As we approach April 15, the deadline for filing federal income tax returns for most individual taxpayers, many people question whether Americans are really required to pay an income tax. Scores of Youtube videos featuring people such as former IRS agent Joseph Bannister claim that the federal income tax is illegal and that Americans cannot be forced to pay taxes to the IRS. In celebration of the Ides of April, let us once again don our tin foil hats and delve into the world of income tax protesters.
One claim made by tax protesters is that there is no law on the books that permits a federal income tax. It is true that the original income tax signed into law by Abraham Lincoln in 1861 was found unconstitutional by the Supreme Court in 1895. This problem was fixed with the ratification of the 16th Amendment in 1913. Some tax protesters argue that the 16th Amendment was never properly ratified. Professor Jonathan Siegel of the George Washington University Law School explains that the 16th Amendment had the same ratification process as other amendments and really is part of the Constitution.
Another claim is that even though the Constitution permits an income tax, no federal law ever enacted one. Some tax protesters claim that even after years of searching that they have found no law establishing an income tax. In truth, they need look no further than Title 26 of the U.S. Code, commonly known as the Internal Revenue Code. Subtitle A, chapter one, subchapter A, part one legally establishes an income tax on individuals. This part also defines that wages are included in taxable income, debunking another claim by some tax protesters.
The “861 argument” against paying income tax is based on a section of chapter one of the tax code. Section 861 relates to resident and nonresident aliens working in the United States as well as foreign corporations. Section 861 does not apply to U.S. citizens unless they have income that has already been taxed according to Professor Siegel. If a U.S. citizen has paid taxes to a foreign government, the federal tax code allows them to use these payments as a credit on their federal income tax. Otherwise Section 861 does not apply to U.S. citizens.
Tax protesters also cite the names of many people who have allegedly “beat the IRS” in court. What they don’t say is that while these people may sometimes avoid jail time, they are not so fortunate when it comes to avoiding civil penalties and being forced to pay back taxes and penalties. Often tax protesters are sent to jail as well.
Vernice Kuglin, a former FedEx pilot who appears in some online videos as someone who beat the IRS in court, actually was acquitted in 2003 of falsifying W-4 forms and failing to pay taxes. Although she did not go to jail, she agreed to pay more than half a million dollars in back taxes and penalties and had her wages garnished by the IRS according to court documents cited on Tax Protester Dossiers. The Memphis Daily News reported in 2007 that the IRS had filed an additional tax lien against her house for $188,025.
Joseph Banister, the IRS agent who was mentioned in the first paragraph, also escaped jail although he was indicted for conspiracy to avoid taxes. According to Tax Protester Dossiers, Banister was acquitted of the criminal charge, but was disbarred from IRS practice. The California Board of Accountancy revoked his CPA license in 2007. The CBA website cites the cause for discipline as “providing erroneous advice to taxpayers” and “improperly advising them that tax returns were not required….”
Banister’s client in the case that led to his disbarment was Walter “Al” Thompson. Thompson refused to withhold taxes from their wages and file tax documents as required by law. According to etax.com, Thompson was convicted, fined $7,500, and sentenced to 72 months in prison on a variety of charges including filing a false return and failing to pay income and Social Security taxes for his employees.
Other tax protesters were also not as lucky as Banister and Kuglin. Sherry Peel Jackson, a Stone Mountain, Ga. resident and former IRS agent, was found guilty on four counts of failing to file tax returns. Jackson appears in some of the internet films espousing tax protest theories. She was sentenced to four years in prison. She surrendered her CPA license to Georgia authorities after her conviction.
Many other tax protesters have gone to jail when they followed their beliefs and failed to file tax returns. Other prominent tax resisters who have gone to jail include Peter Hendrickson, author of “Cracking the Code,” a book of tips on how to avoid paying taxes, who received a 33 month jail term and a $25,000 fine. Larken Rose, a proponent of the 861 argument, received a 15 month prison sentence and $10,000 fine. Irwin Schiff has gone to jail three times for criminal violations of tax laws. He is currently serving a 13 year sentence on tax charges and criminal contempt.
The lesson taxpayers should learn is that if there were an easy way out of paying taxes, nobody would pay them, taxes would not be a major political issue and the Republicans would not put such emphasis on tax cuts. Most obviously, if paying income taxes was not mandatory, people who do not pay taxes would not go to jail. It is not illegal to question the legality of the income tax. It is illegal to refuse to pay taxes or file a return.
Many conspiracy theories are ultimately harmless. Staying inside because of a fear of chemtrails may hamper one’s life, but it won’t ruin it. Believing that that JFK was the victim of a vast conspiracy, that secret forces were behind the September 11 attacks, or that Obamacare requires Americans to receive implants or establishes a secret police force probably won’t cause one to lose their job or family. While it is not against the law to espouse conspiracy theories about the income tax, acting on those theories can cost conspiracy believers years in jails and thousands of dollars in fines and penalties.
Originally published on Examiner.com: