The Internal Revenue Service recently unveiled its annual “dirty dozen” of top tax scams for 2015. The twelfth scam made public was frivolous tax arguments. The IRS takes such frivolity seriously.
Last month, the IRS released its 2015 version of The Truth About Frivolous Tax Arguments. The publication addressed forty-four such arguments. Some are relatively well know and others are more obscure. The courts have sided with the IRS time after time in every case. The IRS levies and collects big fines.
Here are some examples of the frivolous arguments.
- The filing of a tax return is voluntary.
- Wages, tips, and other compensation received for personal services are not income.
- Federal Reserve Notes (i.e., greenbacks) are not income.
- Federal income taxes constitute a “taking” of property without due process of law, violating the Fifth Amendment.
- The Internal Revenue Service is not an agency of the United States.
- A “corporation sole” (or ministerial trust) can be established and used for the purpose of avoiding federal income taxes.
I actually encountered a corporation sole a few years ago. A corporation sole is actually a legitimate entity used in the course of protecting church property and is tax exempt. A person who was not a client of mine came to me because he had gotten ordained online and claimed his airline pilot wages were tax free income of the corporation sole. The IRS sent him a notice alerting him that he was in deep and hot water. I referred him to a good tax attorney, who could help him plead the “dumb and dumber” argument. (P.S., I don’t take airline pilot clients anymore; they have too much time to come up with crazy schemes in the pilots’ lounge with other pilots.)
Some of these arguments are about as old as the Internal Revenue Code. Nut jobs still keep making them. Some folks will never learn.