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Tax Protestor Dummies 2 > Cases
("Damn, We Lost Again!
And why is it
that people who sell
tax protestor materials file their tax returns anyway . . .")
IRS WARNING ON SCAMS
The Internal Revenue Service issued a nationwide alert
to taxpayers warning them not to fall victim to tax scams.
These schemes take several shapes, ranging from promises
of special tax refunds to illegal ways of "untaxing" yourself.
"Each year, con artists shamelessly take advantage
of people, sometimes charging fees for illegal tax schemes," IRS
Commissioner Charles O. Rossotti said. "People should
be on‑guard for these scams. If something sounds too
good to be true, it probably is."
If people think something may be unscrupulous, they
can report suspected tax fraud to the IRS at 1‑800‑829‑0433.
The IRS urges people to avoid these common schemes:
oNO TAXES BEING WITHHELD FROM YOUR WAGES.
Illegal schemes are being promoted that
instruct employers not to withhold federal income tax or
employment taxes from wages paid to their employees. These
schemes are based on an incorrect interpretation of tax law
and have been refuted in court. If you have concerns about
your employer and employment taxes, you can get help by calling
the IRS at 1‑800‑829‑1040.
o "I DON'T PAY TAXES ‑‑WHY SHOULD
Con artists may talk about how they don't
file or pay taxes and then charge people a fee to share their "secret." The
real secret that these people don't reveal is that many of
them actually do file and pay taxes ‑‑they just
won't publicly admit it. Again, the IRS reminds people that
failure to file or pay taxes is subject to civil and/or criminal
o AFRICAN‑AMERICANS GET A SPECIAL TAX REFUND
Thousands of African‑Americans have
been misled by people offering to file for tax credits or
refunds related to reparations for slavery. There is
no such provision in the tax law. Some unscrupulous promoters
have encouraged clients to pay them to prepare a claim for
this refund. But the claims are a waste of your money. Plus,
those who file subsequent claims can be subject to a $500
frivolous return penalty.
o PAY THE TAX, THEN GET THE PRIZE
The caller says you've won a prize and
all you have to do to get it is pay the income tax due. Don't
believe it. If you really won a prize, you may need to make
an estimated tax payment to cover the taxes that will be
due at the end of the year. But the payment goes to the IRS ‑‑not
the caller. Whether you've won cash, a car, or a trip, the
prize giver generally sends you and the IRS a Form 1099 showing
the total prize value that should be reported on your tax
o UNTAX YOURSELF FOR $49.95.
This one's as old as snake oil, but people
continue to be taken in. And now it's on the Internet. The
ads may say that paying taxes is "voluntary," but
it is absolutely wrong. The U. S. courts have continuously
rejected this and other similar arguments. Unfortunately,
hundreds of people across the country have bought "untax
packages" before finding out that following the advice
contained in them can result in civil and/or criminal tax
penalties being assessed. Numerous sellers of these
bogus packages have been convicted on criminal tax charges.
o SOCIAL SECURITY TAX SCHEME.
Taxpayers shouldn't fall victim to a scam
offering them refunds of the Social Security taxes they have
paid during their lifetimes. The scam works by the victim
paying a "paperwork" fee of $100, plus a percentage
of any refund received, to file a refund claim with the IRS.
This hoax fleeces the victims for the up-front fee. The law
does not allow such a refund of Social Security taxes paid.
The IRS processing centers are alert to this hoax and have
been stopping the false claims.
o "I CAN GET YOU A BIG REFUND . . . FOR A FEE!"
Refund scheme operators may approach you
wanting to "borrow" your Social Security Number
or give you a phony W‑2 so it appears that you qualify
for a big refund. They may promise to split the refund with
you, but the IRS catches most of these false refund claims
before they go out. And when one does go out, the participant
usually ends up paying back the refund along with stiff penalties
Two lessons to remember:
1) Anyone who promises you a bigger refund
without knowing your tax situation could be misleading you
2) Never sign a tax return without looking
it over to make sure it's honest and correct.
o IRS "AGENT" COMES TO YOUR HOUSE TO COLLECT.
First, do not let anyone into your home
unless they identify themselves to your satisfaction. IRS
special agents, field auditors, and collection officers carry
picture IDs and will normally try to contact you before they
visit. If you think the person on your doorstep is an impostor,
lock your door and call the local police. To report IRS impostors,
call the Treasury Inspector General's Hotline at 1‑800‑366‑4484.
IRS WARNING ON WITHHOLDING
The Internal Revenue Service issued a consumer alert
today involving illegal schemes where employers do not withhold
federal income tax or employment taxes from wages paid to
These schemes are based on an incorrect interpretation
of the Internal Revenue Code that wages are not a "source" of
income and that the definition of "sources of income" does
not apply to U.S. individuals. This incorrect interpretation
is contrary to the express language of the Internal Revenue
Code and its regulations. The interpretation has been refuted
If you have concerns that your employer is improperly
failing to withhold federal income and employment taxes,
you can contact the IRS at 1‑800‑829‑1040.
The IRS has seen a small number of these cases involving
employers in recent months. The agency is actively investigating
cases where employers fail to withhold income taxes and employment
taxes (Social Security and Medicare taxes).
"We are pursuing these cases to uphold the law
and make sure everyone pays their share," IRS Commissioner
Charles O. Rossotti said. "We don't want to see taxpayers
caught in a bind because employers fail to properly withhold
"The law is crystal clear that income and employment
taxes must be paid," said Joe Kehoe, Commissioner of
the IRS Small Business and Self‑Employed Division. "Evading
employment taxes can have serious consequences. Employers
may be subject to criminal and civil sanctions for willfully
failing to pay employment taxes."
Unscrupulous individuals and promoters have used a
variety of false or misleading arguments for not paying employment
taxes. The courts have repeatedly rejected these arguments
as frivolous and routinely impose financial penalties when
such meritless arguments are raised.
"IRS Criminal Investigation works closely with
the other IRS operating divisions to investigate and refer
for prosecution individuals and companies who have willfully
failed to file or pay employment taxes," said Mark Matthews,
IRS Criminal Investigation Chief. "Each year, Criminal
Investigation obtains significant criminal convictions for
such violations, most of which involve incarceration and
In the past three years, 127 individuals have been
sentenced to confinement in either federal prison, a halfway
house, home detention or some combination thereof on employment
tax issues. Nearly 86 percent of the persons sentenced for
evading employment taxes served an average of 17 months confinement
and were ordered to make restitution to the government for
the taxes evaded (plus interest and penalties.)
Recent examples of employment tax prosecutions can
be found on the IRS Criminal Investigation website at
In cases where your employer withheld employment taxes
but failed to deposit them, or failed to issue W‑2s,
you should contact the employer to request the W‑2.
If you are unable to secure a W‑2 from your employer,
you should complete and attach Form 4852, Substitute for
W‑2, to your tax return using the best data available
to calculate the wages and the withholding. This information
can often be secured from pay stubs.
In addition, if your employer refuses to withhold
employment taxes from your wages and the IRS is unable to
collect the employment taxes from your employer, you still
have the responsibility to pay income tax and you are ultimately
responsible for your share of the FICA tax.
You can get additional help by calling the IRS at 1‑800‑829‑1040.
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