posted March 02, 2011 02:29 PM            

Littlecloud, if what that site said were actually true we wouldn't have income taxes on wages as we currently do, would we?
http://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States_Constitution#Income_taxes_pre-Pollock

Read up folks! All the references are cited. Start at the Penn Mutual Case.

Article 1, Section 8 is what is cited as the Constitutional grounds for Congress to levy income taxes on wages:

"The Congress shall have power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; "

posted March 02, 2011 06:21 PM            

Notice what taxes are mentioned in that article and section.

Duties
Imposts
Excises

Nevertheless, Congress must also pass implementing legislation to do so.

No where in article 1 section 8 is Congress given the power to tax incomes. That authority was given by the 16th Amendment. But, there still must be legislation enacted by Congress to implement a tax on incomes...as with every other form of taxiation. That implementing legislation would be found in the United States Code.

So acoustic, did you find any such article and section in the US Code which would prove Congress passed implementing legislation to levy an income tax on individual taxpayers?

I didn't think so acoustic. And, because you didn't, couldn't and won't find any such Code section in the US Code...you screwed up your chance to win your very first argument here.

Btw, the tax mentioned in Article 1, Section 8 is not an income tax but rather a uniform tax levied by aportionment...an equal tax shared by every individual.

posted March 02, 2011 08:57 PM            

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

in other words the DUTIES IMPOSTS AND EXCISES SHALL BE UNIFORM, but congress can also LAY AND COLLECT TAXES - which presumably do NOT have to be uniform since they are not included in the uniformity provision...and

it does NOT say it cannot be a wage or "income" tax.

posted March 02, 2011 10:32 PM            

a direct tax is one paid directly to the government by the persons on whom it is imposed, often accompanied by a tax return filed by the taxpayer.

"No capitation, or other direct Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken"

Article 1, Section 8 did not permit a direct tax...income tax to be levied. If it had, there would have been no need for the 16th Amendment.

As it was, the word income meant a gain or profit from the exchange of goods or services in the marketplace for money and was understood to be a tax on corporations.

You still haven't come up with any authorizing legislation whereby the Congress implemented a direct tax...income tax on individual wages and salaries.

Don't attempt to bring the federal courts into this discussion. No federal judge and no US Attorney has ever been able to identify any Act of Congress requiring any individual citizen to file an income tax return.

Further, every federal judge who hears a case involving individual income taxes has a gigantic conflict of interest because that judge is the direct recipient of taxes paid to the federal government...including income taxes. The same situation applies to US Attorneys who prosecute those cases.

There is no gain or profit derived from wages or salaries. There is an equal exchange value of labor exchanged for money and therefore, no income.

posted March 03, 2011 02:21 AM            

In that same Penn Mutual Indemnity case, on appeal, the United States Court of Appeals for the Third Circuit agreed, stating:

It did not take a constitutional amendment to entitle the United States to impose an income tax. Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429, 158 U. S. 601 (1895), only held that a tax on the income derived from real or personal property was so close to a tax on that property that it could not be imposed without apportionment. The Sixteenth Amendment removed that barrier. Indeed, the requirement for apportionment is pretty strictly limited to taxes on real and personal property and capitation taxes.

It is not necessary to uphold the validity of the tax imposed by the United States that the tax itself bear an accurate label. Indeed, the tax upon the distillation of spirits, imposed very early by federal authority, now reads and has read in terms of a tax upon the spirits themselves, yet the validity of this imposition has been upheld for a very great many years.

It could well be argued that the tax involved here [an income tax] is an "excise tax" based upon the receipt of money by the taxpayer. It certainly is not a tax on property and it certainly is not a capitation tax; therefore, it need not be apportioned. We do not think it profitable, however, to make the label as precise as that required under the Food and Drug Act. Congress has the power to impose taxes generally, and if the particular imposition does not run afoul of any constitutional restrictions then the tax is lawful, call it what you will.[37]

...

The Court stated that "[a]lthough the 'Congress cannot make a thing income which is not so in fact,' [ . . . ] it can label a thing income and tax it, so long as it acts within its constitutional authority, which includes not only the Sixteenth Amendment but also Article I, Sections 8 and 9."[43]

On April 21, 2008, the Supreme Court declined to review the Court of Appeals decision.[45] http://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States_Consti tution#The_Murphy_case

quote:

---

Don't attempt to bring the federal courts into this discussion. No federal judge and no US Attorney has ever been able to identify any Act of Congress requiring any individual citizen to file an income tax return.

---

posted March 03, 2011 09:42 AM            

You cite Pollock v. Farmers' Loan & Trust without understanding what that lawsuit was about.

The discussion at issue is not whether a corporation is required to file an income tax return and pay a tax on their gains or profits but whether an individual is required to file and pay a tax on their wages and salaries.

Pollock sued Farmers' because Farmers' intended to pay a tax to the federal government of 2% of their profits. Pollock was a stockholder in Farmers' Loan & Trust and had standing to sue. Further, this case is not about individual taxes but rather taxes on income/gain/profit derived by dealing in real estate by a corporation.

You blew right by the most important words in the Murphy decision acoustic.

Let me put them back up for you!

The Court stated "the Congress cannot make a thing income which is not so in fact,"...

Further acoustic, the Murphy case was not about taxes on wages or salaries. That case involved taxes on money received in connection with a non-physical injury.

It is well established that a tax can be levied on corporations, trusts, partnerships and other un-natural entities on the gains and profits derived from the employment of their capital in the expectation of a return on their investment.

