5th amandment?

Factual Questions
1

Hi Cecil,

I remember reading a book by Irwin Schiff a few years ago. Something just doesn’t make sense.

Someone can rob, steal, kill, and murder in US and he’ll never have to confess. When cops arrest them, the cops will tell them that they have a right to remain silent.

Yet, someone can make honest money and then he has to confess his deed to government in the form of tax return. Government will then use his confession to find various reasons and justification to then prosecute the guy.

Why?

One difference that I can think of is that making honest money is legal and hence I am not incriminating my self when I made that confession and hence government can force me to do it.

This has some problems:

  1. What happen if I am a drug dealer or if I am a thief? Should I specify my source of income in my tax return? If so, then all thieves will easily get caught. By filling my tax return I will incriminate my self then?
  2. One possible “solution” is that perhaps I would fill my tax returns but leave out aspects that might incriminate my self. But this leads to another problem. I need to know which info is likely to incriminate me. That means I have to be a legal expert, scanning 64k US code and figure out which one to blank out on tax return. That is still sub standard to the right criminals have. Criminals have right not only not to incriminate themselves, but also to remain silence. Also governments are obligated to tell them their right. Hence, a criminal doesn’t have to worry about whether what he said tend to be incriminating or not. He just shut his hole up.
  3. Why can’t government declare stealing lawful but taxable by say, 700%? That way thieves have to confess too? By not having to confess, thieves have low probability of getting caught and hence are less likely to be punished for their deeds, unlike taxpayers that are punished by tax almost surely? It’s as if making honest money worst than crime because you don’t even have a right criminals have?
  4. Why arguing like this can get fined $50K in court? I thought punishments fits the crime. Is wasting courts’ time that expensive compared to stealing?

As a victim of thieves and some other “real” crime before I just bugged me to no end.

To what extend are we allowed to refrain from saying anything that can be used against us in court of law anyway?

Anyway, I am no longer in US and am not planning to go back. I am glad I don’t have to have that problem anymore ever. But when I look back and see about a so called self claimed free country that want to free other worlds too it makes me wonder a lot.

2

The courts have consistently rejected arguments based on the 5th Amendment, starting with the decision of the Supreme Court in United States v. Sullivan, 274 U.S. 259, 263-64 (1927).

The IRS has published an information bulletin summarising the various court decisions which have ruled against this argument: Internal Revenue Bulletin - April 4, 2005 - Rev. Rul. 2005-19.

As well, I personally wouldn’t rely on Irwin Schiff’s understanding of the law, considering that he’s been repeatedly found to be in breach of the tax law and the courts have always rejected his interpretations of the Constitution and the tax laws:

Convictions for 1974 and 1975 tax years

Convictions for 1980 through 1982 tax years

Civil tax problems for tax years 1979 through 1985

Convictions for 1997 through 2002 tax years

He is currently serving a federal jail sentence of 12 years and 7 months. Since he was 78 at the time of sentencing, he will likely die in prison.

3

A drug dealer could honestly fill out a tax return and list his occupation as ‘salesman’ and fulfill his obligation to the government without incriminating himself. There is nothing in the tax return that specifically identifies the products he is selling, unless he is audited.

4

It has been argued many times that the income tax is wrong for that reason. If for the gov is going to collect income taxes and have the system work it cannot be on a honor system.
The feds could not get Al Capone on any of his illeagal activity except income tax. He ended up being one of the few “white collar” criminals sent to Alcatraz a Maximun Security Prison.

5

I’ve wondered why the form asks for occupation at all, unless it’s an attempt to trip you up. “Lawyer, eh? And you say you earned $20,000 last year? Audit-time for you, bunky.”

6

And just to chime in, this shows the right answer in a situation where people often are confused about evidentiary privileges—they aren’t an absolute shield from any question whatsoever. (Those would be privileges against testifying)

(also, because it’s a pet peeve of mine-- this may be one of the weird cases in which it’s actually right to say you’re invoking the fifth–as you can never invoke a privilege unless you’re being compelled to testify. Tax returns are mandated by law, and so this is probably actual fifth amendment, rather than merely stating that people would invoke the fifth if compelled to answer.)

Back on topic, to properly invoke the privilege-the question asked has to risk giving up something privileged (i.e. incriminating.) (“did you rob the bank?” “fifth”). You can’t just refuse to do anything/to reveal nonincriminatory information. It’s not illegal to earn money. Hence, it’s not incriminating to report how much you earned.
As noted above, the classic case on the issue is United States v. Sullivan, 274 U.S. 259, 264 (1927). I think the language there helps explain the rule: the Supreme Court stated that the taxpayer “could not draw a conjurer’s circle around the whole matter by his own declaration that to write any word upon the government blank would bring him into danger of the law.” (as quoted on the IRS page on tax evasion).

7

But, as you say, the income tax isn’t on the honor system. Capone figured that out. It’s a crime to willfully fail to file a tax return. As they’re completed under penalty of perjury, it’s a crime to lie on one.

