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July 17, 2010


Tax Arguments that Will Not Sway the IRS

In 2007, Arthur Farnsworth of Bucks County, Penn., was tried for failing to pay federal income taxes. Farnsworth’s defense was his belief that the income tax was voluntary. His argument failed to sway the jury, and he was sentenced to 27 months in prison.

Try as they might, many people like Farnsworth do their best to get out of paying federal taxes. Under the U.S. tax code, citizens have the right to pay not one cent more than they have to. Nevertheless, some come up with what the Internal Revenue Service calls frivolous arguments to avoid paying altogether.

For instance, the voluntary argument used by Farnsworth comes from the IRS itself, which uses the word in its publications. But the government says the term voluntary means only that taxpayers, not the IRS, can determine how much they owe, not whether they should or should not pay.

Other frivolous arguments include the definition of income, in which some argue that income does not mean wages, tips and compensation, which is payment for labor, and since there is no gain, there should be no tax. The IRS disagrees, saying income is all income from all sources.

The meaning of terms relates to the argument by some taxpayers that they are not citizens of the U.S. but of the state they live in and thus not bound to pay federal taxes. Constitutional claims rely on the argument that the First Amendment allows a person to refuse to pay based on religious beliefs. Both arguments are considered frivolous, and in most cases in which they are used to challenge the tax laws, the IRS wins. Those types of frivolous arguments often land the taxpayer, using those claims, in trouble with a hefty fine, or worse, a prison sentence.

Tax Crimes