A friend of mine claims to know someone who has successfully removed himself from the roles of the IRS and federal government and is not paying taxes on his earned income.
Is this possible?
Every year, beginning around the same time that we get our tax forms and W-2’s, there are bunches of experts on radio hawking books and reports that claim income taxes are a VOLUNTARY thing and that, if you follow the correct procedure outlined in their book, you can avoid paying.
Has anyone here done this? Can it really be done?
I’m not looking for FOAF’s or UL’s (I can’t find anything on Snopes under “IRS” or “income tax”).
I’m sure there are those who have successfully avoided paying taxes and have avoided jail.
You don’t hear about them because they are wisely keeping quiet about the whole deal. Once it becomes public knowledge, then the IRS gets on their backs.
There are a number of books that purport to teach you how to avoid paying federal income tax. I read one last year.
Is it possible? Yes. I have an acquaintance who does not pay federal income tax, yet has an income.
Is it legal/ethical? IMO yes. Again, just my opinion.
Is it easy? Absolutely not. It takes Big Balls[sup]TM[/sup], and the paperwork is pretty intimidating. And if you work for someone, you must convince them not to withhold.
Just like Crafter_man I know someone that has not paid federal or state taxes in many years. He actually runs a very small company. He is a very good friend and I cringe to think what will happen if he gets caught, since he can’t plead ignorance.
I know someone else that constantly underpays and fights and argues with the government. He is several years behind, but he likes playing the system. He is a salesman and works on commission, not salary so that he controls what money goes to the government. In this case, I would love to see him get what is coming to him.
Would you care to address Captain Amazing’s question, Crafter? I’d be happy to take a shot at describing why your friend is breaking the law and/or loony. (I am quite confident the former is true, and the latter is also true in a remarkable number of such cases.)
Of course, I haven’t had any income for two years, either. Been living on student loans. Since it’s an obligation I have to repay, it doesn’t count as “income”.
This is how it works:
1st lets clear something up - you work and taxes are withheld (or pay estimated).
Taxes have to be paid on income - due to a court decision people don’t make income corporations make it. A company’s income is it’s profit which is revinue - expense and that is the only legal definition of income.
Using that loophole the person files what is known as a ‘zero return’ which basically states that he has 0 income and has paid $X dollars and is now due a refund of that $X.
I never did it but it does sound interestering esp to a person who has to write out a check to unc. sam every quarter.
this is where they hang their hat - a person can’t make income so any funds they make from any of the above is not income and not taxed. It is not income for a person.
Read the statute again, dave. It clearly states that “gross income” includes compensation for services, etc. It matters not one whit whether those enumerated items count as “income,” for they indisputably count as “gross income.” The argument is facially ludicrous.
Not exactly minty green it states that gross income means all income …derived (from all those things).
so it includes income from compensation for services and a person doesn’t make income.
It’s a fine line but some believe they found a loophole and use it. I’ve heard claims that not only are people filling zero returns but putting in zero returns for the past years and getting refunded all the tax they paid.
At this point we are playing with words and I am just explaining how it was explained to me. You argument doesn’t disprove how it was explained to me (at least how I read it).
Okay, dave, let’s play with your scenario a little bit. Where is this purported definition of “income” on which it depends?
In the meantime, you might want to read the case summaries here, which are entirely inconsistent with the definition you rely on. This case also lays out the authorities pretty well.
<annoying literalist post>
Hello!
I work a fulltime job and I’ve never paid taxes to the IRS! How did I do it? It’s simple! Location, location, location!
[sup]Of course, my paying taxes to the authorities in my country is another subject of discussion entirely…[/sup]
</annoying literalist post>
k2dave is referring to the “Zero Return” scam promoted by one Irwin Schiff. I’d heard about this guy before. He was interviewed on a local radio station a few years back. IIRC, the DJ and his staff pretty much regarded him as a loon. I concur.
His basic premise is this:
Individuals are not required to pay taxes on income. Why? Because income is defined as revenues and other benefits received by corporations. I, like mintygreen, wonder just where this definition of income exists. In the tax code? The constitution? The Declaration of Independence?
Anyway, if you google this guy’s name, you’ll come up with a bunch of sites that promote his “system.” I’m not sure exactly what this system entails, as it costs something like forty bucks to see it. Plus, he’ll send you a handsomely bound volume (completely annotated, of course) of the relevant tax code for another $78. Or, you can attend one of his seminars for $150, as described here.
Does this work? Well, I’m an accountant, but I’m not a tax professional. I had my fair share of taxation in college, and have done plenty of tax returns for individuals. But it seemed silly to me. This guy claims he hasn’t paid taxes in twenty-plus years, and can show others how they can do the same (for a fee, of course).
But I did find this. According to this site, Schiff has been prosecuted several times for tax evasion, and has lost every single case:
BTW, here’s an interesting quote from the first link:
That figures…
The “Zero Return” system is a scam, and will land you in big trouble if you attempt it and get caught.
