If you were hoping to dodge your taxes by invoking the Constitution, you might want to rethink that argument — the Internal Revenue Service is already way ahead of you.
The agency has released an 84-page document entitled “The Truth About Frivolous Tax Arguments” just in time for tax season. The publication lists and refutes a series of legal arguments it's heard from taxpayers looking for a way out of filing returns or paying up.
The publication cites numerous cases in which it beat wannabe tax dodgers who brought their claims to court.
Classics include the argument that taxpayers don't have to file returns or provide financial information because they are protected against self-incrimination under the Fifth Amendment. Naturally, there's no constitutional right to refuse to file an income tax return, but that didn't deter a handful of tax dodgers from taking their gripes to court on those grounds.
The IRS cited six decisions against tax protesters, plus a revenue ruling issued in 2005, warning others who were hoping to plead the Fifth and avoid filing.
The IRS also detailed a series of fictitious legal arguments it's heard from people who don't want to file their returns. For instance, the IRS is not an agency of the United States because it wasn't created by an act of Congress.
Ironically, a trio of tax preparers — Eddie Ferrand, Glenda F. Elliott and William N. Kennedy — had used this reasoning in April 2006, when they understated income on their clients' tax returns based on the assertion that the IRS is an illegal organization. A federal district court in Louisiana permanently barred the three from preparing tax returns.
Given the steep monetary penalties waiting for tax dodgers, it might make better sense to just file and pay up. Americans filing groundless or frivolous suits in an attempt to dodge their taxes face penalties as high as $25,000. Since making false statements under a tax return and attempting to evade taxes are felonies, offenders can face three to five years in prison and a $250,000 fine.
“Like moths to a flame, some people find themselves irresistibly drawn to the tax protester movement's illusory claim that there is no legal requirement to pay federal income tax, and like moths, these people sometimes get burned,” wrote Justice Michael Stephen Kanne of the Seventh Circuit Court of Appeals in his 1991 decision against tax protester Lorin G. Sloan.
