Interesting article
Never Pay U.S. Taxes Again - Legally - By Robert E. Bauman
Yes it’s that Robert E. Bauman
Oh wonderful, a new way for our clients to justify not paying taxes. My dad runs a tax business for people with several years unfiled, unpaid, etc. etc. and you’d be amazed (or maybe not) some of the wonderful reasons we get.
There’s the sect that believes that the Constitution doesn’t give anyone taxing authority. The others that believe that there is no “United States” as a nation. The others that believes that they aren’t citizens of anything but “The California Republic” (viva la Bear Flag!). And of course the ones that ask: “Well who gave them the authority to tax me anyway?!” (Article 1, Section 8 of the US Constitution, actually).
I suppose the linked idea isn’t nearly as bad as the others. The group that promotes the idea that the person is a citizen of just their specific state charges thousands and thousands for fake legal documents that the clients can send in to the IRS. I’ve read the docs here and there. . . I laughed. They are poorly formatted, full of bad grammar and spelling, and just dumb. And we have some clients that spent all their money on these dumb things. It’s sad.
Tax-avoidance is a thing of wonder, humor, sadness, and occasionally beauty, isn’t it, DiosaBellissima? As a court reporter in U.S. Tax Court for a number of years, especially when the tax protest movement really peaked in the late ‘80s with the endless succession of phony churches and assorted other weirdness, it was always great fun to see the consternation on peoples’ faces when they waltzed into court and, after explaining to the judge why they didn’t owe taxes (anything from the odd notion that if their name is written in ALL CAPS it’s not a legal identification of them so they don’t have to pay the tax bill sent to them with their name in ALL CAPS, to the ever-classic, “But Judge, I read the Constitution and there’s no income tax provision in it,”), and, although expecting the judge to say, “By golly, I think you’re right! You’re so special and unique, of COURSE you don’t have to pay taxes like the rest of us!”, instead find themselves treated to a lecture on how many ways they’re wrong and why they’re screwed out the wazoo and owe penalties and more penalties and, oh, by the way, there’s a criminal investigation ongoing that has nothing to do with your civil tax trial, so this is only the first step in your torturous downfall at the hands of the taxing authorities.
I did see a few truly creative ways that people came up with to avoid paying taxes, however. The least popular one was the guy who managed to do it by being sent to prison in the Dominican Republic; the guy they dragged out of jail to testify against him was a great witness though, who assured the judge that he was more scared of the IRS than the Colombians, so even though he was convicted of dealing drugs, they couldn’t get him on tax evasion since he’d reported his drug income on his tax returns as “selling fruit.” That was memorable, obviously.
But my favorite of all time was an elaborate scheme in which a person would make a small initial investment – to the tune of under $5,000 – in some form of contracts with companies involved in biomedical research. When the contracts matured, technically the person would owe hundreds of thousands of dollars. But the kicker was that they didn’t use the US dollar for the currency the contracts were drawn up in; they used Brazilian currency, which at that time was undergoing incredible inflation, sufficient that by the time the contracts matured, the actual amount owed would be a few thousand dollars more at most. But in the meantime, they’d written off the hundreds of thousands of dollars their investment was allegedly worth. It didn’t fly with the Tax Court, needless to say, but at least it was inventive!
Frankly, it’s a lot cheaper in the long run to just pay the taxes you owe.
I haven’t paid any US taxes since 2001, myself.
I expected the ending of that plan to be: “Finally, you must die.”
Mama Tiger, we have a rule that if our clients sign on with us for representation, they MUST comply with all tax laws. Naturally, they try every possible way to weasel out of paying taxes (“So. . . how much do I have to make to not pay taxes this year?” “I can’t tell you that.” “Why not?” “Because you have to report how much you make, THAT’S WHY.”). With every new scheme that comes in, I usually just smile and say, “Now honestly- if there REALLY was a way to get out of paying taxes, do you think my dad would be shelling out nearly 50% of his income to the Fed and State each year?” And then they laugh and say I’m right. . . only to come in next week with something dumber.
Isn’t there one that is based on gold fringed flags-that it somehow means a military court or something? That one was my favorite.
Or that Ohio wasn’t really a true state? I think Cecil covered it in one of his books-damned funny stuff.
I didn’t bother to read the article, but ya know the IRS got wise to this many years ago. The IRS can go after your ass if they suspect that the change in citizenship was to avoid paying US taxes. You are not free and clear once you get second nationality and renounce US citizenship.
BTW, I’ve known people who have gone this route.
It’s legal and far easier to marry someone from another country, don’t get them a green card or citizenship, and in an IRS compliant way put all your assets in the spouses name.
The linked article sure doesn’t disclose all the risks of this approach, such as the possibility of being taxed retroactively by the IRS if they, in their infinite wisdom, determine that you renounced your citizenship for the purpose of avoiding taxation. And the tests for determining that are based on income, by default, looking forward from the date of expatriation over a 10-year period.
