I heard this guy named Irwin Schiff on Howard Stern this morning who said that you are not legally required to pay income tax. But he claims that you are required to file a tax return. So he has come up with this “zero” return, reporting zero income which somehow is supposed to be legal.
Has anyone ever heard of this guy or the theory he espouses? He has a web site if you want to check out what he has to say for yourself (he doesn’t say much on his website, he wants you to plunk down money for his book and videotapes, which makes me think it a bunch of bull). http://www.paynoincometax.com
“The truth does not make a good story; that’s why we have art.”
Nice. He starts off with the truth, you are not required to pay income tax but you must fill. [If you don’t make over the minimum, there is no tax so you are not “required” to pay.]
Then the scam starts. His way to report zero income.
If it were that simple I would have seen through things right away, but he claims it is applicable to everyone’s income. He told Howard (who certainly must earn hundreds of thousands, if not millions of dollars every year) that he would fill out Howard’s return for him if he wanted, with zero income and asking for a refund of all federal taxes withheld for the year. Apparently there is some addendum you send in with the return which validates your right not to pay and the zero pay method doesn’t work without this addendum.
Has anyone heard of what it is he is trying to propose to do? I would think it has to be hokum, but I would like to know why it is hokum.
“The truth does not make a good story; that’s why we have art.”
If it were that simple I would have seen through things right away, but he claims it is applicable to everyone’s income. He told Howard (who certainly must earn hundreds of thousands, if not millions of dollars every year) that he would fill out Howard’s return for him if he wanted, with zero income and asking for a refund of all federal taxes withheld for the year. Apparently there is some addendum you send in with the return which validates your right not to pay and the zero pay method doesn’t work without this addendum.
Has anyone heard of what it is he is trying to propose to do? I would think it has to be hokum, but I would like to know why it is hokum.
“The truth does not make a good story; that’s why we have art.”
No, because the guy just talked in circles when Howard tried to nail him down on the specifics of what the addendum would say or how to explain away your W-2s that show you have earned wages.
This guy sounded like a fruitcake who was just trying to sell his books and videos, but I was curious if anyone even knew what concept he was trying to peddle (besides the concept that you can fool some of the people some of the time, ergo make some money from those poor souls).
“The truth does not make a good story; that’s why we have art.”
There are lots of legal ways of reducing your tax bill… for instance, charitable contributions are deductible. Deferring capital gains may be possible. Putting money into a qualified retirement or savings plan (like a 401(k)), etc.
You are certainly required to file (not fill) the income tax forms. Whether you owe taxes depends on whether you have taxable income.
The Sixteenth Amendment gave Congress the power to tax income.
Congress has passed laws that tax income. If you don’t follow those laws, you can be arrested.
There are no “secret loopholes” that allow you to pay nothing. This is, for some reason, a favorite fantasy of the conspiracy-minded: somehow, the Sxiteenth Amendment is fatally flawed, and to hush things things up, no one talks about it. But here’s the secret way to exploit things!
I know of a tax protester who insisted he was a citizen of Pennsylvania, not of the United States, and was therefore immune from taxes levied by the federal government. I know another who claims that Ohio was never really officially made a state, and that mistake invalidates the whole tax scheme. (See http://www.straightdope.com/columns/961206.html and http://www.straightdope.com/columns/970516.html )
There are dozens of permutations on the same theme, but basically, these sorts of arguments boil down to semantics. For example (I’m paraphrasing from one interview I actually paid attention to years ago):
“You see, on the W-4 form you fill out for your employer, you are allowed to enter ‘Exempt’ on line 7, if you can say ‘Last year, I had a right to a refund of all federal tax paid because I had no tax liability…’ Well, go ahead and enter ‘Exempt’ there, because income taxes are voluntary! So of course you had no tax liability last year-- you didn’t have to pay anything if you didn’t want to. So you’re exempt!”
