Tax protester arguments
Tax protester arguments are arguments made by people, primarily in the United States, who contend that tax laws are unconstitutional or otherwise invalid.
Tax protester arguments are typically based on an asserted belief that their 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 rather than legal grounds.
In the United States, tax protester arguments are generally directed to the U.S. federal income tax.
Denial of tax liability
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.Constitutional arguments
Some tax protesters may cite what they believe is evidence that the Sixteenth Amendment to the Constitution 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 . Another argument made by some tax protesters is that because the United States Congress did not pass an official proclamation recognizing Ohio's 1803 admission to statehood until 1953, Ohio was not a state until 1953 and therefore the Sixteenth Amendment was not properly ratified. 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.The argument is occasionally made that Federal Reserve Notes are not real, lawful money and therefore do not constitute income as they are not backed by gold or silver and are issued by a quasi-private organization; in the case of the Posse Comitatus and similar groups and individuals, hybrid arguments incorporating elements of the below-mentioned conspiracy theories appear to predominate.
Statutory arguments
Some protesters have claimed that statutes enacted by the United States Congress pursuant to its constitutional taxing power are defective, invalid, or that the statutes are misapplied by the Internal Revenue Service, 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. Other protesters have argued that the term "income" is not defined in the Internal Revenue Code or the Constitution, and that the tax law should therefore 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, and many courts have rejected it, and 26 U.S.C. §§ 61-64 does define various classes of income.Conspiracy arguments
Some tax protesters claim that since the year 1913, 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:Other arguments
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 his or her income in exchange for not being put in prison. Strictly speaking, a genuine inability to pay taxes is not a crime. 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 willfully failing to file a tax return, willfully filing a false tax return, willfully failing to pay in a timely manner, concealing income or assets, and certain other actions constituting 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." 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. For these reasons, some argue for the FairTax proposal of implementing a national sales tax to replace the federal income tax.
In the United States, debtor's prison was seen as an inhumane practice, and was mostly abolished in the 19th century. Tax protesters argue that prison for tax evasion is just as inhumane, for the same reasons. One owes a bank or a person, while the other owes the government. Some argue for gentler penalties instead of imprisonment, such as fines, community service, wage garnishment, lien on house, taking tax money owed from a bank account, repossession, and foreclosure, much like the penalties of private or bank debt.
Position of the Internal Revenue Service
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: "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." Commentator J.J. MacNab has stated that tax protester arguments will not work, and that with respect to people who use tax protester arguments, the Internal Revenue Service "will come after you with a passion".