trial would expose the ongoing conspiracy between OMB and IRS to publish 1040 forms each year that those agencies knew were in violation of the PRA. That would raise the issue that the Form 1040, with its invalid control number, is being used by the Government to cover up the underlying constitutional tort -- that is, the enforcement of a direct, unapportioned tax on the labor of every working man, women and child in America. [10]
One convicted tax protester, Edward Lewis Brown, has charged that law enforcement officials who surrounded his property in a standoff over his refusal to surrender after his conviction were part of a "Zionist, Illuminati, Free Mason [ sic ] movement", and that the federal government had no jurisdiction in New Hampshire. [11] The New Hampshire Union Leader also reported that "the Browns believe the IRS and the federal income tax are part of a deliberate plot perpetrated by Freemasons to control the American people and eventually the world." [12]
In an interview on February 2, 2007, on the radio show Constitution for the Defense, Ed Brown said:
I'm not quite sure you understand the ramifications of what's going on right now. This is massive. This is international. We are fed up with the Zionist Illuminati. That's what this is all about. Loud and clear. Zionist Illuminati. Lawyers, whatever they are, okay, it's going to stop. And if the judge is a member of that, I know that McAuliffe [the Federal judge in Brown's tax case] is, I know that U.S. Attorney Colantuono is, they'd better stop. This is a warning. You can do whatever you want to me. My job is to get the message out, and I'm getting the message out, and I'm warning you guys—not you guys [referring to the radio show hosts], them—to cease and desist their unlawful activity in this country and every other country because once this thing starts, we're going to seek them out and hunt them down. And we're going to bring them to justice. So anybody wishes to join them, you go right ahead and join them. But I promise you, long after I'm gone, they're going to seek out every one of you and your bloodline. [13]
The standoff between Brown and law enforcement officials ended with his imprisonment after his arrest in October 2007. [14] [15] [16]
Some protesters have argued that Federal Reserve notes (better known as dollar bills) are not actually money, because the Constitution only permits the government to "coin" money, and requires that such money be exchangeable for gold or silver; therefore, printed bills are instead symbols for use in bartering, and being paid in dollars is not the receipt of taxable income. This argument was brought before a court in Wilson v. United States. [17] The court responded:
The contention that paper money is illegal has been consistently rejected. ... Congress has exercised this power by delegation to the federal reserve system. 12 U.S.C. section 411. Federal reserve notes are legal tender for all debts, including taxes. 31 U.S.C. section 392 [now 31 U.S.C. § 5103]; Milam v. U.S. 524 F.2d 629 (9th Cir. 1974). The United States Constitution, art. 1, section 10, 'prohibits the states from declaring legal tender anything other than gold or silver, but does not limit Congress' power to declare what shall be legal tender for all debts.' U.S. v. Rifen, 577 F.2d 1111, 1112 (8th Cir. 1978). Since Congress has done so, there can be no valid challenge to the legality of federal reserve notes. United States v. Anderson, 584 F.2d 369, 374 (10th Cir. 1978).
Other occasionally encountered arguments from tax protesters include the notion that U.S. currency is valueless or unauthorized by the Constitution because the currency is fiat money untied to the gold standard. No court has upheld the validity of that argument.
The argument that Federal reserve notes are not taxable income when paid to a taxpayer because the notes are not gold and silver and may not be redeemed for gold and silver, and variations of this argument, have been officially identified as legally frivolous Federal tax return positions for purposes of the $5,000 frivolous tax return penalty imposed under Internal Revenue Code section 6702(a). [18]
Arguments have been made asserting that members of certain historically disadvantaged minority groups are not obliged to pay taxes. Such arguments have been made, and rejected, with respect to African Americans, [19] Native Americans, [20] and native Hawaiians. [21] Similar arguments have been made in countries other than the United States. For example, such an argument was rejected in the case of a Māori citizen seeking to avoid payment of taxes in New Zealand. [22]
With respect to the failure to pay U.S. federal income tax, some tax protesters miss the distinction between civil and criminal liability. A verdict of acquittal in a criminal trial for non-payment of income tax does not relieve a defendant of civil liability (i.e., the legal obligation to pay the tax). After a criminal acquittal, the IRS can continue to seek money through levy or other lawful means. Generally, the amount of money due to the IRS is determined administratively by the IRS, and not in a criminal trial. (The amount of tax may, however, be calculated after the guilty verdict is reached in a criminal case—for purposes of determining the severity of the sentence.) Although there have been several well-publicized cases of acquittal in a criminal tax case, the IRS continues collection efforts, with many defendants finally seeking refuge in bankruptcy court.