There is no gain or profit for individuals derived from their wages and salaries. There is an "equal exchange"...two things of equal value are exchanged which value is established by the employer and employee.

Now acoustic, for purposes of taxing money derived from wages and salaries, the IRS computes the value of individuals' labor on behalf of an employer at ZERO...NO VALUE whatsoever. Yet for an employer, wages and salaries paid to employees are fully deductible against what is termed...gross income.

The court has ruled that the 16th Amendment granted no new powers to the federal government to tax. That's true and needs to be understood by every wage or salaried employee.

Law declared unconstitutional

In August 1894, the Wilson-Gorman Act, a tax and tariff measure, was signed into law. It levied a 2% tax on incomes of $4,000 or more, which was only 2% of American taxpayers. The tax was applied to "gains, profits, and income derived from any kind of property, rents, interest, dividends, or salaries from any profession, trade, employment, or vocation," plus inheritances and gifts. The tax was also applied to net profits of corporations, companies, and associations.

There is simply too much wrong with the income tax law as it relates to taxing the wages and salaries of individuals and in the supposed requirment to file..report to the IRS.

First, the information the IRS puts out says plainly that our income tax system is based on "Self Assessment and Voluntary Compliance". That which is "voluntary" cannot be "mandatory".

Further acoustic, no US citizen can be required to waive their rights under the Constitution. Citizens can volunteer to do so but cannot be compelled.

No person can be compelled to be a witness against themself...5th Amendment. Courts have ruled that a person who files an individual tax return and signs that return "is a witness within the meaning of the 5th Amendment".

"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures"...4th Amendment. The government can only get possession of an individuals' "papers" by securing an order of a judge...warrant...unless that individual "volunteers" to make them available.

Now, let's get on with the effort to bring the tax codes of the United States into conformity with the Constitution by adopting the "Fair Tax"...a tax on consumption which is Constitutional.

posted March 03, 2011 11:22 AM            

Facts & Fiction of Frivolous Arguments - Nonfiler Enforcement

When the 16th Amendment to the Constitution was ratified (February 3, 1913) giving Congress the power "to lay and collect taxes on incomes" citizens began arguing that it was not properly ratified and income taxes are illegal. The Courts have repeatedly rejected their argument as frivolous, but unfortunately, some citizens continue to raise arguments in spite of the fact that they have no basis in law. Unscrupulous promoters and their followers have long employed frivolous arguments concerning the legality of the income tax as pretexts to enrich themselves or evade their taxes. Their motivation is usually monetary, not some legitimate purpose or belief.

Anti-taxation groups have been around for a long time, some using the frivolous argument mentioned here. These groups are small but vocal. In the past, organizations like We The People, The Save a Patriot Society, The Pilot Connection, and the Freeman all attracted followings. Though the leadership of these movements used different arguments to gain followers, they all share one thing in common; they received substantial sentences in a federal prison for their activities. Their followers also paid a steep price for following bad advice. Some were prosecuted, many more were involved in years of litigation and ultimately had to pay all taxes owed along with penalties and interest.

Complicated arguments against the American tax system are built by stringing together unrelated ideas plucked from widely conflicting court rulings, dictionary definitions, government regulations and other sources. " The Truth About Frivolous Tax Arguments" is a document that addresses false arguments about the legality of not paying taxes or filing returns. Some of the most popular anti-taxation arguments include the following:

Constitutional Argument - Filing an IRS Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy.

The Truth: The courts have consistently held that disclosure of the type of routine financial information required on a tax return does not incriminate an individual or violate the right to privacy.

Compensation Argument - Wages, tips and other compensation received for personal services are not income because there is allegedly no taxable gain when a person "exchanges" labor for money.

The Truth: The Internal Revenue Code defines gross income as income from whatever source derived and includes compensation for services.

Sixteenth Amendment Argument - As stated above, the Constitutional Amendment establishing the basis for income tax was never properly ratified.

The Truth: The 16th Amendment was properly ratified in 1913, and it states "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

Religious Arguments - Individuals invoke the Freedom of Religion clause of the First Amendment by taking a vow of poverty or by fraudulently claiming charitable contributions of 50% or more of their adjusted gross income.

The Truth: Taking a purported vow of poverty or claiming fraudulent contributions to filter income through a church is not legal. Many fraudulent religious organizations use funds for personal expenses.

Internal Revenue Code Arguments -

1. There is no Internal Revenue Code that imposes taxes;
2. only "individuals" are required to pay taxes; or
3. IRS can only assess taxes against people who file returns; income taxes are voluntary

The Truth: The tax law is found in Title 26 of the United States Code. The requirement to file an income tax return is not voluntary and it is clearly set forth in the Internal Revenue Code (IRC) Sections 6011(a), 6012(a), et seq., and 6072(a). IRS was established July 1, 1862 by an act of Congress. Our system of taxation allows taxpayers to determine the correct amount of tax and complete the appropriate forms "voluntarily" rather than have the government do it for them. However, any taxpayer whose income falls below the statutory amount, does not have to file a return.

Forming a Trust Argument - Forming a business trust to hold your income and assets will avoid taxes. A family estate trust will allow you to reduce or eliminate your tax liability.

The Truth: Although there are legitimate trusts and legitimate reasons why individuals establish trusts, establishing a trust, foreign or domestic, for the sole purpose of hiding your income and assets from taxation is illegal and will not absolve you of your tax liability. The underlying claims for many "untaxing" trust packages rely on other frivolous arguments--arguments that have subjected promoters, as well as willing participants, to criminal penalties.

