Tax protester administrative arguments
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 - 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.
Administrative arguments, though related to, are distinct from constitutional, statutory, and general conspiracy arguments. Administrative arguments presuppose that Congress has the constitutional power to impose a tax on incomes and that statutes have been to effect this imposition, but that the administrative agencies tasked with carrying out the directives of the statute have failed to enact regulations enabling them to do so.
Arguments about tax administration and process
Some arguments relate to the regulatory process, the authority of IRS employees to assert penalties, the IRS authority to seize assets, or the validity of IRS tax forms.Arguments about lack of regulations
Some tax protesters have tried to argue that because the Department of the Treasury has promulgated official regulations for some but not all Internal Revenue Code provisions, there can be no obligation to file income tax returns or pay taxes. The courts have uniformly rejected this argument, ruling that duties imposed by statute cannot be avoided merely because the IRS or some other agency has not promulgated a regulation under that statute, and that the mere fact that a statute specifies that an agency is authorized to promulgate a regulation does not necessarily mean that the agency is required to do so.For court decisions on the "lack of regulations" arguments, see Carpa v. Smith; United States v. Langert; Russell v. United States; United States v. Washington; United States v. Hicks.
Arguments about authority of IRS employees to collect penalties
Some tax protesters argue that even if the Internal Revenue Code provides for penalties, IRS employees do not have the authority to assert penalties—basing the argument on Internal Revenue Code section 6020 which states:Some protesters contend that this provision shows that IRS agents have no authority to impose penalties unless they have a delegation from the Secretary of the Treasury.
Tax protesters sometimes assert that court decisions that IRS agents have delegated powers from the Secretary of the Treasury constitute a blatant disregard for the law, which tax protesters cite as proof that the finding of the court is somehow opposite of what the law says. At any rate, under,, and and the Treasury regulation at 26 C.F.R. section 301.6020-1, IRS agents do indeed have the delegated power to prepare section 6020 returns. See also Delegation Order 5-2, which specifically delegates this authority to Internal Revenue Agents, to Tax Auditors, to Revenue Officers of grade GS-9 and above, and to various other IRS personnel. In Craig, the taxpayer argued that only the Secretary of the Treasury himself or herself was authorized under section 6020 to prepare returns for taxpayers despite the plain language of section 6020 which uses the word "Secretary". Under section 7701, where used in the Internal Revenue Code without the phrase "of the Treasury," the term "Secretary" means the "Secretary of the Treasury or his delegate". The phrase "or his delegate" is defined in part as "any officer, employee, or agency of the Treasury Department duly authorized … to perform the function mentioned or described …". The Court rejected the taxpayer's argument, and ruled that an IRS Revenue Agent "plainly falls" within the cited Treasury regulation.
Another group of protesters claims the existing law demands income tax only from federal employees and residents of US territories. Their argument does not rely on nonpassage of the 16th Amendment, but does suggest it. They have asked the IRS and other authorities to cite the laws requiring others to pay income tax. This group claims never to have received an answer.
Arguments about authority of IRS employees to seize assets
Some tax protesters argue that the Internal Revenue Service has no authority to seize assets to satisfy tax claims. For example, tax protester Irwin Schiff's web site, in reference to the 2005 Federal trial resulting in his most recent conviction and imprisonment on tax charges, includes the statement: "… the Government’s prosecutors and Judge Dawson interceded in order to prevent me from proving that all IRS seizures are illegal, and not provided for by law."In United States v. Rodgers, the United States Supreme Court stated:
Similarly, in United States v. Baggot, the Supreme Court stated:
After the decisions in Rodgers and Baggot, Congress provided for limited exceptions to the general rule that court approval is not required for a levy by the Internal Revenue Service. For example, an IRS levy on a principal residence must be approved in writing by a federal district court judge or magistrate.
The statute authorizing the Internal Revenue Service to seize assets without going to court is. In the case of Brian v. Gugin, a group of taxpayers sued a group of IRS and other government employees,, for what the taxpayers claimed was a violation of their rights. The following is an excerpt from the court’s decision in the case:
In a variation on this argument, some tax protesters have argued that section 6331 of the Internal Revenue Code should allow the IRS to seize only the salary of an officer, employee, or elected official of the United States or the District of Columbia. This argument was rejected by the United States Supreme Court in Sims v. United States. Tax protesters have presented variations of this argument, which the courts have ruled to be without legal merit. See, e.g., the decision of the United States Court of Appeals for the Tenth Circuit in James v. United States. See also Peth v. Breitzmann; Pawlowske v. Chrysler Corp.; and Craig v. Lowe. See also the decision of the United States Court of Appeals for the Ninth Circuit in Maisano v. Welcher.
