“Tax protestor” is a term we don’t hear too often these days. Nobody really wants to be labeled a tax protestor as it could damage an image and even put your strongest tax arguments to waste. As the Internal Revenue Service has been in a long war for decades with those who have simply denied its authority, the term “illegal tax protestor” has even been forcefully controlled in usage.
Back in 1998, Congress prohibited the IRS from labeling people as “illegal tax protestors” as well as ordering them to delete the “protestor” code from 57,000 of American’s files. Yet, the IRS continues to use this term and similar others, stigmatizing taxpayers and creating IRS employee bias against them. In an audit conducted on the 2011 fiscal year based on the usage of the term “illegal tax protestor” and “similar designations,” 38 cases were found in which 34 taxpayers were labeled “tax protestor.”
“Tax protestors” in history have been those individuals who refuse to pay taxes or file tax returns on based on their mistaken belief that the federal income tax is unconstitutional, invalid, voluntary, or just doesn’t apply to them under many different bizarre arguments. The term even holds the stigma of those small few who refuse to pay taxes or file returns simply because they disagree with the government policy. For example, they refuse to pay taxes that pay for wars, etc.
The reason this has so long been argued is because many who feel they are wrongly labeled “illegal tax protestors” are simply expressing a disagreement with the tax and not necessarily protesting or they believe that the certain tax doesn’t apply to their personal situation. In 2008, the Department of Justice even introduced the term “tax denier,” although this still applies a stigma to those who only believed they were wrongly taxed.
Despite what the IRS titles them, any individual who makes a frivolous tax argument may face a 20% accuracy-related penalty and even as high as 75% civil fraud penalty. If your return is filed late in addition to having frivolous claims, the penalties can be tripled another 75%. There is also a $5,000 penalty for frivolous tax returns and one can also be additionally penalized for sending any other impractical documents. Many of these claims could have been properly filed with the assistance of an IRS tax lawyer or knowledgeable tax professional.
You may be wondering how a taxpayer is supposed to know exactly what deems a frivolous position. The IRS has a published list of frivolous positions. Yet, this doesn’t seem to be readily available, or understandable, unless it is just entirely ignored. A shocking amount of people still make such erroneous claims.
Here are some cases that have recently transpired:
– Scott Grunsted claimed that his wages weren’t taxable because he believed the government could only tax federally connected income and not income from the private sector. He lost.
– In Worsham v. Commissioner, a tax return was filed from 1989 through 2004, then the taxpayer he no longer had to file returns or pay any taxes. The IRS labeled him a “protestor” making frivolous arguments. However, the court only warmed him.
Although one cannot be fully exempt from paying taxes or filing tax returns, they may not always be aware of what deems them responsible for fulfilling these duties. To avoid being subjected to bias from the IRS based on the commonality of such terms used against taxpayers with frivolous claims, an IRS tax attorney can help you correctly file taxes and avoid any uneasiness you have with your personal tax case.
Segal, Cohen & Landis 9100 Wilshire Blvd. Ste. 601E Beverly Hills, CA 90212 (310) 285-3999