Some American citizens use these and other arguments advocating non-compliance with the tax laws. Don’t be misled. Inspect promotional material carefully. Aside from being false and misleading, it often contains elaborate disclaimers such as "this report is offered as a vehicle for discussion and debate and for general informational purposes only. It does not constitute legal or professional advice and should not be relied on as a substitute for proper research and inquiries into original sources of authority." Many of these "tax experts" don’t even follow their own advice but choose to file and pay their own taxes.

The IRS will:

Assist taxpayers who have been misled to correct their returns, and
Vigorously pursue prosecution and prison sentences for individuals who violate the tax laws. http://www.irs.gov/compliance/enforcement/article/0,,id=106375,00.html

There's plenty more in depth answers at the link mentioned at the start of this article:
http://www.irs.gov/taxpros/article/0,,id=159932,00.html

posted March 03, 2011 11:58 AM            

Here's the legal argument from the IRS. This is unfortunately quite lengthy, but since you haven't looked for yourself I'll post it.

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

1. Contention: Wages, tips, and other compensation received for personal services are not income.

This argument asserts that wages, tips, and other compensation received for personal services are not income, because there is allegedly no taxable gain when a person “exchanges” labor for money. Under this theory, wages are not taxable income because people have basis in their labor equal to the fair market value of the wages they receive; thus, there is no gain to be taxed. A variation of this argument misconstrues section 1341, which deals with computations of tax where a taxpayer restores a substantial amount held under claim of right, to somehow allow a deduction claim for personal services rendered.

Another similar argument asserts that wages are not subject to taxation where a person has obtained funds in exchange for their time. Under this theory, wages are not taxable because the Code does not specifically tax these so-called “time reimbursement transactions.” Some take a different approach and argue that the Sixteenth Amendment to the United States Constitution did not authorize a tax on wages and salaries, but only on gain or profit.

The Law: For federal income tax purposes, “gross income” means all income from whatever source derived and includes compensation for services. I.R.C. § 61. Any income, from whatever source, is presumed to be income under section 61, unless the taxpayer can establish that it is specifically exempted or excluded. In Reese v. United States, 24 F.3d 228, 231 (Fed. Cir. 1994), the court stated, “an abiding principle of federal tax law is that, absent an enumerated exception, gross income means all income from whatever source derived.” The IRS issued Revenue Ruling 2007-19, 2007-14 I.R.B. 843, advising taxpayers that wages and other compensation received in exchange for personal services are taxable income and warning of the consequences of making frivolous arguments to the contrary.

Section 1341 and the cases interpreting it require taxpayers to return funds previously reported as income before they can claim a deduction under claim of right. To have the right to a deduction, the taxpayer should appear to have an unrestricted right to the income in question. See Dominion Resources, Inc. v. United States, 219 F.3d 359 (4th Cir. 2000). It is a frivolous argument to claim a section 1341 deduction when there has been no repayment by the taxpayer of an amount previously reported as income. The Internal Revenue Service issued Revenue Ruling 2004-29, 2004-1 C.B. 627, warning taxpayers of the consequences of making this frivolous argument.

The Sixteenth Amendment provides that Congress shall have the power to lay and collect taxes on income, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration. U.S. Const. amend. XVI. Furthermore, the U.S. Supreme Court upheld the constitutionality of the income tax laws enacted subsequent to ratification of the Sixteenth Amendment in Brushaber v. Union Pacific R.R., 240 U.S. 1 (1916). Since that time, the courts have consistently upheld the constitutionality of the federal income tax. For a further discussion of the constitutionality of the federal income tax laws, see section I.D. of this outline.

All compensation for personal services, no matter what the form of payment, must be included in gross income. This includes salary or wages paid in cash, as well as the value of property and other economic benefits received because of services performed, or to be performed in the future. Furthermore, criminal and civil penalties have been imposed against individuals relying upon this frivolous argument.

Taxpayers who assert the position that wages are not taxable income, or other frivolous positions, may later claim that they were ignorant of or did not purposely disregard the requirements of the tax laws, such as the requirements to report wages and to withhold and pay taxes. Also, a handful of taxpayers who are criminally charged with violations of the internal revenue laws have avoided conviction.

Taxpayers should not mistake these cases for an indication that frivolous positions that lead to criminal acquittals are legitimate or that the outcome of other cases will protect a taxpayer from sanctions resulting from noncompliance. Furthermore, while a few defendants have prevailed, the vast majority are convicted. Also, even though a taxpayer may be acquitted of criminal charges of noncompliance with Federal tax laws, the Service is still free to pursue any underlying tax liability and is not barred from determining civil penalties. See Helvering v. Mitchell, 303 U.S. 391 (1938); Price v. Commissioner, T.C. Memo. 1996-204.

In November 2004, a federal district court in Ohio barred Michael A. Allamby from preparing federal tax returns and representing taxpayers before the IRS. Mr. Allamby erroneously interpreted the instructions to certain federal tax forms as requiring individuals to report their wages as income only if they invested the wages to earn income. See http://www.usdoj.gov/tax/txdv04733.htm; see also 2004 TNT 215-24 (Nov. 4, 2004). Also, in May 2005, a federal district court in Louisiana permanently barred Richard A. Fuselier and Richard J. Ortt and their organization, Compensation Consultants, from preparing tax returns and promoting tax schemes, such as the “not for profit” scheme, which was based on the premise that wages cannot be taxed. See http://www.usdoj.gov/opa/pr/2005/March/05_tax_085.htm; see also 2005 TNT 94-16 (May 16, 2005).

