Nobody likes paying taxes, and the IRS gets that. But citizens who come up with the-dog-ate-my-homework excuses for not paying their fair share of taxes really annoy the U.S. government.
They’re called “frivolous tax arguments,” and the IRS has a response for every specious reason you can create for failing to file or pay taxes. The IRS quotes the United States v. Sloan ruling regarding frivolous tax arguments on its website. The quote poetically sums up the IRS position on the claims, “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.”
The penalties for taking frivolous positions are steep. The IRS can assess a $5,000 penalty just for filing a return with a frivolous position. The IRS can also pursue fraudulent filing penalties for these positions. For more serious or large claims, the IRS can even pursue criminal penalties. Bottom line… don’t try to pull one over the IRS. They’ve seen it all before.
Here are some common contentions that the IRS disputes:
- Filing a tax return is voluntary. Actually, the word “voluntary” does show up in IRS publications, but it refers to the country’s system of letting taxpayers initially determine and pay their tax debt, rather than have the government present a bill and take the money from your bank account. If you’ve earned enough money, filing a tax return is required, and failure to file can result in civil and/or criminal penalties.
- Tips and wages from personal services are not considered income. The argument is that people’s personal labor is equal to the fair market value of their wages and tips, and therefore there’s no net income gain or tax due. However, the federal government defines, for tax purposes, “gross income” to mean all income from whatever source it is derived, including compensation for services.
- Taxpayer is not a U.S. “citizen,” and therefore is not subject to federal income laws. These nontaxpayers insist that they are freeborn citizens of a particular state and reject citizenship in the U.S.; thus they do not have to pay federal taxes. Unfortunately for them, the Fourteenth Amendment to the U.S. Constitution defines U.S. citizens as “all persons born in or naturalized in the United States.”
- Taxpayers can refuse to pay income taxes on religious or moral grounds. These folks claim that they can avoid paying based on their religious or moral beliefs or because they object to the way the government is using their money. However, whereas the Constitution’s First Amendment does protect certain personal liberties such as speech and assembly, it does not protect citizens who refuse to pay income taxes on the basis of any belief.
