
The Truth About Frivolous Tax Arguments - rfreytag
https://www.irs.gov/Tax-Professionals/The-Truth-About-Frivolous-Tax-Arguments-Introduction
======
jedberg
I feel bad for the IRS. They don't make the rules, but they get the brunt of
the vitriol because they are the enforcers. And honestly, as enforcers, they
are pretty fair and just, given the resources they have to work with.

They've used "big data" for years to target the tax cheats they think will
give them the best return on their dollar. That's why they don't go after the
mega-rich -- their lawyers delay the process so much that their return is
lower than going after small business owners.

As far as government orgs go, they're probably one of the most efficient.

My personal experience with them was actually very positive, even though I was
there for an audit. They called me in, they said, "here are our concerns", I
said, "here's my documentation". We went back and forth, and mutually agreed
that some things were ok and some were not. We decided I owed some extra
money, but they waived the fees and penalties.

Overall, I think they're one of the better orgs in the government.

~~~
jeremyt
Sorry, but an organization that targeted people because of their political
beliefs, postponed or withheld nonprofit status because of such beliefs, and
is now stonewalling the congressional investigation doesn't count as "one of
the better orgs in the government".

They apparently can't implement their own backup policy, can't comply with
congressional subpoenas, and has generally slow walked and foot dragged
through the entire investigation.

[http://www.motherjones.com/politics/2013/05/irs-tea-party-
sc...](http://www.motherjones.com/politics/2013/05/irs-tea-party-scandal-
congress-nonprofit-obama)

~~~
tryitnow
Here's more Mother Jones reporting:
[http://www.motherjones.com/politics/2013/05/irs-tea-party-
ta...](http://www.motherjones.com/politics/2013/05/irs-tea-party-tax-problems)

I can provide a little context here. When I was in college I was a
conservative Republican. Some right-wing groups in Washington deliberately and
consciously helped me and many other students set up tax-exempt organizations.
Everything was technically OK.

But in retrospect? It's pretty clear their strategy was to create a bunch of
exempt organizations through which to funnel money for political purposes. The
big loophole at that time was that you could be a 501c3 and provide
"education" and remain exempt. Now if ALL of that education just happened to
benefit the right-wing of the GOP, well I guess that's just a coincidence.

Frankly, the IRS was totally right in going after these groups. The problem is
they overreached in some cases. Many of the groups are not following the
spirit of the law and I would wager that many of them are not even following
the letter of the law.

For example, you're not supposed to coordinate with election campaigns if
you're a 501c3, but what if everyone on your board is actively involved in
local Republican politics? Even if your board meeting is technically non-
partisan, when everyone goes out for drinks afterwards (on the non-profit's
tab) you can be sure that election strategy is going to be a topic of
conversation.

For the record, I do not see liberal groups flagrantly disregarding the law in
such a manner, which makes sense because they're ideologically less committed
to dodging taxes.

TLDR: If a bunch of people are organizing around the concept "taxes suck,
let's not pay them!" it's a pretty safe bet that many of them are actually
breaking the law.

~~~
dnautics
Well, I run a 501(c)3, scientific research, ("making an open source anticancer
drug") and the IRS held up my application for a year and a half on what should
have been a very straightforward application. While I was waiting I had to
quit my job at a big research institute to avoid use of time conflicts and
literally drove for Lyft and Uber to make ends meet.

It turned out that the IRS had bolo'd ("be on the lookout") all applications
that used "open source" and although I don't know for sure it seems like that
was what caused the problem.

~~~
DanBC
[https://en.wikipedia.org/wiki/IRS_targeting_controversy](https://en.wikipedia.org/wiki/IRS_targeting_controversy)

> Controversial intensive scrutiny of political groups

> Beginning in March 2010, the IRS more closely scrutinized certain
> organizations applying for tax-exempt status under sections 501(c)(3) and
> 501(c)(4) of the Internal Revenue Code by focusing on groups with certain
> words in their names.[46][47][48] In May 2010, some employees of the
> "Determinations Unit" of the Cincinnati office of the IRS, which is tasked
> with reviewing applications pertaining to tax-exempt status, began
> developing a spreadsheet that became known as the "Be On the Look Out" list.