In January 2005, a federal district court in California permanently enjoined Joseph O. Saladino, founder of an organization known as the Freedom and Privacy Committee, from promoting two schemes: the “claim of right” program and the “corporation sole” scheme (discussed below in this outline). See http://www.usdoj.gov/tax/txdv05005.htm; see also 2005 TNT 15-22 (Jan. 24, 2005). In November 2009, Saladino and three co-defendants were convicted of conspiracy to defraud the United States by interfering with the IRS’ ability to accurately assess and calculate income taxes. A fourth co-defendant was acquitted and a fifth pled guilty in September. Saladino faces up to five years in prison and $250,000 in fines. http://www.oregonlive.com/portland/index.ssf/2009/11/federal_jury_finds_three_guilt.ht ml

Also, in January 2005, a federal district court in North Carolina permanently barred Frank D. Perkinson from selling the “claim of right” program and the “corporation sole” scheme. See http://www.usdoj.gov/opa/pr/2005/January/05_tax_005.htm; see also 2005 TNT 5-16 (Jan. 6, 2005).

In June 2006, Richard M. Blackstock was convicted on thirty-two counts of assisting in the preparation of fraudulent returns based on his involvement in filing various returns claiming deductions for wages, salaries and other compensation under the frivolous “claim of right” theory. See http://www.usdoj.gov/tax/usaopress/2006/txdv06Blackstock_USAO_OK.wpd; see also 2006 TNT129-31 (Jun. 23, 2006).

In March 2008, a federal judge in Michigan barred Donald A. Gray from preparing federal income tax returns. The court found that Gray had been preparing tax returns for his customers based on the theory that wages are not income. The court ordered that Gray be barred from counseling others about the preparation of their returns, from holding himself out as a Certified Public Accountant, and from otherwise interfering with the administration and enforcement of the internal revenue laws. See http://www.usdoj.gov/tax/txdv08163.htm.

Relevant Case Law:

Cheek v. United States, 498 U.S. 192 (1991) – the Supreme Court reversed and remanded Cheek’s conviction of willfully failing to file federal income tax returns and willfully attempting to evade income taxes solely on the basis of erroneous jury instructions. The Court noted, however, that Cheek’s argument, that he should be acquitted because he believed in good faith that the income tax law is unconstitutional, “is unsound, not because Cheek’s constitutional arguments are not objectively reasonable or frivolous, which they surely are, but because the [law regarding willfulness in criminal cases] does not support such a position.” Id. (emphasis added). On remand, Cheek was convicted on all counts and sentenced to jail for a year and a day. Cheek v. United States, 3 F.3d 1057 (7th Cir. 1993), cert. denied, 510 U.S. 1112 (1994).

Commissioner v. Kowalski, 434 U.S. 77 (1977) – the Supreme Court found that payments are considered income where the payments are undeniably accessions to wealth, clearly realized, and over which a taxpayer has complete dominion.

Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-30 (1955) – referring to the statute’s words “income derived from any source whatever,” the Supreme Court stated, “this language was used by Congress to exert in this field ‘the full measure of its taxing power.’ . . . And the Court has given a liberal construction to this broad phraseology in recognition of the intention of Congress to tax all gains except those specifically exempted.”

United States v. Becker, 965 F.2d 383, 389 (7th Cir. 1992), cert. denied, 507 U.S. 971 (1993) – the court found defendant’s contention that wages are not income to be “ridiculous.”

United States v. Sloan, 939 F.2d 499, 500 (7th Cir. 1991), cert. denied, 502 U.S. 1060 (1992) – in rejecting defendant’s argument that the revenue laws of the United States do not impose a tax on income, the court recognized the “Internal Revenue Code imposes a tax on all income.”

United States v. Connor, 898 F.2d 942, 943-44 (3d Cir. 1990), cert. denied, 497 U.S. 1029 (1990) – the court stated that “[e]very court which has ever considered the issue has unequivocally rejected the argument that wages are not income.”

Stelly v. Commissioner, 761 F. 2d 1113 (5th Cir. 1985), cert. denied, 474 U.S. 851 (1985) – the Fifth Circuit affirmed the Tax Court’s holding against the taxpayer’s argument that taxing wage and salary income is a violation of the constitution because compensation for labor is an exchange, not gain. The Fifth Circuit also fined the taxpayer for bringing a frivolous appeal.

United States v. White, 769 F. 2d 511 (8th Cir. 1985) – the court issued a permanent injunction to prevent the promotion of the argument that there is no tax imposed on an exchange of property (labor) in an equal exchange for property (wages).

United States v. Richards, 723 F.2d 646, 648 (8th Cir. 1983) – the court upheld conviction and fines imposed for willfully failing to file tax returns, stating that the taxpayer’s contention that wages and salaries are not income within the meaning of the Sixteenth Amendment is “totally lacking in merit.”

Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th Cir. 1981) – the court rejected as “meritless” the taxpayer’s contention that the “exchange of services for money is a zero-sum transaction . . . .”

United States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981) – the court affirmed Romero’s conviction for willfully failing to file tax returns, finding, in part, that “[t]he trial judge properly instructed the jury on the meaning of [‘income’ and ‘person’]. Romero’s proclaimed belief that he was not a ‘person’ and that the wages he earned as a carpenter were not ‘income’ is fatuous as well as obviously incorrect.”

Callahan v. Commissioner, 103 A.F.T.R.2d 2400, 2009 U.S. App. LEXIS 11342 (7th Cir. May 27, 2009) – the court rejected the petitioner’s argument that only “the gain from wages” (not the wages themselves) is taxable and characterized the argument as “beyond frivolous.” The court also imposed a $4,000 penalty for filing a frivolous appeal.

