Tax protesters contort the Constitution to meet preconceived notions that they are magically exempt from paying income tax. Their efforts are both comical and delusional. They write books, give expensive seminars, rope in the gullible and greedy, and convince them they are “sovereign citizens” or other such rubbish, and thus don’t have have to pay income tax. Sometimes they go to prison. Generally, they end up owing the IRS large amounts due to interest and penalties. And yes, when there is fraud and continued noncompliance the IRS can and does seize property and bank accounts, but only after giving lots of advance warning and attempting to work out an agreement.
Tax Protesters Dossiers has voluminous information on tax protesters, many of whom seem to be outright charlatans and / or have mental issues.
Irwin Shiff is a real gem, and is currently in prison again, this time for thirteen years, for tax crimes.
Most of Schiff’s advocacy/litigation include the following claims:
There is no law making anyone liable for the federal income tax.
The word “income” means corporate earnings and not wages or salaries.
The income tax laws can be satisfied by filing a “zero return” with zeros for each line for reporting income.
Steven Swan met Irwin Schiff in 1995 and, after hearing Schiff’s theories and talking with him, Swan bought Schiff’s books and even began teaching Schiff’s theories at seminars and preparing tax returns based on Schiff’s theories. The results were disastrous because Swan was forced to close his real estate business after the IRS assessed taxes and penalties against him and began levying on his bank accounts and other assets. Swan sued Schiff for misrepresentation, fraud, and negligence, but the suit was dismissed summarily. Showing his typical compassion for his victims, Schiff publicly referred to Swan as “an idiot.”
Their FAQ debunks in loving detail the idiot arguments tax protesters make. The IRS deems such arguments “frivolous” and rejects them outright.
For example, on the sovereign citizen silliness:
The income tax cannot apply to natural-born “sovereign state citizens” because they are not “citizens” within the meaning of the 14th Amendment.
There are actually a number of problems with the concept of “citizens” of the states of the United States who are not “citizens” within the meaning of the 14th Amendment. If this tax protester claim were true, then:
- The words “citizen of the United States” would have a meaning in the 14th Amendment that is different than the meaning given those same words in other parts of the Constitution.
- The words “United States” would have a meaning in the first sentence of the 14th Amendment that is different than the meaning given those words in other parts of the Constitution.
- The word “jurisdiction” would have a meaning in the first sentence of the 14th Amendment that is different than the meaning given that word in other parts of the Constitution.
- The 14th Amendment would extend the power of Congress to legislate for “federal citizens” without regard to the limits on Congressional power found in other parts of the Constitution.
- The 14th Amendment would have created a new kind of citizenship, and did not merely extend the existing definition of “citizen” to include former slaves as well as whites.
- The 14th Amendment would not mean what it says, and would not apply to “all persons.”
- The power of Congress to tax would limited by citizenship, and Congress would not be able to tax immigrants or foreigners who are within the United States but not citizens of the United States.
All of the above statements are wrong.