When I ran West Coast operations for a telecommunications company, we hired a new employee. As per company policy, before he started work we had him fill out all the company paperwork. That individual handed the customer service manager a W-4 that said he was a citizen of California and not a citizen of the United States and, thus, exempt from income tax. My manager was confused, so asked me what to do. I told the new hire that he had a choice: He could correctly complete the W-4 or we would hire someone else. We hired someone else.
That was my first exposure to frivolous tax arguments (but definitely not my last). The IRS has just come out with an 80-page release titled, The Truth About Frivolous Tax Arguments. The argument that I saw back in the 1990s is debunked on page 21 of the IRS’ release. This new publication joins the Tax Protester FAQ as rebuttals to the trash being peddled by the unscrupulous.
Meanwhile, from the TaxProf Blog we learn that the new budget contains a proposal to increase the penalties on tax protesters.
Any person who willfully fails to file tax returns in any three years within any five consecutive year period, if the aggregated tax liability for such period is at least $50,000, would be subject to a new aggravated failure to file criminal penalty. The proposal would classify such failure as a felony and, upon conviction, impose a fine of not more than $250,000 ($500,000 in the case of a corporation) or imprisonment for not more than five years, or both.
If there was ever a time to start realizing that the tax protesters are peddling snake oil, it’s now.
Tags: TaxProtester