“Now, they make you sign the form and they’ll try to prosecute you for perjury saying that you did owe taxes last year, so to get around that, cross out the ‘under penalty of perjury’ part and sign it. That way, you can assert the defense that you were refusing to swear to anything just so they could prosecute you…” etc.
The guy on Stern this morning’s line was not fundamentally different from any of these other crackpot schemes. From what I heard, his basic argument was that your W-2 form reports “Wages, salaries, and tips,” while the Income Tax Law doesn’t use those words in the definition of “Gross Income” (which the Gummint’ helpfully defines as “Any income from any source whatsoever”). If my guess is right, the guy’s technique is to go ahead and report your W-2 income on your return, then file something like Schedule E, “Supplemental Income and Loss,” and deduct out your wages as being “non-income” in some absurd way. As a result, you declare zero gross income and claim all your withheld tax.
I surfed across the program this morning.
If you listened very carefully to his “guarantee”, all he was guaranteeing was to send you a book if you sent him money. He said it so fast and phrased it so that it sounded as if he was guaranteeing that you could get away with it.
He also sort of skated over the fact that he spent 3 or 4 years in jail for not filing a return at all. He was promoting that action as legal back then. He claimed that the constitution didn’t allow income taxes.
Now he claims the tax code defines income so that wages are excluded.
I really don’t think the lawyers that wrote the code were that dumb.
Do a Google search on “irwin schiff IRS” and watch the hits pile up. In the midst of all the hype and book sales Schiff is promoting through various outlets, you will also discover a few sites that will point out that Schiff has already been nailed by the Feds for practicing what he preached. I believe the technical term for his current role in society is “convicted felon.”
Yeah, he said he went to prison for 4 years, but supposedly that was for failing to file at all. Now he files, but claims he files the “zero” return and doesn’t pay any taxes legally.
I know this guy is not legit, but I want to know what he is trying to pull.
“The truth does not make a good story; that’s why we have art.”
Heh. Here’s another great tax tip for you, courtesy of a resident of the Aleutian Islands: You cannot deduct the entire free market value of a charitably donated sperm whale from your income and claim you are entitled to a five-figure refund.
I don’t know what Schiff actually files (as opposed to what he tells his scam victims that he files).
When he got out of prison, he was old enough to collect Social Security. He has not yet collected any (in eight or ten years) because the IRS keeps collecting it to pay back taxes. His basic scam is to sell books and tapes telling other people how to avoid paying taxes. There are a number of people who believed him and are now in the position of paying large penalties to the Feds for having filed “frivolous” returns. (It is, I believe, $500 per improperly filled out line.) Schiff keeps dodging the IRS (or claiming that he is dodging the IRS while he actually pays like a good boy–I don’t know which), while he makes a nice income selling books that get other people in trouble.
Most of his scams involve twisting the meaning of the English language to claim that the laws don’t mean what they say. He also makes a big deal about the IRS, as a regulatory agency having no authority to make “laws.” Unfortunately for his argument, the IRS is carrying out the express wishes of Congress insome cases (however badly their regulations are interpreted). In some cases, Schiff has denied “regulatory” control for acts that were actually enacted directly by Congress.
To date, no one who has used Schiff’s methods has escaped taxes and fines. Schiff hypes the people who fight the IRS by following his advice, while dropping them from his spiel as soon as they lose and pay up.
Obviously too good to be true. What’s he trying to pull? Lots of money out of your wallet (which he may well pay income taxes on, now…)
Sounds like the guys (somehow affiliated with the Republic of Texas, IIRC) who claim you can create a “land patent sandwich,” with all the proper forms in just the right order, and avoid paying property taxes.
Oh yeah, on Stern’s show, a caller complained about how he did everything that was said in Irwin’s books about filing 0 income and he still got taxes. All Irwin said to him was that he did it wrong. The caller told him that he followed everything Irwin said in his book step-by-step exactly, and still got taxed. After that, Irwin ignored the caller, still saying he was doing it wrong.