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Tax protester arguments |
| Taxation in the United States |
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 This article is part of a series on |
| Federal taxation |
| Authority · History Internal Revenue Service Court • Forms • Code • Revenue |
| Income tax · Payroll tax Alternative Minimum Tax Estate tax · Excise tax · Gift tax Corporate tax · Capital gains tax |
| State & local taxation |
| State income tax · State tax levels Sales tax · Use tax · Property tax |
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Federal tax reform
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| Tax protester arguments: Constitutional · 16th Amendment Statutory · Conspiracy |
Tax protester arguments are a number of theories raised by individuals who deny that a person has a legal obligation to pay a tax for which the United States government has determined that person is liable.
Tax protester arguments are typically based on an asserted belief that the United States government is acting outside of its legal authority when imposing such taxes. The label "tax protester" should be distinguished from "tax resister", an individual who refuses to pay tax on moral or selfish rather than legal grounds. Whilst there have been advocates of tax resistance in many countries, the tax protester phenomenon is particular to the United States and has no notable equivalent in other jurisdictions.citation needed
United States citizens have a long history of protesting taxation. Taxes imposed on American colonists by the British helped to persuade Americans to seek independence, resulting in the creation of the United States of America. Anti-taxation sentiment led to the Boston Tea Party in 1773 and the Whiskey Rebellion in 1791. Americans so despised taxation that the first Congress of the United States created under the Articles of Confederation did not receive the power to levy any taxes. Congress was not given that power until 1789citation needed. Many tax protesters argueweasel words that the power of taxation is still limited in its scope.
This article discusses tax protester arguments with respect to the U.S. federal income tax.
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Arguments made by tax protesters generally deal with the U.S. Federal income tax and not with other taxes such as the gift tax, estate tax, sales tax, and property tax (although some tax protesters have attacked the last category under allodial title claims).
Some tax protesters may cite what they believe is evidence that the Sixteenth Amendment to the Constitution (removing any apportionment requirement for income taxes) was never "properly ratified" or that it was properly ratified but does not permit the taxation of individual income, or particular forms of individual income. One argument is based on the contention that the legislatures of various states passed bills of ratification with different capitalization, spelling of words, or punctuation marks (e.g., semi-colons instead of commas) (see, e.g., United States v. Thomas1). Another argument made by some tax protesters is that because the United States Congress did not pass an official proclamation recognizing Ohio's year 1803 admission to statehood until 1953 (see Ohio Constitution), Ohio was not a state until 1953 and therefore the Sixteenth Amendment was not properly ratified (see Ivey v. United States2 and Knoblauch v. Commissioner3 in the referenced article). These arguments have been universally rejected by the courts. Another tax protester argument is that the manner in which the income tax is enforced violates the Fifth Amendment, which protects individuals from having to make self-incriminating statements. In particular, they argue that the Fifth Amendment protects individuals from being required to file a personal income tax return. This argument was ruled invalid by the United States Supreme Court in the case of United States v. Sullivan.4
Some protestors have claimed that statutes enacted by the United States Congress pursuant to its constitutional taxing power are defective or invalid (see e.g., the Irwin Schiff quote below). In addition, they state the statutes are misapplied by the Internal Revenue Service (IRS), the courts, lawyers, certified public accountants, law professors, and legal experts generally, and that the tax "protesters" are not liable for tax under the law (see below).
Other protestors have argued because the term "income" is not actually defined in the Internal Revenue Code or in the United States Constitution, the tax law should be invalid. These protesters claim that without clear definitions, Chapter 1 of Title 26 of the Code of Federal Regulations suggests IRS agents must rely on voluntary compliance. No court has upheld this argument.
Some tax protesters claim that since the year 1913 (the year of the inception of the modern Federal income tax), several generations of IRS employees, Department of Justice employees, the United States Congress, Federal court judges, lawyers, certified public accountants, and other experts have engaged in various continuing conspiracies to conceal the above deficiencies. For example, convicted tax offender Irwin Schiff states on his web site:
Some tax protesters argue that an income tax is enforced upon threat of imprisonment, and is akin to "government sanctioned extortion", in which a citizen is forced to give up a percentage of their income in exchange for not being put in prison.citation needed Strictly speaking, however, this argument is false. A genuine inability to pay taxes is not a crime (although "willful failure" to pay taxes is a crime), and for the most part, unpaid tax bills are settled through civil actions rather than in the criminal courts. The government may seize assets, file liens, garnish wages and pursue other civil legal actions to satisfy the tax debt, but persons may not be jailed simply for failing to pay taxes. Instead, criminal charges arise from closely related actions, such as failing to file a tax return, filing a false tax return, concealing income or assets and certain other actions considered to be illegal tax evasion.
Frank Chodorov wrote "... you come up with the fact that it gives the government a prior lien on all the property produced by its subjects." The government "unashamedly proclaims the doctrine of collectivized wealth. ... That which it does not take is a concession."6 Issues with civil liberties are also charged at the tax system, such as social inequality, economic inequality, financial privacy, self-incrimination, unreasonable search and seizure, burden of proof, and due process.7 For these reasons, some argue for the FairTax proposal of implementing a national sales tax to replace the federal income tax.89
The position of the Internal Revenue Service based upon the statutes and upon the related legal precedents in case law, is that these and similar tax protest arguments are frivolous and, if adopted by taxpayers as a basis for failure to timely file tax returns or pay taxes, may subject such taxpayers to penalties. On its web site, the IRS states:
As stated in the Alaska District Court case of United States v. Rempel:10 "It is apparent ...that the defendants have at least had access to some of the publications of tax protester organizations. The publications of these organizations have a bad habit of giving lots of advice without explaining the consequences which can flow from the assertion of totally discredited legal positions and/or meritless factual positions."
In criminal cases, the law distinguishes between beliefs about constitutionality of the tax law from other beliefs about the tax law:
See also Cheek v. United States.
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