Abdo v. United States, 234 F.Supp.2d 553 (M.D. N.C. 2002), aff’d, 63 Fed. Appx. 163 (4th Cir. 2003), cert. denied, 540 U.S. 1120 (2004) – the tax preparer prepared returns based on the argument that labor is an exchange for wages and not taxable. The court cited Connor, supra, when finding that the tax preparer misstated the law.

McCoy v. United States, 88 A.F.T.R.2d (RIA) 7116, 2001 U.S. Dist. LEXIS 18986 (N.D. Tex. Nov. 16, 2001), appeal dismissed, 54 Fed. Appx. 406 (5th Cir. 2002) – the court rejected the taxpayer’s argument that wages received were not income and described this position as meritless.

Sumter v. United States, 61 Fed. Cl. 517, 523 (2004) – the court found the taxpayer’s “claim of right” argument as “devoid of any merit” and that section 1341 only applies to situations in which the claimant is compelled to return the taxed item because of a mistaken presumption that the right held was unrestricted and, thus, the item was previously reported, erroneously, as taxable income. Section 1341 was inapplicable to Ms. Sumter, because she had a continuing, unrestricted claim of right to her salary income and had not been compelled to repay that income in a later tax year.

Bigley v. Commissioner, T.C. Memo. 2010-29 – after warnings from both the IRS and the court that his arguments were frivolous and could result in a penalty, the court imposed a $5,000 section 6673(a) penalty on the taxpayer for arguing that his earnings were not taxable income and that he is not a taxpayer.

Pugh v. Commissioner, T.C. Memo. 2009-138, 97 T.C.M. (CCH) 1791 (2009) – stating that the “petitioner advances shopworn arguments characteristic of tax defier rhetoric,” the court rejected the taxpayer’s argument that his wages were not taxable because of section 1341. The court imposed a $15,000 section 6673 penalty for advancing frivolous arguments.

Carskadon v. Commissioner, T.C. Memo. 2003-237, 86 T.C.M. (CCH) 234, 236 (2003)– the court rejected the taxpayer’s frivolous argument that “wages are not taxable because the Code, which states what is taxable, does not specifically state that ‘time reimbursement transactions,’ a term of art coined by [taxpayers], are taxable.” The court imposed a $2,000 penalty against the taxpayers for raising “only frivolous arguments which can be characterized as tax protester rhetoric.”

Wheelis v. Commissioner, T.C. Memo. 2002-102, 83 T.C.M. (CCH) 1543-45 (2002), aff’d, 63 Fed. Appx. 375 (9th Cir. 2003) – the court rejected the taxpayer’s frivolous argument that his wages were not taxable based on his belief that “[p]roperty (money) exchanged for property (labor not subject to tax)” is not subject to income taxation. The court stated that such claims have been “consistently and thoroughly rejected” by the courts and imposed a penalty against Wheelis in the amount of $10,000 for making frivolous arguments.

Cullinane v. Commissioner, T.C. Memo. 1999-2, 77 T.C.M. (CCH) 1192, 1193 (1999) – noting that “[c]ourts have consistently held that compensation for services rendered constitutes taxable income and that taxpayers have no tax basis in their labor,” the court found Cullinane liable for the failure to file penalty, stating that “[his] argument that he is not required to pay tax on compensation for services does not constitute reasonable cause.”

Abrams v. Commissioner, 82 T.C. 403, 413 (1984) – the court rejected the argument that wages are not income, sustained the failure to file penalty, and awarded damages of $5,000 for pursuing a position that was “frivolous and groundless . . . and maintained primarily for delay.”

Reading v. Commissioner, 70 T.C. 730 (1978), aff’d, 614 F.2d 159 (8th Cir. 1980) – the court said the entire amount received from the sale of one’s services constitutes income within the meaning of the Sixteenth Amendment.

______________________

posted March 03, 2011 12:14 PM            

"There can be no question that one who files a return under oath is a witness within the meaning of the Amendment." Sullivan v. United States (US Court Of Appeals) "The information revealed in the preparation and filing of an income tax return is, for Fifth Amendment analysis, the testimony of a 'witness' as that term is used herein." Garner v. United States "The Fifth Amendment provision that the individual cannot be compelled to be a witness against himself cannot be abridged" landmark Miranda decision

So, since the government cannot require you to ever be a witness against yourself, any law requiring the filing of a tax return would be unconstitutional; however, no such law exists. So, how can filing tax returns be voluntary, but we all have been led to believe that they are mandatory...and courts have prosecuted people for a crime (a law) that does not exist? That's a very good question.

So, in summation:

1. The 5th Amendment states that the federal government cannot require anyone to be a witness against himself (all state governments also have similar protection).

2. The Supreme Court has ruled that those who file returns are witnesses against themselves.

3. Congress can make no law abridging the 5th Amendment right.

So, there can be no law requiring the filing of a tax return. And there isn't. So, if you filed a tax return in the past believing it was required, you had a false impression. How you acquired that impression is due to subterfuge by judges, the clever way the the tax code is written as to seem to imply coercion while actually asserting the voluntary nature of the tax system, and press releases every April of tax crimes to further convince the public that voluntary compliance really means compulsory compliance. No other "law" uses the term voluntary compliance. Do I agree to voluntary compliance not to rob, murder, etc? No, only with income taxes, because if my return were not voluntary, it could not be used against me.

posted March 03, 2011 12:21 PM            

Any elementary grade school student can tell you that you cannot define a word by using the word in its own definition!

