Just in time for the New Year, the Internal Revenue Service has expanded its online rebuttal of frivolous tax arguments to provide some amusing holiday reading.
The 74-page document, The Truth About Frivolous Tax Arguments, disputes some of the more common positions taken by people who claim citizens don’t need to pay income tax. Those include claims about the voluntary nature of the tax system supposedly excusing people from having to pay their taxes altogether, which would certainly be preferable to most folks.
Other dubious contentions include the notion that only foreign-source income is taxable and that Federal Reserve notes don’t count as income. Another fun, but unlikely, argument is that taxpayers can reduce their federal income tax liability by filing a “zero return” that shows no income and no tax liability, even if they really do have taxable income. Yet another interesting contention is that if someone fails to file a tax return, then the IRS is obligated to prepare the return for them and sign it too. Otherwise, the taxpayer is off the hook.
There’s even more chutzpah in the claim that compliance with an administrative summons by the IRS is only voluntary. Since the summons is voluntary, that means there’s no need to bother to respond. The case of Schulz v. IRS provides some basis for this claim, but the IRS said it can still go to court and seek to prosecute people who don't respond to a summons.
Others would contend that wages, tips and other compensation received for personal services don't count as income. The IRS shoots down this argument, as it does in the other cases, by citing laws and relevant cases to show that wages for personal services do indeed qualify as income.
Several tax preparers have been barred for telling clients that any source of income from within the United States should not be taxed and that only income from foreign sources qualifies as taxable. This argument derives from a whopping misreading of a section of the Tax Code, according to the IRS.
Indeed, many of the questionable arguments derive from interesting perspectives on the meaning of the Tax Code, which admittedly has never been a great model of clarity to begin with. The IRS wants to set the record straight now as we head into 2008 and a new tax season basically by saying, “Yeah, we’ve heard that one before - and lots of other excuses too.”
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