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Tax Scam Artist's Lie: Taxpayer is not a "citizen" of
the United States, thus not subject to the federal income tax laws.
Some individuals argue that they have rejected citizenship in
the United States in favor of state citizenship; therefore, they
are relieved of their federal income tax obligations. A variation
of this argument is that a person is a free born citizen of a
particular state and thus was never a citizen of the United States.
The underlying theme of these arguments is the same: the person
is not a United States citizen and is not subject to federal tax
laws because only United States citizens are subject to these
The Fourteenth Amendment to the United States Constitution defines
the basis for United States citizenship, stating that "[a]ll
persons born or naturalized in the United States, and subject
to the jurisdiction thereof, are citizens of the United States
and of the State wherein they reside." The Fourteenth Amendment
therefore establishes simultaneous state and federal citizenship.
Claims that individuals are not citizens of the United States
but are solely citizens of a sovereign state and not subject to
federal taxation have been uniformly rejected by the courts.
Relevant Case Law:
O'Driscoll v. I.R.S., 1991 U.S. Dist. LEXIS 9829, at *5-6
(E.D. Pa. 1991) - the court stated, "despite [taxpayer's]
linguistic gymnastics, he is a citizen of both the United States
and Pennsylvania, and liable for federal taxes.
United States v. Sloan, 939 F.2d 499, 500 (7 th Cir. 1991),
cert. denied, 502 U.S. 1060, reh'g denied, 503 U.S. 953 (1992)
- the court affirmed a tax evasion conviction and rejected Sloan's
argument that the federal tax laws did not apply to him because
he was a "freeborn, natural individual, a citizen of the
State of Indiana, and a 'master' - not 'servant' - of his government.
United States v. Ward, 833 F.2d 1538, 1539 (11 th Cir.
1987), cert. denied, 485 U.S. 1022 (1988) - the court found Ward's
contention that he was not an "individual" located within
the jurisdiction of the United States to be "utterly without
merit" and affirmed his conviction for tax evasion.
United States v. Sileven, 985 F.2d 962 (8 th Cir. 1993)
- the court rejected the argument that the district court lacked
jurisdiction because the taxpayer was not a federal citizen as
United States v. Gerads, 999 F.2d 1255, 1256 (8 th Cir.
1993) - the court rejected the Gerads' contention that they were
"not citizens of the United States, but rather 'Free Citizens
of the Republic of Minnesota' and, consequently, not subject to
taxation" and imposed sanctions "for bringing this frivolous
appeal based on discredited, tax-protestor arguments.
Solomon v. Commissioner, T.C. Memo. 1993-509, 66 T.C.M.
(CCH) 1201, 1202-03 (1993) - the court rejected Solomon's argument
that as an Illinois resident his income was from outside the United
States, stating "[he] attempts to argue an absurd proposition,
essentially that the State of Illinois is not part of the United
States. His hope is that he will find some semantic technicality
which will render him exempt from Federal income tax, which applies
generally to all U.S. citizens and residents. [His] arguments
are no more than stale tax protester contentions long dismissed
summarily by this Court and all other courts which have heard
The Tax Scam Artist's Lie: The "United
States" consists only of the District of Columbia, federal
territories, and federal enclaves.
Some argue that the United States consists only of the District
of Columbia, federal territories (e.g., Puerto Rico, Guam, etc.),
and federal enclaves (e.g., American Indian reservations, military
bases, etc.) and does not include the "sovereign" states.
According to this argument, if a taxpayer does not live within
the "United States," as so defined, he is not subject
to the federal tax laws.
The Internal Revenue Code imposes a federal income tax upon all
United States citizens and residents, not just those who reside
in the District of Columbia, federal territories, and federal
enclaves. In United States v. Collins, 920 F.2d 619, 629 (10 th
Cir. 1990), cert. denied, 500 U.S.
920 (1991), the court cited Brushaber v. Union Pac. R.R., 240
U.S. 1, 12-19 (1916), and noted the United States Supreme Court
has recognized that the "sixteenth amendment authorizes a
direct nonapportioned tax upon United States citizens throughout
the nation, not just in federal enclaves." This frivolous
contention has been uniformly rejected by the courts.
Relevant Case Law:
In re Becraft, 885 F.2d 547, 549-50 (9 th Cir. 1989) -
the court, observing that Becraft's claim that federal laws apply
only to United States territories and the District of Columbia
"has no semblance of merit," and noting that this attorney
had previously litigated cases in the federal appeals courts that
had "no reasonable possibility of success," imposed
monetary damages and expressed the hope "that this assessment
will deter Becraft from asking this and other federal courts to
expend more time and resources on patently frivolous legal positions.
United States v. Ward, 833 F.2d 1538, 1539 (11 th Cir.
1987), cert. denied, 485 U.S. 1022 (1988) - the court rejected
as a "twisted conclusion" the contention "that
the United States has jurisdiction over only Washington, D.C.,
the federal enclaves within the states, and the territories and
possessions of the United States," and affirmed a tax evasion
Barcroft v. Commissioner, T.C. Memo. 1997-5, 73 T.C.M.
(CCH) 1666, 1667, appeal dismissed, 134 F.3d 369 (5 th Cir. 1997)
- noting that Barcroft's statements "contain protester-type
contentions that have been rejected by the courts as groundless,"
the court sustained penalties for failure to file returns and
failure to pay estimated income taxes.
The Tax Scam Artist's Lie: Taxpayer is not
a "person" as defined by the Internal Revenue Code, thus
is not subject to the federal income tax laws.