Silly IRS!

posted March 03, 2011 12:26 PM            

Some argue that taxpayers may refuse to file federal income tax returns, or may submit tax returns on which they refuse to provide any financial information, because they believe that their Fifth Amendment privilege against self-incrimination will be violated.

The Law: There is no constitutional right to refuse to file an income tax return on the ground that it violates the Fifth Amendment privilege against self‑incrimination. In United States v. Sullivan, 274 U.S. 259, 264 (1927), the U.S. Supreme Court stated that the taxpayer “could not draw a conjurer’s circle around the whole matter by his own declaration that to write any word upon the government blank would bring him into danger of the law.” The failure to comply with the filing and reporting requirements of the federal tax laws will not be excused based upon blanket assertions of the constitutional privilege against compelled self‑incrimination under the Fifth Amendment.

The IRS issued Revenue Ruling 2005-19, 2005-1 C.B. 819, which discusses this frivolous argument in more detail, warning taxpayers of the consequences of attempting to pursue a claim on these grounds.

Relevant Case Law:
Sochia v. Commissioner, 23 F.3d 941 (5th Cir. 1994), cert. denied, 513 U.S. 1153 (1995) – the court affirmed tax assessments and penalties for failure to file returns, failure to pay taxes, and filing a frivolous return. The court also imposed sanctions for pursuing a frivolous case. The taxpayers had failed to provide any information on their tax return about income and expenses, instead claiming a Fifth Amendment privilege on each line calling for financial information.

United States v. Neff, 615 F.2d 1235, 1241 (9th Cir. 1980), cert. denied, 447 U.S. 925 (1980) – the court affirmed a failure to file conviction, noting that the taxpayer “did not show that his response to the tax form questions would have been self-incriminating. He cannot, therefore, prevail on his Fifth Amendment claim.”

United States v. Schiff, 612 F.2d 73, 83 (2d Cir. 1979) – the court said that “the Fifth Amendment privilege does not immunize all witnesses from testifying. Only those who assert as to each particular question that the answer to that question would tend to incriminate them are protected . . . . [T]he questions in the income tax return are neutral on their face . . . [h]ence privilege may not be claimed against all disclosure on an income tax return.”

United States v. Brown, 600 F.2d 248, 252 (10th Cir. 1979), cert. denied, 444 U.S. 917 (1979) – noting that the Supreme Court had established “that the self-incrimination privilege can be employed to protect the taxpayer from revealing the information as to an illegal source of income, but does not protect him from disclosing the amount of his income,” the court said Brown made “an illegal effort to stretch the Fifth Amendment to include a taxpayer who wishes to avoid filing a return.”

United States v. Daly, 481 F.2d 28, 30 (8th Cir. 1973), cert. denied, 414 U.S. 1064 (1973) – the court affirmed a failure to file conviction, rejecting the taxpayer’s Fifth Amendment claim because of his “error in . . . his blanket refusal to answer any questions on the returns relating to his income or expenses.”

quote:

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So, how can filing tax returns be voluntary, but we all have been led to believe that they are mandatory.

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2. Contention: Payment of tax is voluntary.

In a similar vein, some argue that they are not required to pay federal taxes because the payment of federal taxes is voluntary. Proponents of this position argue that our system of taxation is based upon voluntary assessment and payment. They frequently claim that there is no provision in the Internal Revenue Code or any other federal statute that requires them to pay or makes them liable for income taxes, and they demand that the IRS show them the law that imposes tax on their income. The stance that is taken is that until the IRS can prove to these taxpayers’ satisfaction, which is effectively impossible because they never will be satisfied, the existence and applicability of the income tax laws, they will not report or pay income taxes. These taxpayers reflexively dismiss any attempt by the IRS to identify the laws, thereby continuing the cycle. The IRS has issued Revenue Ruling 2007-20, 2007-14 I.R.B. 863, discussing this frivolous position at length and warning taxpayers of the consequences of asserting it.

The Law: The requirement to pay taxes is not voluntary and is clearly set forth in section 1 of the Internal Revenue Code, which imposes a tax on the taxable income of individuals, estates, and trusts as determined by the tables set forth in that section. (Section 11 imposes a tax on the taxable income of corporations.)

Furthermore, the obligation to pay tax is described in section 6151, which requires taxpayers to submit payment with their tax returns. Failure to pay taxes could subject the noncomplying individual to criminal penalties, including fines and imprisonment, as well as civil penalties.

In discussing section 6151, the Eighth Circuit Court of Appeals stated that “when a tax return is required to be filed, the person so required ‘shall’ pay such taxes to the internal revenue officer with whom the return is filed at the fixed time and place. The sections of the Internal Revenue Code imposed a duty on Drefke to file tax returns and pay the . . . tax, a duty which he chose to ignore.” United States v. Drefke, 707 F.2d 978, 981 (8th Cir. 1983), cert. denied, Jameson v. United States, 464 U.S. 642 (1983).

In United States v. Kuglin, No. 03-20111 (W.D. Tenn. Aug. 8, 2003), Vernice B. Kuglin faced criminal charges for falsifying Forms W-4 and failing to pay taxes on $920,000 of income between 1996 and 2001, but was acquitted by a federal jury. Kuglin argued that she attempted to determine whether the income was taxable but the Service did not respond to her letters. Government officials issued press releases making it clear that the outcome in Kuglin should be treated as an “aberration” and noting that persons acquitted of criminal tax violations are not relieved of their obligation to pay taxes due. See 2003 TNT 155-12 (Aug. 11, 2003); 2003 TNT 155-13 (Aug. 11, 2003); 2003 TNT 158-2 (Aug. 14, 2003).

