Every year around tax time, I hear a few successful and intelligent taxpayers come explain to me that income tax is illegal. When I ask them how this is possible, I am told that the 16th Amendment was never properly ratified. It turns out these taxpayers had attended some seminar or read some book that promotes the 16th Amendment as a fraud on the American people. So I thought it might be useful for us to look a little closer here on TaxView at the various arguments against paying income tax that are out there.
The Benson case: William J Benson stopped paying income tax claiming the 16th Amendment was never properly ratified. He argued that state amendments were not of the exact language of the circulated congressional amendment, making the amendment fail to achieve the three-forths required majority of states. Benson even wrote a book in 1985 titled “The Law That Never Was: The fraud of the 16th Amendment and personal income tax.” History in fact shows that in 1913, Mr. Knox, Secretary of State, proclaimed that the amendment had been ratified by the necessary three-quarters of the states. Mr. Knox was clearly aware of the grammatical and minor changes in text between the various state and congressional amendments.
In US vs House the Court said “The Solicitor of the Department of State drew up a list of the errors in the instruments and taking into account both the triviality of the deviations and the treatment of earlier amendments that had experienced more substantial problems [and] advised the Secretary that he was authorized to declare the amendment adopted. The Secretary did so.”
Benson was sentenced to four years in prison in 1995 but is still very actively promoting his beliefs. Trust me folks, every court out there has ultimately rejected Benson’s arguments.
The Cheek case: John L. Cheek stopped paying income tax claiming the tax laws were unconstitutionally enforced and the he did not have to pay tax. He ultimately lost all his civil claims and was forced to pay the tax. However, he was also criminally charged as well. He claimed he acted without the willfulness required for criminal conviction.
He was able to get his case to the Supreme Court on an issue of criminal intent. Cheek v. United States, 498 U.S. 192 (1991). He had a partial victory on a technicality in that the Court ruled that even though an honest belief may be irrational, if intent was not there, there could be no criminal liability. The Supreme Court remanded the case to the court below so new jury instructions could be given. Cheek’s victory was short lived, in that on remand, he was sentenced to a year in prison in 1991.
There are countless other tax protester arguments other than the 16th Amendment argument. One of my favorite arguments is to place all your assets and income in a foreign trust in a tax free haven with a foreigner in control of all the assets and income. Since only American citizens and resident aliens are taxed on worldwide income, the income deposited into this foreign trust would accumulate tax free.
However, most taxpayers never create the required “irrevocable” trust, but still retain control, either through a revocable trust or through a credit card access to the money, making the scheme illegal and criminal.
All of the promoters of these tax protest arguments and others like them are either serving time in Federal prison or have just been released. Taxes owed were all assessed and either paid or are due. No group or individual has ever successfully challenged the United States to collect income tax form its citizens.
Let’s start with our own local and state elected officials to move forward to legally change the system and to shut down these tax protestors for good. Remember if the tax advice is too good to be true, it isn’t.
(H Christopher Moss of Mount Pleasant , a CPA and attorney, is President and CEO of Infinite Partnerships Inc.)
AS PUBLISHED BY THE POST AND COURIER March 19, 2008
Thank you for joining us on TaxView with Chris Moss CPA
Chris Moss CPA