A related concept is that under American jurisprudence, different standards of proof are required in civil and criminal proceedings. Normally, to be convicted of a crime, the defendant must have had a specific mens rea, or guilty mental state. For criminal violations of the income tax law, this generally means that the prohibited conduct (whether failure to file, failure to pay, or engaging in some affirmative act to evade the tax), must have been accompanied by an intentional violation of a legal duty of which the defendant was aware. By contrast, to establish civil liability to pay the tax, no mens rea on the part of the defendant is required to be proven.
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: CS1 maint: archived copy as title (link)Frivolous litigation is the use of legal processes with apparent disregard for the merit of one's own arguments. It includes presenting an argument with reason to know that it would certainly fail, or acting without a basic level of diligence in researching the relevant law and facts. That an argument was lost does not imply the argument was frivolous; a party may present an argument with a low chance of success, so long as it proceeds from applicable law.
Form 1040, officially, the U.S. Individual Income Tax Return, is an IRS tax form used for personal federal income tax returns filed by United States residents. The form calculates the total taxable income of the taxpayer and determines how much is to be paid to or refunded by the government.
Tax noncompliance is a range of activities that are unfavorable to a government's tax system. This may include tax avoidance, which is tax reduction by legal means, and tax evasion which is the illegal non-payment of tax liabilities. The use of the term "noncompliance" is used differently by different authors. Its most general use describes non-compliant behaviors with respect to different institutional rules resulting in what Edgar L. Feige calls unobserved economies. Non-compliance with fiscal rules of taxation gives rise to unreported income and a tax gap that Feige estimates to be in the neighborhood of $500 billion annually for the United States.
Irwin Allen Schiff was an American libertarian and tax resistance advocate known for writing and promoting literature in which he argued that the way in which the income tax in the United States is enforced upon individuals as a tax on one's time or wages, is illegal and unconstitutional. Judges in several civil and criminal cases ruled in favor of the federal government and against Schiff. As a result of these judicial rulings Schiff was in a hospital prison serving a sentence of 162 months at the time of his death.
Cheek v. United States, 498 U.S. 192 (1991), was a United States Supreme Court case in which the Court reversed the conviction of John L. Cheek, a tax protester, for willful failure to file tax returns and tax evasion. The Court held that an actual good-faith belief that one is not violating the tax law, based on a misunderstanding caused by the complexity of the tax law, negates willfulness, even if that belief is irrational or unreasonable. The Court also ruled that an actual belief that the tax law is invalid or unconstitutional is not a good faith belief based on a misunderstanding caused by the complexity of the tax law, and is not a defense.
Robert Barnwell Clarkson was an American tax protester in South Carolina.
A tax protester, in the United States, is a person who denies that he or she owes a tax based on the belief that the Constitution of the United States, statutes, or regulations do not empower the government to impose, assess or collect the tax. The tax protester may have no dispute with how the government spends its revenue. This differentiates a tax protester from a tax resister, who seeks to avoid paying a tax because the tax is being used for purposes with which the resister takes issue.
The Law That Never Was: The Fraud of the 16th Amendment and Personal Income Tax is a 1985 book by William J. Benson and Martin J. "Red" Beckman which claims that the Sixteenth Amendment to the United States Constitution, commonly known as the income tax amendment, was never properly ratified. In 2007, and again in 2009, Benson's contentions were ruled to be fraudulent.
America: Freedom to Fascism is a 2006 American film by filmmaker and activist Aaron Russo, covering a variety of subjects that Russo contends are detrimental to Americans. Topics include the Internal Revenue Service (IRS), the income tax, Federal Reserve System, national ID cards, human-implanted RFID tags, Diebold electronic voting machines, globalization, Big Brother, taser weapons abuse, and the use of terrorism by the government as a means to diminish the citizens' rights.
