I. Introduction
To a certain extent, most everyone becomes a
tax protestor of sorts come tax season. The goal in filling out one's
tax return is to ensure that one receives every penny back that can
possibly be justified — not that one pays the appropriate amount of
tax given one's circumstances. And yet, most of us do indeed pay.
Among those that do not pay in full can be found at least two distinct
categories of shirkers: the tax evader, and the tax protestor. The tax
evader is content to freeride off of the compliance of the rest of
society, choosing not to pay taxes but not without tacit reliance on a
system that requires taxation. The tax protestor, on the other hand,
eschews taxation as a matter of course, proclaiming his distaste for
this or any system of taxation by not taking part therein. While the
net effect for both the tax evader and the tax protester is the
non-or-under-payment of tax, the tax protester feels doctrinally
empowered where the tax evader just feels wily. This article is
concerned with the tax protester, and will examine first three broad
categories into which arguments for the non-payment of the federal
income tax fall, and then it will discuss a few different methods
through which the tax protester achieves his ends.
II. Arguments
Common arguments against the payment of federal income tax fall
into three categories: constitutional arguments, statutory arguments,
and arguments alleging conspiracies to cover up the truth behind the
constitutional and statutory arguments. Constitutional arguments
center around the 16th amendment which removed the requirement that
taxes on certain income (from rents, dividends and other passive income
derived from property) be apportioned among the state equally according
to population.[1] The arguments generally allege some deficiency in
the ratification of the amendment: that the different states used
different punctuation in their versions of the amendment[2], that Ohio
had not yet been officially proclaimed a state at the time of the
ratification[3], and many other arguments along these lines.[4] Not
surprisingly, none of the arguments have been accepted by any courts.
Other arguments focus instead on the statutes dealing with
federal income taxation. Filmmaker Aaron Russo, producer of "America:
From Freedom to Fascism," has been quoted as saying that "Title 26 is
not the law, it is I.R.S. regulations and to be a law it has to be
passed by Congress."[5] In the film, Russo claims that individuals who
do pay tax have been tricked into so doing as no law imposes a tax
liability — notably, courts have interpreted the language of the word
"impose" in the code to necessarily imply liability.[6] A number of
statutes expressly "impose" tax and the duty to file a return.[7]
Some tax protesters go farther and would argue that in
addition to defects that may exist in the statutes or constitutional
underpinnings of the income tax, the government has been hard at work
conspiring to cover up these defects. Irwin Schiff, author of The Federal Mafia,
offers on his website that Federal Judges have misrepresented income
tax laws "so that the public [can't] figure out what they're
doing."[8] In the first chapter of his book, he emphasizes the "key
role" that he feels federal courts have played in "hoodwink[ing]" the
American public, aided by both the federal government generally and an
"army" of accountants, lawyers and other tax preparers.[9]
III. The Means
Understanding the "why" behind the tax protester is only part
of understanding how a tax protester operates. The other aspect worth
overviewing here is the means through which a tax protestors attempts
to avoid tax. A recent high-profile tax evader (and possible
protestor), Wesley Snipes, employed a "defense" popular to tax
protesters: the section 861 defense.[10] Under an erroneous
interpretation of this section, the taxpayer argues that only income
earned from foreign sources constitutes taxable income and fails to
report domestically earned wages.[11] Section 861 is cited among the
IRS' "Dirty Dozen" of tax evasion schemes, including such other
classics as frivolous Constitutional arguments akin to that outlined in
the first section of this article, offshore transactions, flat out
fraud and abuse of a variety of different trust entities and
corporation, both charitable and otherwise.[12] Others, like the
incarcerated Mr. Irwin Schiff, opt not to file a return at all (as, in
the eyes of Mr. Schiff, there is no obligation to file a return) — or
to file a return replete with zeroes accompanied by a "confession"
detailing why.[13]
IV. Conclusion
April 17 is tomorrow, and marks the due date for filing your
2006 tax return. The author wholeheartedly recommends that if you
haven't yet done so, grab your 1040EZ, A, or whatever flavor you choose
and get out the tax — but if you decide not to, go out with a bang
like Mr. Irwin Schiff. Unlike the tax evader, the tax protester has a
backbone and a vision, and it's difficult not to respect that.
[1] See U.S. Const. amend. XVI, see also FindLaw.com, The Sixteenth Amendment, at http://caselaw.lp.findlaw.com/data/constitution/amendment16/01.ntml#2; Wikipedia, Entry on Tax Protester Arguments, at www.wikipedia.org/wiki/Tax_protester_arguments.
[2] See, e.g., U.S. v. Thomas, 788 F.2d 1250 (7th Cir. 1986), cert. denied, 107 S.Ct. 187 (1986).
[3] See Wikipedia, Entry on Tax Protestor Arguments, at www.wikipedia.org/wiki/Tax_protester_arguments.
[4] See generally The Law That Never Was, at www.thelawthatneverwas.com (last visited April 16, 2007).
[5] David Cay Johnston, Facts Refute Filmmaker's Assertions on Taxes, The N.Y. Times, July 31, 2006.
[6] Id.
[7] See 26 U.S.C.A. §§1, 11, 6151 (West 2007).
[8] Irwin Schiff, The Pay No Income Tax Website Home Page, at www.paynoincometax.com (last visited April 16, 2007).
[9] Irwin Schiff, The Federal Mafia, Chapter 1, available at www.paynoincometax.com/chapter1.htm.
[10] Rond Drew, Celebrity Tax Evasion: What Did Wesley Snipes Do and What Happens Now?, Associated Content, October 20, 2006, available at www.associatedcontent.com/article/75782/celebrity_tax_evasion_what_did_wesley.html.
[11] Id.
[12] See The Internal Revenue Service Website, IRS Announces the 2005 Dirty Dozen, Feb. 28, 2005, at www.irs.gov/newsroom/article/0,,id=136337,00.html.
[13] See supra note 8.