Some maintain that they are not a "person" as defined
by the Internal Revenue Code, and thus not subject to the federal
income tax laws. This argument is based on a tortured misreading
of the Code.
The Internal Revenue Code clearly defines "person"
and sets forth which persons are subject to federal taxes. Section
7701(a)(14) defines "taxpayer" as any person subject
to any internal revenue tax and section 7701(a)(1) defines "person"
to include an individual, trust, estate, partnership, or corporation.
Arguments that an individual is not a "person" within
the meaning of the Internal Revenue Code have been uniformly rejected.
A similar argument with respect to the term "individual"
has also been rejected.
Relevant Case Law:
United States v. Karlin, 785 F.2d 90, 91 (3d Cir. 1986),
cert. denied, 480 U.S. 907 (1987) - the court affirmed Karlin's
conviction for failure to file income tax returns and rejected
his contention that he was "not a 'person' within meaning
of 26 U.S.C. § 7203" as "frivolous and requir[ing]
McCoy v. Internal Revenue Service, 88 A.F.T.R.2d (RIA)
5909, 2001 U.S. Dist. LEXIS 15113, at *21, 22 (D. Col. Aug. 7,
2001) - the court dismissed the taxpayer's complaint, which asserted
that McCoy was a nonresident alien and not subject to tax, describing
the taxpayer's argument as "specious and legally frivolous.
United States v. Rhodes, 921 F. Supp. 261, 264 (M.D. Pa.
1996) - the court stated that "[a]n individual is a person
under the Internal Revenue Code.
Biermann v. Commissioner, 769 F.2d 707, 708 (11 th Cir.),
reh'g denied, 775 F.2d 304 (11 th Cir. 1985) - the court said
the claim that Biermann was not "a person liable for taxes"
was "patently frivolous" and, given the Tax Court's
warning to Biermann that his positions would never be sustained
in any court, awarded the government double costs, plus attorney's
Smith v. Commissioner, T.C. Memo. 2000-290, 80 T.C.M.
(CCH) 377, 378- 89 (2000) - the court described the argument that
Smith "is not a 'person liable' for tax" as frivolous,
sustained failure to file penalties, and imposed a penalty for
maintaining "frivolous and groundless positions.
United States v. Studley, 783 F.2d 934, 937 n.3 (9 th
Cir. 1986) - the court affirmed a failure to file conviction,
rejecting the taxpayer's contention that she was not subject to
federal tax laws because she was "an absolute, freeborn,
and natural individual" and went on to note that "this
argument has been consistently and thoroughly rejected by every
branch of the government for decades.
The Tax Scam Artist's Lie: The only "employees"
subject to federal income tax are employees of the federal government.
Some argue that the federal government can tax only employees
of the federal government; therefore, employees in the private
sector are immune from federal income tax liability. This argument
is based on an apparent misinterpretation of section 3401, which
imposes responsibilities to withhold tax from "wages."
That section establishes the general rule that "wages"
include all remuneration for services performed by an employee
for his employer. Section 3401(c) goes on to state that the term
"employee" includes "an officer, employee, or elected
official of the United States, a State, or any political subdivision
thereof . . . .
Section 3401(c) defines "employee" and states that
the term "includes an officer, employee or elected official
of the United States . . . .
This language does not address how other employees' wages are
subject to withholding or taxation. Section 7701(c) states that
the use of the word "includes" "shall not be deemed
to exclude other things otherwise within the meaning of the term
defined." Thus, the word "includes" as used in
the definition of "employee" is a term of enlargement,
not of limitation. It clearly makes federal employees and officials
a part of the definition of "employee," which generally
includes private citizens.
Relevant Case Law:
United States v. Latham, 754 F.2d 747, 750 (7 th Cir.
1985) - calling the instructions Latham wanted given to the jury
"inane," the court said, "[the] instruction which
indicated that under 26 U.S.C. § 3401(c) the category of
'employee' does not include privately employed wage earners is
a preposterous reading of the statute. It is obvious within the
context of [the law] the word 'includes' is a term of enlargement
not of limitation, and the reference to certain entities or categories
is not intended to exclude all others. .
Sullivan v. United States, 788 F.2d 813, 815 (1 st Cir.
1986) - the court rejected Sullivan's attempt to recover a civil
penalty for filing a frivolous return, stating "to the extent
[he] argues that he received no 'wages' . . " because he
was not an 'employee' within the meaning of 26 U.S.C. § 3401(c),
that contention is meritless. . . . The statute does not purport
to limit withholding to the persons listed therein." The
court imposed sanctions on Sullivan for bringing a frivolous appeal.
Peth v. Breitzmann, 611 F. Supp. 50, 53 (E.D. Wis. 1985)
- the court rejected the taxpayer's argument "that he is
not an 'employee' under I.R.C. § 3401(c) because he is not
a federal officer, employee, elected official, or corporate officer,"
stating, "[he] mistakenly assumes that this definition of
'employee' excludes all other wage earners.
Pabon v. Commissioner, T.C. Memo. 1994-476, 68 T.C.M.
(CCH) 813, 816 (1994) - the court characterized Pabon's position
- including that she was not subject to tax because she was not
an employee of the federal or state governments - as "nothing
but tax protester rhetoric and legalistic gibberish. The court
imposed a penalty of $2,500 on Pabon for bringing a frivolous
case, stating that she "regards this case as a vehicle to
protest the tax laws of this country and espouse her own misguided
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