Since at least 1867, the Federal tax collector has also held the power to sell property of a delinquent taxpayer to satisfy a Federal income tax liability, even before physically ejecting the taxpayer from the property. See the United States Supreme Court decision in the case of Springer v. United States.
Arguments that the IRS must follow the Fair Debt Collection Act
At least one tax protester has argued that the IRS must follow the Federal Fair Debt Collection Practices Act, also known as the Fair Debt Collection Act. This argument was rejected in Smith v. United States, where the United States Court of Appeals for the Fifth Circuit stated that the taxpayer's: "… invocation of the Fair Debt Collection Act is entirely without merit, as the statute expressly excludes 'any officer or employee of the United States... to the extent that collecting or attempting to collect any debt is in the performance of his official duties' from the definition of 'debt collector.' 15 U.S.C. section 1692a."In 1998, Congress amended the Internal Revenue Code by adding a new section 6304, "Fair Tax Collection Practices," which refers to and includes certain rules that are similar to some provisions of the Fair Debt Collection Practices Act. The office of the Treasury Inspector General for Tax Administration reviews IRS tax collection practices under section 6304.
The Paperwork Reduction Act (OMB control number) argument
One contention of tax protesters is that they are not liable to file returns or pay taxes because, they argue, Form 1040 or some other Federal tax form, or the related instructions, or a Treasury Regulation, does not contain an "OMB control number" The courts have rejected the OMB control number arguments, primarily on two grounds: With respect to Form 1040 itself, Form 1040, U.S. Individual Income Tax Return, does contain the OMB control number, and has included the number for every tax year since 1981; and according to the court rulings, the absence of an OMB control number on a tax form, or in tax regulations, would not eliminate the statutory legal obligation to file tax returns or pay taxes.The regulations for the OMB control number under the Paperwork Reduction Act specifically mention statutory tax obligations, providing :
Additionally the Paperwork Reduction Act itself states : "…this subchapter shall not apply to the collection of information … during the conduct of … a civil action to which the United States or any official or agency thereof is a party … or … an administrative action or investigation involving an agency against specific individuals or entities."
The courts have ruled that there is no legal requirement that an IRS tax form bear an OMB control number in order for a taxpayer to be legally obligated to file Federal income tax returns and pay the related taxes, and there is no requirement of an OMB number in order for the taxpayer to be properly convicted of tax crimes—as these are tax obligations imposed by statute and therefore cannot be obviated by presence or lack of an OMB control number on a tax form.
OMB control numbers and the ''Lawrence'' case
Some tax protesters have argued that criminal defendant Robert Lawrence was successful with an OMB control number argument when his case was dismissed by a federal court in 2006. According to the court record, the IRS agents who had calculated Mr. Lawrence's tax liability discovered errors they themselves had made—based on information obtained from Lawrence's own tax returns, regarding the taxpayer's tax basis in certain property Lawrence had sold. With respect to certain properties the taxpayer had sold, the IRS agents discovered that he had more tax basis than they had originally calculated—therefore, lower gains or even losses, and thus lower taxes. The IRS agents brought their errors to the attention of the government lawyers, who then asked that the charges be dropped.Lawrence then asked the trial court to order the government to reimburse him for his legal fees. The court ruled against him on that.
He then appealed to the United States Court of Appeals for the Seventh Circuit—to try to obtain a reversal of the trial court's refusal to order the government to compensate him for the legal fees he had incurred. At the Court of Appeals, Lawrence contended that he should be reimbursed because the government's conduct against him had been "vexatious, frivolous, or in bad faith." He raised his PRA/OMB control number argument—an argument he had also raised at the trial court level.
In March 2007 the United States Court of Appeals for the Seventh Circuit rejected the OMB argument. The Court also rejected his request for reimbursement for the legal fees he incurred. The following is an excerpt from the Court's decision:
The ''Wunder'' case
In the case of United States v. Wunder, the United States Court of Appeals for the Sixth Circuit stated:The ''Patridge'' case
In the case of United States v. Patridge, the United States Court of Appeals for the Seventh Circuit affirmed a tax evasion conviction, and rejected the convicted taxpayer's OMB control number argument, with these words:In the same case, the Court of Appeals rejected the taxpayer's argument that the Paperwork Reduction Act could block a tax evasion conviction:
Other cases involving OMB control numbers
Despite the presence of the OMB control number on Form 1040 and despite the language of regulation 1320.6 above, tax protesters have repeatedly litigated several variations of the "OMB control number argument" without success. See McDougall v. Commissioner ; United States v. Barker ; Salberg v. United States ; United States v. Cavins ; United States v. Dawes ; Lonsdale v. United States ; Karkabe v. Commissioner. Pate v. Commissioner.Lindsey K. Springer, a proponent of the Paperwork Reduction Act/OMB control number argument, raised the issue in his own federal criminal tax case. His argument was rejected by the court, and the jury found him guilty of one count of conspiracy to defraud the IRS, three counts of tax evasion, and two counts of willful failure to file federal income tax returns.