And we have audits, etc, etc, to check the returns submitted. The system, overall, seems to work pretty well, all things considered.

8

Actually the audit system works very poorly. The IRS even admits that it will go after smaller companies and individuals because the large corporations and rich people have money to fight the IRS. This will tie the IRS up for years and years. The IRS pulls random files but still CHOOSES which ones of those pulled to audit. Of course they will audit rich people but purposely choose audits they can win, simply because, as the IRS they are short staffed and can’t catch everyone

Therefore audit system, like so many other things is against poorer people.

9

Well, I was talking about the tax system in general (opposing the argument that it fails because it’s on the “honor” system). But anyway:

I haven’t myself heard of IRS agents talking about the audit system. The only person I’ve talked to who knows about how the IRS picks who to audit (he taught a class I was in, and used to work for the service) made it very clear he was restricted by (at least) contract from describing anything about it, and took that very seriously. So I’d love to know who you’ve found who talks about the audit system.

One might also argue the rich have more to lose by a prosecution for tax fraud. Hurts more to be in jail if you can’t be on the yacht/make movies/etc, etc, etc. Furthermore, rich people pay more taxes (overall), and hence the IRS is likely to recover more through an audit of them. As you note, however, the poor are less likely to fight the system. (not clear if this is true–although IANAL, I’ve read some tax court cases that went at least to the court of appeals over relatively small sums of money), myself, don’t know the answer to who the IRS chooses to audit, how they do so, or how it works. But the incentives don’t seem to clearly favor either side.

10

More or less. Various businesses are expected to have different costs and expenses. Others have a lot of cash coming in, thus more chance for cheating. Still others are often hobbies disquised as a Sch C.

11

I read somewhere once where all the old time mafioso used to put “privileged” down as their occupation when filing tax returns, so that’s what I’ve always put.

12

I’m still tempted, now that I’m retired, to write “Unemployed Spy”* where it asks for my occupation. (I just checked, and last year I just left it blank. No response yet from the IRS on that.)

*points to anyone who recognizes why I got it from

13

Your occupation at the bottom of your 1040 is optional, but not so with your occupation code at the top of your schedule C.

14

“You’ve been a very nice man so I’ll mark it ‘unemployed spy’”

I got it, my friend.

15

I suspect you’re thinking of ‘Total honor system’, which completely rely on the truthfullness of the participants. But I think that ‘honor system’ is also fairly used in situations where most participants aren’t monitored, but if a random check or happenstance uncovers their duplicity then they face penalties and consequences, or their refusal to follow rules. (Failing to file a tax return when the circumstances require one would seem to qualify for that.)

16

I got it too.

It’s from Heinlein’s Have Spacesuit, Will Travel. Kip’s father was arguing with a man from the IRS about the, uh, quirky way he filled out his tax form.

17

Well, I’m only interpreting what the poster I quoted described. But at base, I don’t think the system fundamentally relies on people being honest. I think it works better when they are, but there are significant checks and balances (for example, the service can presumably check your reported income by comparing the deduction taken for salaries by an employer=the salaries reported by employees). I take the “honor system” to mean one in which the principal check against fraud is the good faith/honesty of the filer. I don’t think that’s how the IRS does it.

18

[hijack]
A friend of mine runs a small, one-man carpet cleaning business. Last year he got audited–for the first time in his 20 years in business–imediately after running a few ads on the local Air America affiliate (he got a slew of nasty phone calls, too).

Naturally he suspects some right-wing operatives sicced the IRS on him and I can’t say that I blame him.
[/hijack]

19

Yes. This is a very surprising reality by itself.

This shows that the laws are powerless against, well, anything carefully organized and planned. Murder, rape, stealing, robbery, extortion…

The only law that is strong enough to capture al capone is the law against “the good guy,” namely income tax. Scary ha?

Also earning money is not income and hence 5th amandement does not apply. That is a correct argument I must admit, but boy… You see how unfair and strange it is? Government gives privilege to some action (like murder and stealing) BECAUSE it is a crime. Great. It’s just great. Now our intuitive notion that a crime is something government encourage is a bad thing.

Also, say I were Al Capone. What should I write in my tax returns then?

If I said I am a salesman, then I will have to explain how in the earth I am earning $1 million dollars per day selling what? So even putting salesman will actually put me in reasonable risk of self incriminating.

Perhaps the issue is how much the 5th allow me to limit self incriminating statement?

For example, a drug dealer must put “salesman” but the fifth allow them not to put “drug dealers”.

Is that how things go?

So what’s the limit? Do Americans have to provide lists of their cayman island’s trust or can they simply say, look, I think I earn $5000 per year. If IRS don’t believe me then proof me wrong. If I am audited, I’ll just argue that I have reasonable reason to believe that my offshore’s company’s income doesn’t count, etc.

Still it’s tough to balance how much we are allowed to disclose. A balancing act that thieves, burglars, and robbers, doesn’t have to worry.

20

As far as I can recall, the 1040EZ (the basic one) doesn’t ask for an occupation at all.