Tax protesters in the United States have advanced a number of arguments asserting that the assessment and collection of the federal income tax violates statutes enacted by the United States Congress and signed into law by the President. Such arguments generally claim that certain statutes fail to create a duty to pay taxes, that such statutes do not impose the income tax on wages or other types of income claimed by the tax protesters, or that provisions within a given statute exempt the tax protesters from a duty to pay.
We the People Foundation for Constitutional Education, Inc. also known as We the People Foundation is a non-profit education and research organization in Queensbury, New York with the declared mission "to protect and defend individual Rights as guaranteed by the Constitutions of the United States." It was founded by Robert L. Schulz. At the U.S. Department of Justice, he is known as a "high-profile tax protester". The Southern Poverty Law Center asserts that Schulz is the head of the leading organization in the tax protester movement. The organization formally served a petition for redress of grievances regarding income tax upon the United States government in November 2002. In July 2004, it filed a lawsuit in an unsuccessful attempt to force the government to address the petition. The organization has also served petitions relating to other issues since then.
Tommy Keith Cryer, also known as Tom Cryer, was an attorney in Shreveport, Louisiana who was charged with and later acquitted of willful failure to file U.S. Federal income tax returns in a timely fashion. In a case in United States Tax Court, Cryer contested a determination by the U.S. Internal Revenue Service that he owed $1.7 million in taxes and penalties. Before the case could come to trial, Cryer died June 4, 2012. He was 62.
Robert Louis Schulz is a political activist and the Founder and Chairman of the We the People Foundation for Constitutional Education, a non-profit education and research organization with the declared mission "to protect and defend individual Rights as guaranteed by the Constitutions of the United States."
The 861 argument is a statutory argument used by tax protesters in the United States, which interprets a portion of the Internal Revenue Code as invalidating certain applications of income tax. The argument has uniformly been held by courts to be incorrect, and persons who have cited the argument as a basis for refusing to pay income taxes have been penalized, and in some cases jailed.
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, without apportionment among the several States, and without regard to any census or enumeration", was never properly ratified, or that the amendment provides no power to tax income. Proper ratification of the Sixteenth Amendment is disputed by tax protesters who argue that the quoted text of the Amendment differed from the text proposed by Congress, or that Ohio was not a State during ratification, despite its admission to the Union on March 1, 1803, more than a century prior. Sixteenth Amendment ratification arguments have been rejected in every court case where they have been raised and have been identified as legally frivolous.
Tax protesters in the United States advance a number of constitutional arguments asserting that the imposition, assessment and collection of the federal income tax violates the United States Constitution. These kinds of arguments, though related to, are distinguished from statutory and administrative arguments, which presuppose the constitutionality of the income tax, as well as from general conspiracy arguments, which are based upon the proposition that the three branches of the federal government are involved together in a deliberate, on-going campaign of deception for the purpose of defrauding individuals or entities of their wealth or profits. Although constitutional challenges to U.S. tax laws are frequently directed towards the validity and effect of the Sixteenth Amendment, assertions that the income tax violates various other provisions of the Constitution have been made as well.
A tax protester is someone who refuses to pay a tax claiming that the tax laws are unconstitutional or otherwise invalid. Tax protesters are different from tax resisters, who refuse to pay taxes as a protest against a government or its policies, or a moral opposition to taxation in general, not out of a belief that the tax law itself is invalid. The United States has a large and organized culture of people who espouse such theories. Tax protesters also exist in other countries.
Tax protester arguments are arguments made by people, primarily in the United States, who contend that tax laws are unconstitutional or otherwise invalid.
First National Bank of Montgomery v. Jerome Daly, Dec. 9, 1968, also known as the Credit River Case, was a case tried before a justice of the peace in Minnesota in 1968. The case is not a Supreme Court case or an appeals court case, and does not set a legal precedent. The decision in that case is sometimes cited by opponents of the United States banking system.
Tax protesters in the United States advance a number of administrative arguments asserting that the assessment and collection of the federal income tax violates regulations enacted by responsible agencies –primarily the Internal Revenue Service (IRS)– tasked with carrying out the statutes enacted by the United States Congress and signed into law by the President. Such arguments generally include claims that the administrative agency fails to create a duty to pay taxes, or that its operation conflicts with some other law, or that the agency is not authorized by statute to assess or collect income taxes, to seize assets to satisfy tax claims, or to penalize persons who fail to file a return or pay the tax.