> The list, first distributed in August 2010, suggested intensive scrutiny of
> applicants with names related to a number of political causes, including
> names related to the Tea Party movement and other conservative causes.[48]
> Eventually, IRS employees in at least Cincinnati, Ohio; El Monte,
> California; Laguna Niguel, California; and Washington, D.C.[49] applied
> closer scrutiny to applications from organizations that:[50][51][52]

> referenced words such as "Tea Party", "Patriots", or "9/12 Project",
> "progressive," "occupy," "Israel," "open source software," "medical
> marijuana" and "occupied territory advocacy" in the case file;[47][48]

------
scott_s
I heard about this list on the most recent episode of Planet Money, which
talks to someone who believed some of these frivolous arguments and faced a
lot of legal problems because of it, and separately, with a lawyer explaining
that yes, these arguments are frivolous:
[http://www.npr.org/podcasts/510289/planet-
money](http://www.npr.org/podcasts/510289/planet-money)

~~~
vonklaus
To be fair, they aren't frivilous. In fact, taxes were illegal or
temporary(given americas hostory).

See my above comment for one of the "rebuttals".

------
tacon
Alas, they have yet to solve the halting problem, or create the universal
debugger:

"This document, including the relevant legal authorities cited, is not
intended to provide an exhaustive list of frivolous tax arguments. Merely
because a frivolous argument is not included in this document does not mean
that it is not frivolous."

------
DanBC
See also the Sovereign Citizen Movement, who use a lot of these frivolous
arguments. (FBI claims some sovereign citizens might be terrorists; Southern
Poverty Law Center says there are about 100,000 hard core believers, with an
extra 200,000 partial believers.)

[https://en.wikipedia.org/wiki/Sovereign_citizen_movement](https://en.wikipedia.org/wiki/Sovereign_citizen_movement)

------
6stringmerc
While this is surely a warranted and useful document in its own right, I can't
help but tell my own story of "Frivolous IRS Wastefulness" as a counter-
balance.

Some in the US might remember a year when the 'Estate Tax' was suspended -
that is, if a relative died and passed along an inheritance amount, it wasn't
taxable like in years prior or once the suspension expired after 2010.

As a recipient of some funds - a mid single digit thousand figure - from my
maternal relative passing, I paid off my credit card and - this was my mistake
- included the amount received in some kind of 'income' field. This set into
motion one of the most ridiculous, patience-testing exchanges in my adult
life. In mid-2011, they sent me a letter wanting a check for $X,XXX.

I wrote back a clear explanation of the error in question - that the funds
were an inheritance and not subject to the taxes being claimed. I sent it via
FedEx, and eventually got a response. They still wanted the entire $X,XXX!

This back and forth - me being as polite and stubborn as possible in writing -
and the IRS kept wanting money, offering no proof why the amount they claimed
owed was actually owed (I asked repeatedly for citations). This went on for a
FULL YEAR. In the second to last correspondence, I had pages and pages of the
2010 tax code included, with relevant highlights, obscure forms...yet still
felt taking a polite (if a bit dense) tone would be better than getting angry,
you know, poking a gorilla with a stick kind of thing.

In the end, I sucked it up and sent them about $150, what they eventually came
down to after all this time, just to get them to shut up. The IRS, without
question, wasted time, resources, and money stubbornly pursuing money that
they weren't entitled to at all.

So, while I respect their power and genuinely believe in their mission to
acquire funds to keep the government working in its basic fashion, I have
absolutely no pity for staff members who have to read through line after line
of bullshit excuses, because they do it too.

~~~
nightski
Hmm, the fact that you were being ignored tells me that you actually were not
getting time, resources, and money allocated to your case. It was probably the
case that they lacked the time, resources, and money to take it seriously and
just kept sending you the default response. Sending many pages of tax code
probably hurt you in the long run.

~~~
6stringmerc
Quite the opposite, they weren't ignoring me. Every single correspondence
demonstrated effort and time on their part to read through, re-calculate some
things, re-package, and send it back hoping I'd just kind of cave in. The
stack of papers is about six inches tall.

------
tzs
When I was in law school I liked to research "tax protestor" and "sovereign
citizen" arguments to practice my legal research skills. The IRS documents
submitted cover much of what I remember of these people's arguments, but not
all. Some other arguments or mistakes I recall being common:

• Quoting from a court case and claiming it says they do not have to pay tax.
The case turns out to be real...but what they are quoting is not from the
court's ruling but rather is from a brief submitted by the losing side.

• Quoting from a court case and claiming it says they do not have to pay tax.
The cited court exists, but the case does not.

• Similar to the above, but the cited court itself does not exist.

• They cite a real case from a real court, but the parts they quote to support
their argument do not exist.

• On those very rare occasions when they cite a real case, from a real court,
and actually quote from the court's ruling, it turns out to be a ruling that
was overturned quickly by a higher court.

• (One of my favorites) Saying that a court lacked jurisdiction because the
flag in the courtroom had a gold fringe, which they say signifies that this is
an "Admiralty Court" and only has jurisdiction over the seas and navigable
waterways.

The article mentioned the argument that the Federal government only has
authority over D.C., Guam, Puerto Rico, etc., but doesn't say _why_ some
people believe that. I've seen two arguments for that belief. The first is
that the Federal government was created by the Constitution specifically to
run D.C. and other Federal territory and was not given any authority over
anything else.

The second is that there is someplace in the tax code that says something like
"For purposes of this section, 'United States' includes D.C., Guam, [...]" and
they think "includes" means "consists of only" (and they ignore the
restriction to "this section" and so think this applies to the whole tax
code).

I've never run into an argument from these people that was not, frankly,
idiotic. If one of their arguments does not immediately fail due to a
fundamental misunderstanding of basic English, it falls apart as soon as you
try to track down original sources.

------
LordKano
One of the items, specifically alleging that the 16th amendment wasn't
properly ratified has some merit but there's an even better counter-argument.

The government will seize your property and incarcerate you if you don't pay.

------
kazinator
It's amazing that some actually tried the equivocation on the word "voluntary"
as far as taking it to court and losing.

------
Animats
If only that applied to pretending that your company is headquartered in a
tiny office in Bermuda.

------
dasil003
The misspelling prompted me to the notion that "frivolous" is a great word
that ought to be more widely applied to a variety of situations in modern
life, but somehow has been pigeon-holed to a legal definition.