The defendant in United States v. Brunet, No. 03-00057 (M.D. Tenn. March 12, 2004), argued he could not find any information that would lead him to conclude the Internal Revenue Code made him liable to file income tax returns or pay taxes. In stark contrast to Kuglin, the jury returned guilty verdicts against Brunet on four counts of tax evasion and the court sentenced him to serve 27 months in prison. See 2004 TNT 51-33 (March 12, 2004).

There have been no civil cases where the Service’s lack of response to a taxpayer’s inquiry has relieved the taxpayer of the duty to pay tax due under the law. Courts have in rare instances waived civil penalties because they have found that a taxpayer relied on a Service misstatement or wrongful misleading silence with respect to a factual matter. Such an estoppel argument does not, however, apply to a legal matter such as whether there is legal authority to collect taxes. See, e.g., McKay v. Commissioner, 102 T.C. 465 (1994), rev’d as to other issues, 84 F.3d 433 (5th Cir. 1996). Kuglin’s case, discussed above, did not prove to be the exception. Despite her acquittal of criminal charges, on September 12, 2004, Kuglin entered a settlement with the IRS in the Tax Court in which she agreed to pay more than half a million dollars in back taxes and penalties. Kuglin v. Commissioner, Docket No. 21743-03; see 2004 TNT 177-6 (Sept. 13, 2004).

In August 2004, an appellate court affirmed a federal district court preliminary injunction barring Irwin Schiff, Cynthia Neun, and Lawrence N. Cohen from selling a tax scheme that fraudulently claimed that payment of federal income tax is voluntary. United States v. Schiff, 379 F.3d 621 (9th Cir. 2004), cert. denied 546 U.S. 812 (2005); see http://www.usdoj.gov/tax/txdv04551.htm. Also, in October 2005, the trio was convicted by a Las Vegas jury for various criminal charges relating to the federal income tax laws. See 2005 TNT 205-4 (Oct. 25, 2005). Schiff received a sentence of more than 12 years in prison and was ordered to pay more than $4.2 million in restitution to the IRS; Neun received a sentence of nearly 6 years and was ordered to pay $1.1 million in restitution to the IRS; and Cohen received a sentence of nearly 3 years and was ordered to pay $480,000 in restitution to the IRS. See http://www.usdoj.gov/opa/pr/2006/February/06_tax_098.html; 2006 TNT 38-67 (Feb. 24, 2006); 2006 TNT 24-62 (Feb. 3, 2006).

In September 2008, a federal district court in Nevada sentenced Irwin Schiff to 11 months in prison for criminal contempt. The court reinstated 15 criminal contempt convictions imposed during Schiff’s 2005 trial for promotion of tax defier schemes. The 11-month sentence is to be served consecutively to the 151-month sentence previously imposed for Schiff’s conspiracy and tax convictions. See http://www.usdoj.gov/tax/txdv08789.htm.

In June 2009, Lawrence Cohen, an associate of Irwin Schiff, pled guilty to aiding and assisting in the preparation of a false Form 1040. Cohen faces up to three years in prison and a $250,000 fine. Cohen also agreed to pay restitution for the taxes owed. http://www.justice.gov/opa/pr/2009/June/09-tax-596.html.

In 2007, a dentist, Dr. Elaine Brown, and her husband, Ed Brown, were prosecuted in a federal district court in New Hampshire of conspiracy to defraud the federal government and, as to Dr. Brown, income tax evasion, among other charges. These taxpayers claimed that they were not subject to taxation and that the IRS never responded to their demands for a legal explanation. In an opening statement to the jury, Ed Brown proclaimed, “We will once and for all show beyond the shadow of a doubt . . . that the federal income tax system is a fraud.” They failed to do so, however, as the jury convicted the Browns on all charges. See http://www.usdoj.gov/tax/usaopress/2007/txdv07WEM_Browns.pdf. After being sentenced in April, they refused to surrender themselves to authorities and were arrested at their home on October 4, 2007, to begin serving their prison terms.

On January 29, 2009, the Browns were indicted on eleven obstruction and weapons-related charges in connection with the 2007 trial and standoff. In July, the Browns were convicted on all counts. The most serious counts were carrying and possessing firearms and destructive devices in connection with and in furtherance of crimes of violence and carried a possible life sentence, with a thirty-year minimum sentence. http://www.atf.gov/press/releases/2009/07/070909-bos-edward-and-elaine-brown-convicted.html. On October 2, 2009, Elaine Brown was sentenced to thirty-five years in prison, and on January 11, 2010, Edward Brown was sentenced to thirty-seven years in prison. http://www.justice.gov/usao/nh/press/october09/AH_TO_Brown.html; http://www.justice.gov/usao/nh/press/january10/AH_TO_Brown.html.

Relevant Case Law:
United States v. Gerads, 999 F.2d 1255, 1256 (8th Cir. 1993), cert. denied, 510 U.S. 1193 (1994) – the court stated that the “[taxpayers’] claim that payment of federal income tax is voluntary clearly lacks substance” and imposed sanctions in the amount of $1,500 “for bringing this frivolous appeal based on discredited, tax-protester arguments.”

Schiff v. United States, 919 F.2d 830, 833 (2d Cir. 1990), cert. denied, 501 U.S. 1238 (1991) – the court rejected Schiff’s arguments as meritless and upheld imposition of the civil fraud penalty, stating “[t]he frivolous nature of this appeal is perhaps best illustrated by our conclusion that Schiff is precisely the sort of taxpayer upon whom a fraud penalty for failure to pay income taxes should be imposed.”

