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("Damn, We Lost Again!
And why is it
that people who sell
tax protestor materials file their tax returns anyway . . .")
For Release: 04/03/2001
IRS Fact Sheet: FS-2001-06
False Arguments For Noncompliance With The Tax Laws
The Internal Revenue Service is concerned that taxpayers might be misled by improper
suggestions that they are not required to file tax returns or pay taxes.
Since shortly after the federal income tax was enacted in 1913, some individuals
and groups have encouraged others not to comply with the law. There have been
unsuccessful challenges about the applicability of tax laws using a variety of
arguments. There have been assertions that the 16th Amendment was not properly
ratified, that the tax law was unconstitutional, did not apply to certain types
of income, only applied to certain individuals, or violated one or more constitutional
Despite the courts having consistently rejected these arguments, their promoters
continue to expound them, even incurring penalties for bringing frivolous cases
into court or for filing frivolous tax returns. They often present their arguments
in a pseudo-legal format, luring unsuspecting people into participating in their
schemes to evade taxes.
First Amendment. These arguments focus on
using the Freedom of Religion clause of the First Amendment
to reduce income tax liability. A common scheme calls for
individual taxpayers to obtain minister's credentials and
a church or religious order charter by mail for a fee. The
individuals set up a new organization that purports to be
a church, religious order, or other religious organization.
They then take a "vow of poverty" and assign their
assets and income to the new organization. But filtering
money through a purported church to fraudulently claim charitable
contribution deductions is illegal. The tax law affords benefits
to churches and other religious organizations and to those
who make gifts or contributions to these organizations. The
law requires, however, that such organizations actually be
operated for religious purposes and not for the private benefit
2. Fourth and Fifth Amendments. These arguments claim that filing
an income tax return violates the Fourth Amendment right to privacy or the
Fifth Amendment right against self-incrimination. However, the courts have
consistently held that disclosure of routine financial information required
on a tax return does not incriminate an individual or violate the right to
3. Sixteenth Amendment. These arguments claim that the constitutional
amendment establishing the basis for income tax was never properly ratified.
However, the courts have held that none of the points presented undermine the
fact that the Sixteenth Amendment was indeed ratified in 1913.
Arguments Related to the Internal Revenue
These false arguments claim that:
- there is no Internal Revenue Code that imposes taxes;
- only "individuals" are required to pay taxes;
- Code Section 861 limits taxable income to certain sources which don't
apply to most U.S. citizens; or
- the government can assess taxes only against people who file returns.
The tax law is found in Title 26 of the United States Code. Section 6012 of
the Code makes clear that only people whose income falls below a certain
minimum level do not have to file returns. Sections 861 through 865 determine
whether income is from a U.S. or foreign source - they do not in any way
exclude income from taxation for a U.S. citizen or resident. Section 6201
of the Code states that the Secretary of the Treasury is required to make
assessments "of all taxes imposed by this title [Title 26]."
These arguments claim that forming a trust to receive your income and hold
your assets will allow you to reduce or eliminate your tax liability. In truth,
establishing a trust, foreign or domestic, for the sole purpose of hiding your
income and assets from taxation is illegal and will not absolve you of your
More information is available from the "Summary of
Abusive Trust Schemes," prepared by the IRS Criminal
Investigation Division. A copy is available via the Internet
IRS Steps Against Noncompliance
The Internal Revenue Service has focused its efforts against noncompliance
by adopting a multi-functional compliance approach:
· helping otherwise innocent taxpayers who have been
misled by others to rejoin the system; and
· vigorously pursuing enforcement actions against
those who continue to promote schemes or entice others to
violate the law.
Regardless of the arguments used, they have two things in common:
· the arguments are consistently rejected by the courts,
· the participants may face IRS enforcement action.
The IRS has one of the highest conviction rates in federal law enforcement.
In addition to serving substantial prison sentences imposed by the courts,
those convicted must also pay fines, taxes, civil penalties, and, frequently,
Additional information is available from IRS Publication 2105, "Why Do
I Have to Pay Taxes?" It's available at www.ustreas.gov/irs/ci/factsheets/pub2105.pdf.
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National Director Communications Division - Posted on 04/03/2001
Return to Tax Protestor Exhibit