April 17, 2012 : Becky Brown - H&R Block
Creative Arguments that Won’t Get You Out of Paying Taxes
Ed Note: Happy Tax Day! If you’ve already filed, congratulations. If you haven’t, don’t freak — you have plenty of options. Tax ‘season’ as we know it ends today, and we assume that you’ve been less than enthused about tackling your taxes at some point over the last few months. But some people take that lack of enthusiasm to a whole new level.
Let’s be honest: we all have moments of “I don’t wanna!” when it comes to filing and paying taxes. If you’re like me, you have a brief hissy in the privacy of your own home. Then, your dog looks at you like you’re insane, and you move on with your life. However, some folks take “I don’t wanna!” to new lengths – like to the Supreme Court.
The IRS has seen it all. Here are some of the more interesting arguments people have actually used in court to try to avoid taxes.
“Income tax is voluntary – and I’m not volunteering my dollars.”
A 1960 ruling said, “[o]ur system of taxation is based upon voluntary assessment and payment, not upon distraint.” While most people don’t know “distraint,” many haven’t been afraid to take the term “voluntary” and run with it.
However, the usage of “voluntary” in the ruling refers to citizens’ opportunity to take a first stab at figuring their tax. Basically, you get to do the math instead of just paying whatever the IRS says you owe. But you still have to do the math, and you’re still on the hook for paying up.
“What is income, reaaaalllly?”
This one sounds like a college philosophy assignment gone astray. The basic argument is that when you exchange labor for money, there’s no taxable gain. And no taxable gain means nothing to tax, so you don’t owe tax.
Another version of this argument is that you’re exchanging your time for money, and the Internal Revenue Code doesn’t specifically tax “time-reimbursement transactions.” So, you don’t owe tax.
As you might guess, neither of these arguments holds water. The IRS feels pretty confident in their definition of income, and the courts agree.
“Taxes are unconstitutional.”
The First and Fifth Amendments are popular go-tos for these arguments. However, freedom of religion and freedom of speech don’t necessarily mean freedom from taxes. And the filing process is generally considered to be due process.
The courts have shot down many flavors of this argument, including:
• Taxes are against my religion, or would be used to fund programs that go against my beliefs.
• Income tax is the equivalent of taking my property without due process.
• I plead the fifth – if I paid taxes, I’d incriminate myself.
While we don’t have clear data on the infamous “I don’t wanna” argument, I feel comfortable saying it probably doesn’t work, either. What creative arguments do you wish you could use?
[Image: s_falkowt via Flickr]