Wilcox v. Commissioner, 848 F.2d 1007, 1008 (9th Cir. 1988) – the court rejected Wilcox’s argument that payment of taxes is voluntary for American citizens, stating that “paying taxes is not voluntary” and imposing a $1,500 penalty against Wilcox for raising frivolous claims.

United States v. Bressler, 772 F.2d 287, 291 (7th Cir. 1985), cert. denied, 474 U.S. 1082 (1986) – the court upheld Bressler’s conviction for tax evasion, noting, “[he] has refused to file income tax returns and pay the amounts due not because he misunderstands the law, but because he disagrees with it . . . . [O]ne who refuses to file income tax returns and pay the tax owing is subject to prosecution, even though the tax protester believes the laws requiring the filing of income tax returns and the payment of income tax are unconstitutional.”

Packard v. United States, 7 F. Supp. 2d 143, 145 (D. Conn. 1998), aff’d, 198 F.3d 234 (2d Cir. 1999) – the court dismissed Packard’s refund suit for recovery of penalties for failure to pay income tax and failure to pay estimated taxes where the taxpayer contested the obligation to pay taxes on religious grounds, noting that “the ability of the Government to function could be impaired if persons could refuse to pay taxes because they disagreed with the Government’s use of tax revenues.”

United States v. Sieloff, 2009 WL 1850197, 104 A.F.T.R.2d 2009-5067 (M.D. Fla. Jun. 25, 2009) – the court rejected the taxpayer’s argument that he was not obligated to pay income taxes because the tax system is based upon voluntary assessment and payment.

United States v. Scott, 2009 WL 1439187, 103 A.F.T.R.2d 2009-2336 (D.D.C. May 20, 2009) – the court imposed sanctions of $1,500 under section 6673 against husband and wife petitioners and rejected their argument that payment of income tax is voluntary.

Horowitz v. Commissioner, T.C. Memo. 2006-91, 91 T.C.M. (CCH) 1120 – the court imposed sanctions in the amount of $10,000 in rejecting the taxpayer’s arguments, including the frivolous claim that he could find no statute or regulation making him liable for an income tax.

Bonaccorso v. Commissioner, T.C. Memo. 2005-278, 90 T.C.M. (CCH) 554 (2005) – the taxpayer filed zero returns based on the argument that he found no Code section that made him liable for any income tax. The court held that the taxpayer’s argument was frivolous citing to section 1 (imposes an income tax), section 63 (defines taxable income as gross income minus deductions), and section 61 (defines gross income). The court also imposed a $10,000 sanction against the taxpayer under section 6673 for making frivolous arguments.

posted March 03, 2011 02:50 PM            

When time permits, I am going to look up the jane & john doe`s who won the "voluntary " arguement.

That most likely would be my deciding factor. I know I can`t ask but am curious to who does not voluntarily contribute to the IRS coffers

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What we do for ourselves dies with us. What we do for others and the world is immortal"~

posted March 03, 2011 03:42 PM            

After Judge Vinson ruled O'BomberCare unconstitutional, O'Bomber and his administration continued to implement their plan. What they didn't do is appeal Judge Vinson's decision to a higher court.

Judge Vinson has just told O'Bomber to either appeal his decision or...stop implementing O'BomberCare.

Judge who declared Obamacare unconstitutional sends message to White House with second ruling
By Amanda Carey - The Daily Caller | Published: 2:18 PM 03/03/2011 | Updated: 2:22 PM 03/03/2011

Roger Vinson, the U.S. federal judge who ruled Obamacare unconstitutional in its entirety, has ruled again on the health-care law. On Thursday, Judge Vinson issued a stay on his earlier ruling that the law could not be enforced. In doing so, he sent a clear message to the Obama administration: Appeal my decision to a higher court or stop implementing the law.

When Judge Vinson ruled on Jan. 31 that the health-care law was unconstitutional, the administration followed up by filing a motion for clarification rather than filing an official appeal. Vinson’s ruling criticized the administration for that action.

“During the four-plus weeks since entry of my order, the defendants have seemingly continued to move forward and implement the act,” Vinson wrote. “While I believe that my order was as clear and unambiguous as it could be, it is possible that the defendants may have perhaps been confused or misunderstood its import.”

Now, Vinson has given the Obama administration an ultimatum to either stop implementing the law, or appeal it — presumably to the Supreme Court. It is unclear what will happen if the administration ignores that order.

Following Vinson’s initial ruling, Florida and Alaska stopped implementing the law. Several other states have lawsuits pending challenging its constitutionality
http://dailycaller.com/2011/03/03/judge-who-de clared-obamacare-unconstitutional-sends-message-to-white-house-with-second-ruling/

posted March 03, 2011 03:56 PM            

quote:

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Originally posted by jwhop:

After Judge Vinson ruled O'BomberCare unconstitutional, O'Bomber and his administration continued to implement their plan. What they didn't do is appeal Judge Vinson's decision to a higher court.

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Sounds like his predecessor.

posted March 03, 2011 05:31 PM            

i have been researching this for years and so far though the arguments are seductive i have not heard of ANYONE winning in court with them...

posted March 03, 2011 06:13 PM            

The IRS is filing a lot fewer prosecutions for willful failure to file these days. They've lost too many in court and those get publicized and hurts their "compliance rate".

Interestingly, lots of the cases I remember citizens winning have disappeared from the Internet. Imagine that!