Tax Excuses That the IRS Won't Buy
NEW YORK (MainStreet) -- Americans have tried just about everything to get out of paying their taxes, the Internal Revenue Service says, but very few of these excuses are likely to work.
The IRS recently released its annual The Truth About Frivolous Tax Arguments report, which outlines not only the most popular arguments people have presented over the years to avoid paying their taxes, but also the policy statements and inevitable tax court decisions the government has used to debunk them.
|Don't be shocked when the IRS says you really, really have to pay your taxes.|
"Anyone who contemplates arguing on legal grounds against paying their fair share of taxes should first read the 84-page document," the IRS said in a statement.Taxpayers' contentions have run the gamut over the years. Whether you're arguing that you don't have to pay your taxes based on moral grounds or because only "employees" of the government are subject to federal income tax, though, it's likely to cost you a significant amount of time and a decent sum of money. Back in 2006, Congress increased the penalty for frivolous tax returns to $5,000 from $500. The penalty is applied when a person submits a tax return and any portion of the submission is based on a position the IRS identifies as frivolous. Those who were planning a dispute can find the full report on the agency's website, but here are some of the main arguments disputed in federal courts and now considered frivolous by definition. Contention: Taxpayers can refuse to pay income taxes on religious or moral grounds.
The IRS says taxpayers have frequently used the First Amendment to argue that they don't have to pay taxes because it is against their moral or religious beliefs, since it says that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." The Supreme Court has frequently asserted that saying your religious beliefs are in conflict with the payment of taxes provides no basis for refusing to pay, though. Contention: Paying taxes violates the Fifth Amendment.
The Fifth Amendment to the Constitution says a person shall not be "deprived of life, liberty, or property, without due process of law." This might sound like a sound argument if the law hadn't already decided it is well within the government's rights to charge residents to live here. According to the IRS, the Supreme Court stated in Brushaber v. Union Pacific R.R. all the way back in 1916 that "it is ... well settled that [the Fifth Amendment] is not a limitation upon the taxing power conferred upon Congress by the Constitution." Contention: Taxes are a form of servitude in violation of the 13th Amendment.
Residents have argued that paying taxes is a form of servitude, which is problematic, since the 13th Amendment prohibits slavery (as well as the imposition of involuntary servitude). Courts have consistently found that paying taxes is not considered forced servitude, though, calling the claim "clearly unsubstantial and without merit," as well as "far-fetched and frivolous." Keep in mind that the IRS does have payment plans available for taxpayers who find themselves significantly impaired financially. In fact, the IRS recently made changes to its lien system, the main way the agency penalizes people who can't pay their taxes on time. You can read how these changes may affect you here. >To submit a news tip, email: firstname.lastname@example.org.
Twitter and become a fan on Facebook.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV