We, in Vermont at least, are not citizens of the United States — we are citizens of our sovereign state.
Even if we are, the only taxable income is that received from foreign sources and employment.
We don’t have to file federal income taxes even if the income is from foreign sources or corporations because filing taxes is a violation of our Fifth Amendment right against self-incrimination and is a form of involuntary servitude (slavery) in violation of the Thirteenth Amendment of the U.S. Constitution.
If none of those reasons ring your bell, the bottom line reason that we don’t have to file or pay taxes is that the U.S. tax system (filing and paying) is “voluntary” and you may just not want to volunteer this year.
The Internal Revenue Service (IRS), through documents and the IRS website (http://www.irs.gov), said that they have heard all of the arguments, tortured interpretations of the tax code and statutes and have disposed of all of the arguments in court. The old saying that “nothing is certain but death and taxes” is as true today as it ever was.
An IRS spokespersons, contacted on the issue of some of these arguments, said, “The courts have consistently upheld that they (arguments mentioned above) are frivolous arguments. What amazes me is that, even after all of the publicity, people still fall for the schemes. It boggles my mind that people still fall into the traps.”
The courts, addressing these tax protest arguments, have consistently used terms like: “groundless,” “baseless” and “frivolous” and have increasingly penalized those making the tax protest claims by awarding court costs and attorney fees to the government for the time and effort of defending these cases.
The award of attorneys fees is not the only penalty. In addition to back taxes and interest, the spokesperson said that there is also a $500 penalty for filing a frivolous claim or return.
The IRS also points out that many of the tax protest organizations “charge a hefty fee for preparing baseless documents and tax forms” and these “tax advisors” are rarely around when the IRS comes calling to collect.
The most egregious tax scam is the Slavery Reparations filing. North and South Carolina are two of the more active states for this scam. Promoters are targeting black churches. The fee varies from $50 to $100 to prepare the return and can be a percentage of the return. The scam artists convince people that there is a tax credit due for slave reparations. If they can convince people that the reparations credit is $40,000 they charge a percentage of the return, up to 10 percent ($4,000) up-front to prepare the return. The scam artists are never around when the claim is denied.
The IRS describes the Slave Reparations scam as:
• Tax Protest Argument: Proponents of this contention assert that African Americans can claim a so-called ‘Black Tax Credit’ on their federal income tax returns as reparations for slavery and other oppressive treatment suffered by African Americans. A similar frivolous argument has been made that Native Americans are entitled to a credit on their federal income tax returns as a form of reparations for past oppressive treatment.”
The Law: There is no provision in the Internal Revenue Code which allows taxpayers to claim a “Black Tax Credit” or a credit for Native American reparations. It is a well settled principle of law that deductions and credits are a matter of legislative grace. Unless specifically provided for in the Internal Revenue Code, no deduction or credit may be allowed.
Further the IRS will implement a new policy under which these reparation claims will be treated as a frivolous tax return which could result in a potential $500 penalty.
Every time the IRS debunks one argument another surfaces, often as a verbal-twisting of a previously discredited tax avoidance argument. The long list of cases and court decisions supporting the IRS are omitted, but are available in IRS publications. Some of the most interesting, and grammatically inventive, arguments dealt with by the IRS, chosen from this long and growing list, are :
• Tax Protest Argument: The filing of a tax return is voluntary. Proponents point to the fact that the IRS itself tells taxpayers in the Form 1040 instruction book that the tax system is voluntary.
The Law: The word ‘voluntary’ as used in IRS publications, refers to our system of allowing taxpayers to determine the correct amount of tax and complete the appropriate returns, rather than have the government determine tax for them. The requirement to file an income tax return is not voluntary and is clearly set forth in Internal Revenue Code.
Any taxpayer who has received more than a statutorily determined amount of gross income is obligated to file a return. Failure to file a tax return could subject the noncomplying individual to criminal penalties, including fines and imprisonment, as well as civil penalties.”
• Tax Protest Argument: “The IRS must prepare federal tax returns for a person who fails to file.
Proponents of this argument contend that section 6020(b) (of the tax code) obligates the IRS to prepare a federal tax return for a person who does not file a return. Thus, those who subscribe to this contention believe that they are not required to file a return for themselves.
The Law: Section 6020(b) merely provides the IRS with a mechanism for determining the tax liability of a taxpayer who has failed to file a return. Section 6020(b) does not require the IRS to prepare tax returns for persons who do not file and it does not excuse the taxpayer from civil penalties or criminal liability for failure to file.