I can’t find it now, but we had a training session on this issue at my old job, but IIRC if the IRS determines you renounced U.S. citizenship to avoid taxes, you can also be barred from entering the U.S. even temporarily. Not fun if you have family or business interests in the U.S.
Eva Luna, Immigration Paralegal
I came across this one in Debunking the Story of the Buck Act (which is actually more about the “Patriot” movement, but it discusses tax loonies as well):
And then there’s the staple of these discussions, The Tax Resister FAQ — which will not only make your jaw drop, but is good for a hearty chuckle or three as well.
Oh, yes. I remember the first guy who came in and claimed that the gold-fringed flag in the courtroom signified that the trial should be under admiralty law, and tax laws don’t fall under admiralty law. The judge, having never heard of that one before (and the guy appearing more than a little screwy to begin with), was seriously perplexed but assured the idiot that it was his courtroom and he said what system of law they were using in it.
So there was more than that one idiot doing it? Amazing.
Other posters have already chimed in on the tax-avoidance hoax about a gold fringed flag, so I’ll cover this point from the other side.
As I recall, gold fringe is used as a decorative effect on a flag intended to be displayed indoors only. (Fringing suffers badly when exposed to the weather.) That’s all that the fringe means – it simply looks pretty on the flag.
For some completeness, and as an interesting digression, the “military law / admiralty law” claims might have had a toe to stand on, if the flag in question was a military flag / military ensign – some countries use different flags for civilian, government, and military purposes, and some use different flags on land and at sea.
Example 1: Israel uses a flag with a white field and blue devices for civilian and government purposes, but (last I checked, many years ago) it uses a different flag, blue field with white device charged with a blue device, in the military.
Example 2: The UK uses the Union Jack on land, but at sea uses ensigns with a white or red field (depending on purpose) charged with the Union Jack as a canton.
Back to the main point, the USA uses a single flag for all purposes – civilian, government, and military, on land and sea. Any claim that “such and such American flag shows that such and such law applies” is invalid, because there is only one American flag.
(And even if there were different flags, the judge probably merely has to say, “The defendent is right, that’s the military flag, and this is a court on tax law. Baliff, get the correct flag.”)
Uh… perhaps I missed something here.
Wouldn’t it be common sense, rather than a book, that tells you that leaving the United States will get you out of paying US taxes?
I think the idea was that you stay here, but try to make the IRS believe you left. And the consensus among those in the know in this thread (which I’m not one of) seems to be that the IRS is not easily fooled, so this isn’t really a good idea.
Not that laws always conform to common sense either.
I’m always sceptical of these cunning schemes, because my inner sceptic suggests to me:
[ul]
[li]People typically only get out of paying taxes by wriggling through small loopholes in the law[/li][li]Such loopholes tend to get closed as soon as they become a significant revenue loss to the government[/li][li]People smart enough to find loopholes are smart enough to know this[/li][li]Anyone finding a cunning way of dodging taxes will therefore keep it to themselves in the hope of delaying the awful day when someone completes the paperwork to close the loophole[/li][/ul]
The only guaranteed surefire way of dodging taxes is to become a pauper.
Dying. The only sure things are death and taxes - but once estate tax is paid off, dying will take care of the second.
You and your money can move to a place where there is not a huge burden and renounce U.S. Citizenship. You shouldn’t plan on coming back though.
The IRS has a few words to say about this.
Pay your taxes like a good American or you’ll wind up being supported by the rest of us in prison.
I’ve had years where I was exempt for a large chunk of my taxes. I believe the current threshold is 330 days, if you stay out of the US for 330 days you are exempt federal tax on the first 90k of your taxes. I’ve had years where I met that threshold. I bring my papers to my tax guy, file a return and get a refund. Most of my colleagues do the same.
I do know people who fly to Canada or Mexico and then drive to the US because they don’t check passports on those borders. That is just outright fraud.
It may be tough to shirk income taxes, but I’ve been checking my local municipalities online property tax database and Im astonished at the number of people who dont pay property taxes. Some for years and years and still they live in the same house. I know that exemptions can be made, the elderly with no income, veterans etc. But those exceptions cannot account for the pages of delinquent property taxes in one city.
I think our city assessor must be a dope. :dubious:
Rule number one: Anyone who assures you that what they’re doing is legal is doing something illegal.
Your local car dealership doesn’t have to tell you that they are selling cars legally. You don’t see signs at the grocery story saying, “Buy food from us – legally!” The power company doesn’t say, “Connect to us – it’s all perfectly legal.”
Even those who are regulated by law don’t belabor the fact: “Come to Martin, Harding, and Hungadunga – we have the legal right to practice law!”
No, the people who have to insist that that they’re doing is legal are usually swindlers, chain letter mailers, or just plain crooks.