Patriotic Tax Warriors

[Armando Beaujolais]

Every day there are one or several cases in Tax Court where they have to deal with frivolous tax protestors who end up owing tax, penalties, interest, and fines for filing frivolous returns. I can't believe these people. The IRS picks them off a bunch at a time, yet they keep coming. It's aggravating. Today, Coulton v. Commissioner:

"Petitioner argues on brief that his reliance on materials (the tax protester materials) and seminars provided by Irwin Schiff (Mr. Schiff), constitutes reasonable cause for his failure to file a tax return."

Blah blah blah. As if the court is going to buy that. What's going on with these folks? Is it like a cult deal where they can easily brainwash people because they want so badly for the "you don't have to pay tax" arguments to be true?

What do you say to your clients who come in after listening to some late-night talk show and act like you're ripping them off by preparing their tax return?

[BOB W]

Protestors

That's easy........"GOODBY"...........

[Bird Legs]

Tax Warriors

The last time a client said he attended a seminar and was told that filing tax returns nor paying taxes was required by law, I asked him to go back and ask the speaker how much time he/she spent in prison for not filing. Also ask them if they were reporting the seminar fees as income on their tax return. If so, why, if it is not required.

[jainen]

Voluntary

When clients ask this question, I say, "Yes, the income tax is not legal. The 16th amendment was never ratified. Now, would you like to file your voluntary tax return?"

[Armando Beaujolais]

You have to be firm with those kinds of questions from clients. You have to be confident. However, my aggravation isn't really with the client. The dang tax code is so complicated, they can't hope to understand how things work. I'm aggravated with whoever told them they don't have to pay tax.

I heard a radio interview once with a guy who was touting the "you don't have to pay tax" option (I'm probably admitting I listen to the radio too much and don't have a life). The interviewer was just a bit skeptical and asked the guy "Do you pay tax on your income from the book?" I've never heard such an awkward silence in my life, followed by "Uh, up, um, well, uh, you know, um...."

I tell my clients that I pay my taxes, and in my opinion taxes are too dang high but that's the law. I'm not going to help somebody else commit tax evasion while I'm paying my share. Give me a gray area and you'll see me come to life. Give me a lame reason why taxes aren't a fact of life, and I'll go back to sleep, thank you.

[Snaggletooth]

Smarter than average...

It's amazing how people talk about the income tax being illegal, as if they know priveleged information and they now can take some of their valuable time and inform the rest of us. My first confrontation was in the early 80s in Michigan. Although I wasn't practicing there, my brother made sure I was exposed to a number of these people. These folks believed very much that their information was without flaw. I didn't stay in Michigan long enough to find out what happened to them. Later, some of my own customers heard this same doctrine from a protest group in Birmingham, AL, and a couple of my clients approached me about not paying taxes. I told them the obvious - Dept of Treasury is going to collect these taxes whether legal or not, and you didn't have to be a Solomon to figure it out.

This went on for a couple years, and my clients told me the Federal Court in Birmingham was throwing these guys in jail right and left.

On related idiocy, it's amazing how some of this stuff gets talked about out on the street, and then your customers feel you out. One classic lady in Tennessee spent our entire appointment time complaining about the tax code and laws and our "cruel and oppressive tax system." I did her returns for at least 10 years, and she never had enough income to show any tax liability at all - but she had LOADS of earned income credit. A couple of my Alabama customers want a "flat tax" and think that is the fairest tax of all. However, their own state has virtually a "flat" tax of 5% and withholding tables to match. Thus there is very little tax to pay or refund -- and they always complain that no matter what they do, there is never much of a refund on their state return.

The two most prodigious such ideas of today actually sound very appealing, but wither in the light of reality: 1)The much beloved "flat" tax, and 2)The nationwide Sales Tax. Both of these promise to replace the current code with simpler tax laws. I don't want to beat these follies to death on this post - they deserve a post of their own. But suffice it to say that the "winners" of these proposals at first glance appear to be, respectively, 1) the very wealthiest 10% of taxpayers, and 2)those people who don't spend much money.

I can only say to group 1)yes your taxes are lower, but you'd better worry about the lower income taxpayer paying rent on your rental unit, or buy gas at your store, since he is now paying the tax that you used to pay. To group 2) I must say spending less money is going to do wonders for the economy, and not in a good way.

Tax Protesters? Flat Tax? Illegal Tax code? We hear it all...and from dubious sources.

[JG EA]

Dubious sources

When clients occationally mention this theory of income taxes being illegal, I just say that it must be legal if you can go to jail for not paying your taxes.

I know people who are influenced, who allow themselves to be influenced, by every strange idea they hear on late night radio. Yet, when reputable sources are used they doubt these.It's like mental drugs. Easy to swallow and not so easy to shake off. This type of media uses sensation, scare tactics, pervert legitimate resonable fears and discuss false information instead. This affects certain people. (Perhaps an older person who has lost the ability to reason.)

The old saying is certainly true. Consider the source.

But as far as seminars are concerned, the same type of misinformation has been presented to clients who want to get out of paying taxes in a legal way. I've had clients get so wrapped up in certain outlined schemes at seminars, that they come back with all these ideas to make money from property without paying any taxes. Then I'm in the position to study and explain each idea. Yet, some don't really believe me - the guy at the seminar was very sure.... Because that idea is in their mind, I've lost two or three who went down the road. I got one of these back at one point. When I looked at their return there was nothing unusual done. The preparer just gave the impression that their schemes were being taken into consideration on the return?

One client who really believed his theory could be worked out in practice asked me - why he sees many people building and developing, how do they do it? I just said perhaps they pay taxes - it is possible. I would love to know what he did and how his ideas are being handled.

[geekgirldany]

Flat Tax

I've had several clients asking about the Flat Tax since Neal Boortz came out with his book. I am going to get this book just to see what it is they reading that makes them think it is the best thing for them.