Tax protester

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A tax protester is an individual who denies the obligation to pay a tax (for which the government has determined that person is liable) based on a belief that the government is acting outside of its legal authority when imposing such taxes.

The term has been used by the Internal Revenue Service and by courts to describe those who believe that tax laws do not apply to them, or to their income. The related term "tax resister" refers to people who do not tend to dispute the legal validity of a tax such as the income tax, or its legal applicability to them, but who intend to defy tax collection for conscientious reasons (for instance, pacifists who do not want to pay for war).

A person could be both a tax protester and a tax resister if he or she believes that tax laws do not apply to him or her and also believes that taxes should not be paid based on the use to which the taxes are put. Some tax resisters have put forth legal arguments for their position — for instance that they cannot pay taxes for nuclear weapons development because this would put them in violation of the Nuremberg Principles — that could be considered varieties of tax protester theories.

1 History
2 Denial of tax liability in the United States
3 Responses to tax protesters
- 3.1 Arguments about constitutionality in U.S. tax crime cases
4 Notes
5 See also
6 External links

[edit] History

Main article: Tax protester history

While there have been people throughout history who challenged the assessment of taxes as beyond the power of the government, the modern tax protester movement began after World War II. One of the first people to fit this description was Vivien Kellems, a Connecticut industrialist and political activist who in 1948 refused to withhold taxes from the wages of her employees based on the claim that the government had no power to require such withholding. Kellems lost a case contesting her withholding obligation, but later adopted the position that the income tax itself was not being assessed in accordance with the law.

The tax protester movement began to develop a greater following in the late 1960s and early 1970s, as various anti-government groups sought ways to avoid paying their taxes. In 1975, the term "tax protester" began to appear in reported court decisions. Members of this group quickly became the target of scam artists who reaped money from books, lectures, and other materials promising to help people avoid having to pay taxes. The Seventh Circuit Court of Appeals summed up one case as follows:

Like moths to a flame, some people find themselves irresistibly drawn to the tax protestor movement's illusory claim that there is no legal requirement to pay federal income tax. And, like the moths, these people sometimes get burned. Lorin G. Sloan believed these claims and because he acted upon them now faces four months in a federal prison; there can be little doubt that he has been burned.

[. . . .]

The real tragedy of this case is the unconscionable waste of Mr. Sloan's time, resources, and emotion in continuing to pursue these wholly defective and unsuccessful arguments about the validity of the income tax laws of the United States. Despite our rejection of Mr. Sloan's legal analysis of the tax laws, we are not unmindful of the sincerity of his beliefs. On the other hand, we are less sure of the sincerity of the professional tax protestors who promote their views in literature and meetings to persons like Mr. Sloan, yet are unlikely ever to face the type of penalties incurred by him.^[1]

Ideas associated with the tax protester movement have been forwarded under different names over time. These ideas have been put forth, for example, in the broader Christian Patriot and Posse Comitatus movements, which generally assert that the Constitution has been usurped by the federal government. More recently, tax protesters have styled themselves as the Tax Honesty Movement.

[edit] Denial of tax liability in the United States

Main article: Tax protester arguments

Arguments made by tax protesters generally fall into several categories: that the Sixteenth Amendment was never properly ratified; that the Sixteenth Amendment does not permit the taxation of individual income, or particular forms of individual income; that other provisions of the Constitution such as the First, Fifth, or the "Missing Thirteenth Amendment" eliminate an obligation to file a return; that citizens of the states are not also citizens of the United States; that the statutes enacted by Congress pursuant to their constitutional taxing power are defective or invalid; and that the government and the courts engage in various conspiracies to conceal the above deficiencies.

These arguments generally contain logical fallacies, selective interpretation of perceived syntactic ambiguity in statutes and cases, and convey a general misconception about the structure of the legal system and the operations of the government.

In another Seventh Circuit case, the Court observed:

Some people believe with great fervor preposterous things that just happen to coincide with their self-interest. 'Tax protesters' have convinced themselves that wages are not income, that only gold is money, that the Sixteenth Amendment is unconstitutional, and so on. These beliefs all lead — so tax protesters think — to the elimination of their obligation to pay taxes."^[2]

[edit] Responses to tax protesters

Federal courts have consistently rejected such arguments as frivolous. The Internal Revenue Service assesses tax penalties against taxpayers who file "frivolous" returns that include any of the standard tax protester arguments. Returns that include a defaced jurat embodying the oath verifying the truthfulness of the statements made on the return are almost certain to incur this penalty.

Almost every United States Court of Appeals has made a blanket statement repudiating tax protester arguments. For example, see United States v. Buckner^[3]:

"For the record, we note that the following beliefs, which are stock arguments of the tax protester movement, have not been, nor ever will be, considered 'objectively reasonable' in this circuit:

"(1) the belief that the Sixteenth Amendment to the Constitution was improperly ratified and therefore never came into being;

"(2) the belief that the Sixteenth Amendment is unconstitutional generally;

"(3) the belief that the income tax violates the Takings Clause of the Fifth Amendment;

"(4) the belief that the tax laws are unconstitutional;

"(5) the belief that wages are not income and therefore are not subject to federal income tax laws;

"(6) the belief that filing a tax return violates the privilege against self-incrimination; and

"(7) the belief that Federal Reserve Notes do not constitute cash or income."

[edit] Arguments about constitutionality in U.S. tax crime cases

A defendant prosecuted under Federal tax laws who argues that tax laws are unconstitutional incurs the risk that his or her own words may help the prosecution prove the element of willfulness, even if the defendant's belief is genuine and in good faith. See generally Cheek v. United States and Tax avoidance and tax evasion.

If a jury finds that a criminal defendant had a subjective good faith belief due to a misunderstanding based on the complexity of the tax law (and not based on an argument about its constitutionality), that belief may be a defense with respect to the element of willfulness, even if the belief is unreasonable.^[4] This is due to the general mens rea requirement needed to hold someone criminally liable and the specific intent needed in the Cheek case and word willfully in the statute (see specific intent crimes).

[edit] Notes

^ United States v. Sloan, 939 F.2d 499 (7th Cir. 1991), cert. denied, 502 U.S. 1060 (1992).
^ Coleman v. Commissioner, 791 F.2d 68, 69 (7th Cir. 1986).
^ 830 F.2d 102 (7th Cir. 1987).
^ Cheek v. United States, 498 U.S. 192 (1991).