Why Pay Taxes? – The Truth about Frivolous Tax Arguments

Here’s an interesting read. Published by the IRS and read by tax attorneys like me as well as by others, The Truth About Frivolous Tax Arguments addresses some of the more common false “legal” arguments made by individuals and groups who oppose compliance with the federal tax laws.

These arguments are grouped under several general categories, with variations within each category. Each contention is briefly explained, followed by a discussion of the legal authority that rejects the contention. The second section deals with frivolous arguments encountered in collection due process cases. The final section illustrates penalties imposed on those pursuing frivolous cases.

Here are the arguments:

A. The Voluntary Nature of the Federal Income Tax System

The filing of a tax return is voluntary
Payment of tax is voluntary
Taxpayers can reduce their federal income tax liability by filing a “zero return”

The IRS must prepare federal tax returns for a person who fails to file
Compliance with an administrative summons issued by the IRS is voluntary

B. The Meaning of Income: Taxable Income and Gross Income

Wages, tips, and other compensation received for personal services are not income
Only foreign-source income is taxable
Federal Reserve Notes are not income

C. The Meaning of Certain Terms Used in the Internal Revenue Code

Taxpayer is not a “citizen” of the United States, thus not subject to the federal income tax laws
The “United States” consists only of the District of Columbia, federal territories, and federal enclaves
Taxpayer is not a “person” as defined by the Internal Revenue Code, thus is not subject to the federal income tax laws
The only “employees” subject to federal income tax are employees of the federal government

D. Constitutional Amendment Claims

Taxpayers can refuse to pay income taxes on religious or moral grounds by invoking the First Amendment
Federal income taxes constitute a “taking” of property without due process of law, violating the Fifth Amendment
Taxpayers do not have to file returns or provide financial information because of the protection against self-incrimination found in the Fifth Amendment
Compelled compliance with the federal income tax laws is a form of servitude in violation of the Thirteenth Amendment
The Sixteenth Amendment to the United States Constitution was not properly ratified, thus the federal income tax laws are unconstitutional
The Sixteenth Amendment does not authorize a direct nonapportioned federal income tax on United States citizens

E. Fictional Legal Bases

The Internal Revenue Service is not an agency of the United States
Taxpayers are not required to file a federal income tax return, because the instructions and regulations associated with the Form 1040 do not display an OMB control number as required by the Paperwork Reduction Act.

African Americans can claim a special tax credit as reparations for slavery and other oppressive treatment
Taxpayers are entitled to a refund of the Social Security taxes paid over their lifetime
An “untaxing” package or trust provides a way of legally and permanently avoiding the obligation to file federal income tax returns and pay federal income taxes
A “corporation sole” can be established and used for the purpose of avoiding federal income taxes

II. FRIVOLOUS ARGUMENTS IN COLLECTION DUE PROCESS CASES

A. Invalidity of the Assessment

A tax assessment is invalid because the taxpayer did not get a Form 23C
A tax assessment is invalid because the assessment was made from a substitute for return prepared pursuant to section 6020(b), which is not a valid return

B. Invalidity of the Statutory Notice of Deficiency

A statutory notice of deficiency is invalid because it was not signed by the Secretary of the Treasury or by someone with delegated authority
A statutory notice of deficiency is invalid because the taxpayer did not file an income tax return

C. Invalidity of Notice of Federal Tax Lien

A notice of federal tax lien is invalid because it is unsigned
A notice of federal tax lien is invalid because it was filed by someone without delegated authority

D. Invalidity of Collection Due Process Notice

A collection due process notice (Letter 1058, LT-11 or Lt-3172) is invalid because it is not signed by the Secretary or his delegate.

A collection due process notice is invalid because no certificate of assessment is attached

E. Verification Given as Required by I.R.C. § 6330(c)(1)

Verification requires the production of certain documents

F. Invalidity of Statutory Notice and Demand

No notice and demand, as required by I.R.C. § 6303, was ever received by taxpayer
A notice and demand is invalid because it is not signed, it is not on the correct form (such as Form 17), or because no certificate of assessment is attached

G. Tax Court Authority

The Tax Court does not have the authority to decide legal issues

H. Challenges to the Authority of IRS Employees

Revenue Officers are not authorized to seize property in satisfaction of unpaid taxes
IRS employees lack credentials. For example, they have no pocket commission or the wrong color identification badge

I. Use of Unauthorized Representatives

Taxpayers are entitled to be represented at hearings, such as collection due process hearings, and in court, by persons without valid powers of attorney

J. No Authorization Under I.R.C. § 7401 to Bring Action

The Secretary has not authorized an action for the collection of taxes and penalties or the Attorney General has not directed an action be commenced for the collection of taxes and penalties

III. PENALTIES FOR PURSUING FRIVOLOUS TAX ARGUMENTS

Are you in compliance with all your tax obligations? If not, call Mitchell A. Port at (310) 559-5259 to discuss how to resolve your tax problems now.