• Tax Protest Argument: Wages, tips, and other compensation received for personal services are not income.
This argument asserts that wages, tips, and other compensation received for personal services are not income, because there is allegedly no taxable gain when a person ‘exchanges’ labor for money. Some take a different approach and argue that the Sixteenth Amendment to the United States Constitution did not authorize a tax on wages and salaries, but only on gain or profit.
The Law: “For federal income tax purposes, ‘gross income’ means all income from whatever source derived and includes compensation for services. Any income, from whatever source, is presumed to be income unless the taxpayer can establish that it is specifically exempted or excluded.”
• Tax Protest Argument: Only foreign-source income is taxable. Some maintain that there is no federal statute imposing a tax on income derived from sources within the United States by citizens or residents of the United States. They argue instead that federal income taxes are excise taxes imposed only on nonresident aliens and foreign corporations for the privilege of receiving income from sources within the United States.
The Law: “In general, all citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States.
“I.R.C. (Internal Revenue Code) sections 861 and 911 define the sources of income (U.S. versus non-U.S. source income) for such purposes as the prevention of double taxation of income that is subject to tax by more than one country. These sections neither specify whether income is taxable, nor do they determine or define gross income. Further, these frivolous assertions are clearly contrary to well-established legal precedent.”
• Tax Protest Argument: Taxpayer is not a ‘citizen’ of the United States, thus not subject to the federal income tax laws. Some individuals argue that they have rejected citizenship in the United States in favor of state citizenship; therefore, they are relieved of their federal income tax obligations. A variation of this argument is that a person is a free born citizen of a particular state and thus was never a citizen of the United States. The underlying theme of these arguments is the same: the person is not a United States citizen and is not subject to federal tax laws because only United States citizens are subject to these laws.
The Law: The Fourteenth Amendment to the United States Constitution defines the basis for United States citizenship, stating that 'All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.’
The Fourteenth Amendment therefore establishes simultaneous state and federal citizenship. Claims that individuals are not citizens of the United States but are solely citizens of a sovereign state and not subject to federal taxation have been uniformly rejected by the courts.
• Tax Protest Argument: Federal income taxes constitute a ‘taking’ of property without due process of law, violating the Fifth Amendment. Thus, any attempt by the Internal Revenue Service to collect federal income taxes owed by a taxpayer is unconstitutional.
The Law: The Fifth Amendment to the United States Constitution provides that a person shall not be ‘deprived of life, liberty, or property, without due process of law . . . .’ The U.S. Supreme Court said that ‘it is . . . well settled that [the Fifth Amendment] is not a limitation upon the taxing power conferred upon Congress by the Constitution; in other words, that the Constitution does not conflict with itself by conferring upon the one hand a taxing power, and taking the same power away on the other by limitations of the due process clause.’
“Further, the Supreme Court has upheld the constitutionality of the summary administrative procedures contained in the Internal Revenue Code against due process challenges, on the basis that a post-collection remedy (e.g., a tax refund suit) exists and is sufficient to satisfy the requirements of constitutional due process.
• Tax Protest Argument: Taxpayers do not have to file returns or provide financial information because of the protection against self-incrimination found in the Fifth Amendment.
Some argue that taxpayers may refuse to file federal income tax returns, or may submit tax returns on which they refuse to provide any financial information, because they believe that their Fifth Amendment privilege against self-incrimination will be violated.
The Law: There is no constitutional right to refuse to file an income tax return on the ground that it violates the Fifth Amendment privilege against self-incrimination. The failure to comply with the filing and reporting requirements of the federal tax laws will not be excused based upon blanket assertions of the constitutional privilege against compelled self-incrimination under the Fifth Amendment.
• Tax Protest Argument: “Compelled compliance with the federal income tax laws is a form of servitude in violation of the Thirteenth Amendment.
The Law: The Thirteenth Amendment to the United States Constitution prohibits slavery within the United States, as well as the imposition of involuntary servitude. The Court of Appeals stated that ‘if the requirements of the tax laws were to be classed as servitude, they would not be the kind of involuntary servitude referred to in the Thirteenth Amendment.’ Courts have consistently found arguments that taxation constitutes a form of involuntary servitude to be frivolous.
The IRS strongly recommended that any taxpayer approached by a “tax advisor” attempting to market one of these schemes or any of the arguments that the Constitution provides a reason not to pay taxes contact an independent tax attorney, tax accountant or the IRS. Paying a tax protester to prepare frivolous returns raising previously rejected arguments can have serious financial and legal consequences.