The OMB control number argument 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. In Cargill v. Commissioner, an $8,000 penalty was imposed on taxpayer Judy Cargill under in connection with her appeal in which she persisted in making the OMB control number argument after having been notified that the argument was frivolous.
Arguments about the status of the IRS
Some tax protesters argue that the IRS is not a government agency, or that the IRS is not mentioned in the statutes, or that the IRS has no authority in the absence of established internal revenue "districts," or that the IRS has no authority outside the District of Columbia.Arguments that the IRS is not a government agency
Many tax protesters claim that because the Internal Revenue Service itself was not created by statute and because the IRS has no legal capacity to sue or be sued, the IRS is not a federal government agency. Some claim it is a Puerto Rican trust. Others claim that the IRS does not lawfully exist. The courts have uniformly rejected such arguments. As explained below, the "Internal Revenue Service" is referred to in statutes and regulations as an "agency," as a "bureau," and as an "administrative unit" of the U.S. Department of the Treasury.Although the IRS, as a bureau within the Treasury Department, was not created by statute, the United States Supreme Court, in Chrysler Corp. v. Brown, specifically referred to the Revenue Act of 1862, the "Act of July 1, 1862, ch. 119, 12 Stat. 432, the statute to which the present Internal Revenue Service can be traced".
Due to the doctrine of sovereign immunity, the IRS itself does not, as a general rule, have the capacity to "sue and be sued" -- a concept separate from that of whether the IRS is a U.S. "government agency." See, for example, Thompson v. Department of Treasury, Internal Revenue Service and United States of America, where the court stated that the "Department of the Treasury" and "Internal Revenue Service" are "federal agencies within the United States Government. Federal agencies may not be sued in their own name except to the extent Congress may specifically allow such suits". Also, "Congress has made no provisions for suits against either the IRS or the Treasury Department, so these agencies are not proper entities for suit. Where taxpayers are authorized to sue on matters arising out of IRS actions, the United States is the proper party defendant"
The United States Court of Appeals for the Tenth Circuit has rejected the argument that the Internal Revenue Service was not lawfully created. The Court also rejected the argument that the IRS is an agency of the "International Monetary Fund".
Similarly in Collins v. Internal Revenue Serv., a Federal district court stated:
In Hawks v. Commissioner, the U.S. Tax Court ruled the arguments that "there is no organization in the Department of the Treasury known as the Internal Revenue Service", that the IRS "is not an agency of the United States", and that the IRS is "an unlawful organization", to be frivolous. In United States v. Bell, the argument that "the Internal Revenue Service is an unregistered agent of Puerto Rico and not properly registered under the Foreign Agent Registration Act" was ruled to be frivolous.
Arguments that the Internal Revenue Service is not mentioned in the statutes
Some tax protesters claim that the Internal Revenue Service is not mentioned in the statutes. Imprisoned tax protester Irwin Schiff has contended that the Internal Revenue Service is not mentioned in Subtitle A of the Internal Revenue Code.The "Internal Revenue Service" is, however, mentioned in many statutes. For example, the "Internal Revenue Service" is mentioned in Subtitle A of the Internal Revenue Code. Overall, the Internal Revenue Code contains at least 200 specific references to "Internal Revenue Service". Many Internal Revenue Code sections contain multiple references to "Internal Revenue Service".
At least nineteen references to "Internal Revenue Service" are found in titles 2, 5, 12, 23, 31, and 42 of the United States Code. For example, refers to the "Internal Revenue Service" as an "agency" of the Treasury Department. According to the official web site of the U.S. Department of the Treasury, the Internal Revenue Service is a bureau located within the Department.
In section 1001, section 1001, section 1001, and section 1001 of the Internal Revenue Service Restructuring and Reform Act of 1998, the IRS is repeatedly designated by Congress as an "administrative unit" of the U.S. Department of the Treasury.
The official U.S. Treasury regulations provide :
The "Internal Revenue Service" is also listed as a "component" and "agency" of the U.S. Department of the Treasury in the official government regulations for "Supplemental Standards of Ethical Conduct for Employees of the Department of the Treasury". The House Committee Report accompanying the Internal Revenue Service Restructuring and Reform Act of 1998, specifically refers to the IRS as being one of the "agencies within the Treasury."
The argument that the Internal Revenue Service is not an agency of the United States government, the argument that the IRS is a private-sector corporation, the argument that the IRS is an agency of some state or territory without authority to administer the internal revenue laws, and variations of these arguments, 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.