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IRS may punish frivolous tax evasion arguments severely, Part Two

In our last post we discussed tax evasion arguments that could subject people to significant tax penalties and other consequences. We now continue with a few more.

Some taxpayers have fashioned arguments to support the broad proposition that the Internal Revenue Service lacks the power to tax people. One suggests that the IRS does not have the ability to tax because Congress's creation of the agency was deficient in some regard. Another proposes that a state, such as California, is independent from the United States, and its residents therefore do not come under the authority of the IRS. Both arguments run counter to established law, and neither has been successful.

Other arguments focus on a taxpayer's personal beliefs. Some have asserted that their religion bars them from paying taxes. They often aver that they are morally opposed to providing money for government activities which go against their religious beliefs. While people have the constitutional right to exercise their religion freely, this does not provide an authority to refuse to pay taxes.

Some arguments are fairly strange. A few taxpayers have refused to pay taxes or give their Social Security numbers to employers for withholding purposes because their number contains a certain combination of digits that they find disquieting. This most often occurs with the sequence "666," which some believe is the sign of the devil.

The tax avoidance arguments presented in the last two posts have been proved wrong through litigation and some are outright odd. These two facts should discourage any taxpayer from employing them in the future. But there is a danger that some taxpayers could attempt to use them. It appears that there are entities that promote such arguments and distribute pamphlets to taxpayers. Some even include examples of letters that a taxpayer could use to make such arguments to the IRS.

Taxpayers should know that the IRS warns that taking such positions could subject them to substantial financial penalties and imprisonment. The IRS does not look favorably upon what it calls "frivolous" arguments and will take taxpayers to court if necessary.

Source:, "Strange tax evasion schemes," Blake Ellis, April 6, 2012.

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