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Scams > Tax
Protestors > Tax
Protestor Theories De-Bunked > Fictional
Legal Basis
Some argue that the Internal Revenue Service is not an agency
of the United States but rather a private corporation, because
it was not created by positive law (i.e., an act of Congress)
and that, therefore, the IRS does not have the authority to enforce
the Internal Revenue Code.
The Truth:
There is a host of constitutional and statutory authority establishing
that the Internal Revenue Service is an agency of the United States.
The U.S. Supreme Court stated in Donaldson v. United States, 400
U.S. 517, 534 (1971), "[w]e bear in mind that the Internal
Revenue Service is organized to carry out the broad responsibilities
of the Secretary of the Treasury under § 7801(a) of the 1954
Code for the administration and enforcement of the internal revenue
laws.
Pursuant to section 7801, the Secretary of Treasury has full
authority to administer and enforce the internal revenue laws
and has the power to create an agency to enforce such laws. Based
upon this legislative grant, the Internal Revenue Service was
created. Thus, the Internal Revenue Service is a body established
by "positive law" because it was created through a congressionally
mandated power. Moreover, section 7803(a) explicitly provides
that there shall be a Commissioner of Internal Revenue who shall
administer and supervise the execution and application of the
internal revenue laws.
Relevant Case Law:
Salman v. Dept. of Treasury, 899 F. Supp. 471 (D. Nev.
1995) - the court described Salman's contention that the Internal
Revenue Service is not a government agency of the United States
as wholly frivolous and dismissed his claim with prejudice.
Young v. I.R.S., 596 F. Supp. 141 (N.D. Ind. 1984) - the
court granted summary judgment in favor of the government, rejecting
Young's claim that the Internal Revenue Service is a private corporation,
rather than a government agency.
The Tax Scam Artist's Lie: 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.
Some argue that taxpayers are not required to file tax returns
because of the Paperwork Reduction Act of 1980, 44 U.S.C. §
3501, et seq. ("PRA"). The PRA was enacted to limit
federal agencies' information requests that burden the public.
The "public protection" provision of the PRA provides
that no person shall be subject to any penalty for failing to
maintain or provide information to any agency if the information
collection request involved does not display a current control
number assigned by the Office of Management and Budget [OMB] Director.
44 U.S.C. § 3512. Advocates of this contention claim that
they cannot be penalized for failing to file Form 1040, because
the instructions and regulations associated with the Form 1040
do not display any OMB control number.
The Truth:
The courts have uniformly rejected this argument on different
grounds. Some courts have simply noted that the PRA applies to
the forms themselves, not to the instruction booklets, and because
the Form 1040 does have a control number, there is no PRA violation.
Other courts have held that Congress created the duty to file
returns in section 6012(a) and "Congress did not enact the
PRA's public protection provision to allow OMB to abrogate any
duty imposed by Congress." United States v. Neff, 954 F.2d
698, 699 (11 th Cir. 1992).
Relevant Case Law:
United States v. Wunder, 919 F.2d 34 (6 th Cir. 1990)
- the court rejected Wunder's claim of a PRA violation, affirming
his conviction for failing to file a return.
Salberg v. United States, 969 F.2d 379 (7 th Cir. 1992)
- the court affirmed Salberg's conviction for tax evasion and
failing to file a return, rejecting his claims under the PRA.
United States v. Holden, 963 F.2d 1114 (8 th Cir.), cert.
denied, 506 U.S. 958 (1992) - the court affirmed Holden's conviction
for failing to file a return and rejected his contention that
he should have been acquitted because tax instruction booklets
fail to comply with the PRA.
United States v. Hicks, 947 F.2d 1356, 1359 (9 th Cir.
1991) - the court affirmed Hicks' conviction for failing to file
a return, finding that the requirement to provide information
is required by law, not by the IRS. "This is a legislative
command, not an administrative request. The PRA was not meant
to provide criminals with an all-purpose escape hatch.
Lonsdale v. United States, 919 F.2d 1440, 1445 (10 th
Cir. 1990) - the court found that the PRA "is inapplicable
to 'information collection request' forms issued during an investigation
against an individual to determine his or her tax liability.
The Tax Scam Artist's Lie: African Americans
can claim a special tax credit as reparations for slavery and other
oppressive treatment.
Proponents of this contention assert that African Americans can
claim a so-called "Black Tax Credit" on their federal
income tax returns as reparations for slavery and other oppressive
treatment suffered by African Americans. A similar frivolous argument
has been made that Native Americans are entitled to a credit on
their federal income tax returns as a form of reparations for
past oppressive treatment.
The Truth:
There is no provision in the Internal Revenue Code which allows
taxpayers to claim a "Black Tax Credit" or a credit
for Native American reparations. It is a well settled principle
of law that deductions and credits are a matter of legislative
grace. See e.g., Wilson v. Commissioner, T.C.
Memo. 2001-139, 81 T.C.M. (CCH) 1745 (2001). Unless specifically
provided for in the Internal Revenue Code, no deduction or credit
may be allowed.
The IRS indicated in News Release IR-2002-08, 2002 I.R.B. LEXIS
30, that it will crack down on promoters of "slavery reparation
tax credit" and "Native American reparations" scams.
See 2002 TNT 17-15 (January 24, 2002).
Further, according to the News Release, the IRS will implement
a new policy under which these reparation claims will be treated
as a frivolous tax return which could result in a potential $500
penalty. Id.
Furthermore, section 7408 provides a cause of action for injunctive
relief to the United States against a party suspected of violating
the tax laws. On March 6, 2002, the United States filed civil
suits to enjoin two tax return preparers (Andrew L. Wiley and
Robert L. Foster) from preparing federal income tax returns claiming
refunds based on a non-existent tax credit for slavery reparations.
United States v. Wiley, No. 3:02-cv-209WS (S.D. Miss. 2002); United
States v. Foster, No. 3:02-cv-133 (E.D. Va. 2002).
Relevant Case Law:
United States v. Bridges, 86 A.F.T.R.2d (RIA) 5280 (4
th Cir. 2000) - the court upheld Bridges' conviction of aiding
and assisting the preparation of false tax returns, on which he
claimed a non-existent "Black Tax Credit.
The Tax Scam Artist's Lie: Taxpayers are entitled
to a refund of the Social Security taxes paid over their lifetime.
Proponents of this contention encourage individuals to file claims
for refund of the Social Security taxes paid during their lifetime,
on the basis that the claimants have sought to waive all rights
to their Social Security benefits.
Additionally, some advise taxpayers to claim a charitable contribution
deduction as a result of their "gift" of these benefits
or of the Social Security taxes to the United States.
The Truth:
There is no provision in the Internal Revenue Code, or any other
provision of law, which allows for a refund of Social Security
taxes paid on the grounds asserted above. In Crouch v. Commissioner,
T.C. Memo. 1990- 309, 59 T.C.M. (CCH) 938 (1990), the Tax Court
sustained an IRS determination that a person may not claim a charitable
contribution deduction based upon the waiver of future Social
Security benefits.
Tax
Protestors Exposed
