It has been said that in life two things are certain, death and taxes. However, some people hope they can protest their way out of one of those certainties.
The schemes these tax protestors come up with are regularly dismissed as frivolous by the courts. There is even a Internal Revenue Code section that imposes a big penalty for filing a frivolous tax return.
One argument tax protesters use is that the Sixteenth Amendment to the U.S. Constitution (which relates to taxation) was never properly ratified. But the Supreme Court held the Sixteenth Amendment constitutional nearly 100 years ago in Brushaber v. Union Pacific Railroad Company.
The constitutional authority to tax comes from two primary provisions of the U.S. Constitution. Article I, Section 8, Clause 1 states:
The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.
Additionally, the Sixteenth Amendment, ratified on February 3, 1913 says:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
The real authority for income taxes comes from Article I, Section 8, Clause 1. The Sixteenth Amendment really just amplifies the power to tax.
Arguing about whether taxation is constitutional will cause you problems. First, it will cause you monetary damages (i.e. a $5,000 frivolous filing penalty). But it could also send you to jail. One of the more famous tax protesters is Irwin Schiff who has been in jail on three different occasions for his tax protester ideals.
The government, in a tax evasion case, has to prove that you intended to evade taxes (i.e. you were willful). If you honestly believe that our system of taxation is illegal that should negate willfulness right?
The answer is no. Under Cheek v. US, the Supreme Court held that a belief that the tax system is unconstitutional does not negate willfulness,. The reason is because such a belief is not objectively reasonable.
To be clear, the Internal Revenue Code requires that individuals file tax returns if they have income above a certain threshold. The Code reads, “[r]eturns with respect to income taxes …shall be made by …[e]very individual having for the taxable year gross income which equals or exceeds the exemption amount….” For 2013 the personal exemption amount is $3,900.
Like the old saying goes, if it sounds too good to be true – it probably is.