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That Income Tax Issue
by Steven D. Laib, J.D., M.S.
17 September 2003IRS

Perhaps you've heard of Mr. Irwin Schiff, who bills himself as the “nation’s leading authority on income tax and how the government illegally collects it."

A Federal 'strike force' targeting tax reformers?  Activists say teams of IRS agents in 'campaign to silence' them.”  So ran the headline on a report on WorldNetDaily.  Out of habit I clicked through on the link.  Articles and information about tax protesters have been a pet interest of mine for over ten years and I haven’t found a reason to give it up now. 

For quite some time I have collected “lore and legend” of the tax protest movement in the United States.  Some of it was discussed in my Masters thesis, along with the attitudes of Americans towards the income tax.  After taking up law practice in California I have had a number of opportunities to counsel people regarding tax avoidance versus evasion, and was able to investigate first hand a tax evasion scheme that had snared one of my clients.  He was lucky, as the scheme could have caused him severe financial problems later on, regardless of what the IRS might have done, because it placed control of his personal assets in the hands of other people with whom he had no personal relationship.  One was actually planning on leaving the state without giving my client a forwarding address.

The gist of what WorldNetDaily had to say was that at the behest of a Senate committee, the Treasury Department has been targeting people who promote various tax avoidance schemes, that the government and consumer advocates such as San Francisco Examiner columnist Robert L. Sommers have labeled illegal.  One of these promoters is Irwin Schiff, who bills himself as the “nation’s leading authority on income tax and how the government illegally collects it.”  Whether or not Schiff’s opinions are correct is now in court, as Treasury obtained a restraining order against him and his associates. But Schiff has appealed, and the original order is now suspended pending the appeal.  

I’ve encountered Mr. Schiff before, and have heard his often repeated challenge to pay anyone between $50,000 and $100,000 if they can show him a law that requires someone to pay income tax.  I took the opportunity of examining some of the papers, which Schiff has made available on his site.  Unfortunately, not all of the download links worked.  However, I was able to gather that Mr. Schiff’s current position is that the taxing clauses of the US Constitution require that the income tax system be voluntary, and that this was previously expounded in the courts.  He then goes on to contend that the government has been perpetrating a massive fraud on the public ever since the 16th Amendment was enacted, by pretending that tax payments are mandatory.  Part of his position is based on a legal argument that I have never had adequately explained; that income in the “constitutional sense” is different from income in the “ordinary sense.”  As my examination of his papers doesn’t explain it any better than any of the other materials I have seen, I’m not sure he understands it himself. 

The one thing I am sure of is that any good tax lawyer could show Mr. Schiff the code sections.  For example lets check out:

TITLE 26, Subtitle A, CHAPTER 1, Subchapter A, PART I, Sec. 1
    Married individuals filing joint returns and surviving spouses
    There is hereby imposed on the taxable income of -
        every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013...

I’ve omitted the table. However, the last time I checked, there is nothing voluntary about something that is imposed upon you, which is the reason why I underlined “imposed” in the code section.  As an additional comment on this “voluntary system” argument, it should be noted that whenever a Judge or Treasury official is quoted on it, the reference is inevitably to the fact that people are expected to file their 1040 each year.  This is the voluntary compliance referred to.  The government assumes that we file our papers voluntarily in the same way that most of us generally obey the speed limit laws.  The possibility that people may file their tax forms because they are afraid of the consequences of not doing so is ignored.  Then again, we also have highway patrol officers to ticket us if we drive too fast. 

But Mr. Schiff and other anti-tax crusaders do have a point.  Whenever they get up on their soapboxes to challenge Title 26 or the Sixteenth Amendment, there is little or no serious response from government agents.  Joseph Banister, a former criminal investigator with the IRS, says the Service is "non-responsive, unable to withstand scrutiny, tyrannical, and oblivious to the rule of law and the U.S. Constitution."  In the end, the easiest thing for the government to do would be to point out the law, chapter and verse, and put the matter to rest.  There is the possibility that they might believe such a response would add credibility to the people involved, and they may be right.  Still, the point really is that we need to have confidence in government, and if government doesn’t have enough confidence in its own laws to show us how they work, then why should we have any trust in our representatives who enact those same laws. 

As it is, more and more people are becoming critical of the heavy handed way in which many of government’s dealings with the people are managed.  As for the income tax system, we did very well without it before 1913, and could probably do just as well now, except that we might have to rein in a lot of the spending taken for granted by legislators and bureaucrats.  But that is not the point.  The credibility of government is.  The federal income tax is probably the most disliked way of obtaining government funds ever conceived of.  The fact that no one seems truly cognizant of this, and that no one has taken real and effective steps to remedy the problem is a sign of how unresponsive our system is.  The proliferation of tax evasion schemes and the people who advertise them should be a sign that something is wrong with the system and someone should fix it.

Steven Laib is a practicing attorney

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