~~~
dang
We fixed the typo. I agree, it's a fine word.

------
trekman3
The truth? The truth is, you should stop enabling the waste of my money, you
tax collector scumbags. Maybe if you give me the option of not having my
stolen effort spent on foreign wars, I'll have some respect for you
lickspittles.

~~~
toomuchtodo
Your argument is with politicians, not the tax collector.

The IRS funds democracy. They are not scum.

~~~
melted
Democracy is not really what we have though. We the people really don't have
much say in what's going on.

~~~
techsupporter
To be honest, what do you expect to have happened after roughly 100 years of
neglect and disinterest by We The People who are supposed to be doing the
electing and the watching? All technology seems to have given us is the
ability to be even more polarized and entrenched about the way things "ought
to be" and, thus, dig in our heels unless we get exactly that.

~~~
melted
You need to read "People's History of the US" by Howard Zinn. There never was
a democracy here. The only times when people had the actual power was during
the many armed insurrections, most of which were simply suppressed by force,
but some of which did achieve at least some of their ends.

------
Splines
Trying to get out of paying taxes is like arguing the score of a game after
the game has ended. If you didn't like how it ended up, you should have been
playing it differently.

High level players are able to change the rules.

~~~
dkokelley
I agree to a point, but to further the game analogy, no other game has rules
quite so complicated. When the referees decide that you had a foul in the
first quarter, you begin a complex process of determining what the result of
the game would have been had the foul been caught immediately.

The best "players" have great teams studying the rules. Those without the
resources to do so make their best attempt by using amateur understanding and
common advice.

------
djsumdog
Yes, taxes are stealing, police and fire should be private and pay with your
pocketbook, etc etc blah blah libertarian bullshit.

I like public parks, and schools and fire. I don't like funding wars or
corrupt police, but those are separate issues.

Every high income nation has income taxes. The US is the only high income
nation that still has the death penalty. Let's fix that first.

Ultimately, getting rid of taxes won't change anything. You're talking about a
broken system; the system of debt, war and money. They're all related. If
humanity is going to survive another 10,000 years, we need to deal with the
real issues of consumerism and move away from money entirely.

~~~
dchest
Actually, before fixing dead penalty, the US should resolve the Mars-Milky Way
chocolate bar mix-up.

------
anon_peace
Eliminate the 16th Amendment. This would reduce the power of the IRS

[https://www.law.cornell.edu/constitution/amendmentxvi](https://www.law.cornell.edu/constitution/amendmentxvi)

~~~
orblivion
Serious question - was this person downvoted because of the particular
argument they presented, or because of the quality of the argument? Maybe it's
the latter, and I'm just biased. Hacker News bills itself as a civil, open
minded discussion forum, and by and large it works out great. However I
certainly feel that certain views are not very accepted. If the "taboo" views
were _explicitly_ laid out, that would be fine. At least we'd know where it
stands.

~~~
majormajor
For this particular comment, probably just that it doesn't add anything.
Saying something akin to "get rid of taxes, and the IRS will have less power"
is pretty tautological and not really relevant to most of the arguments linked
(which are far more ... creative ... and bold, in terms of claiming that the
US/IRS already doesn't have power to tax people).

~~~
orblivion
I agree it's not very insightful or anything, but there are plenty of boring
comments lying around that don't get downvoted _that_ much. I imagine it's
partially fueled by people's frustration with this viewpoint. But I guess it's
hard to uproot bias entirely.

~~~
krapp
Green accounts tend to draw more fire as well. Trolling through sockpuppet
accounts seems to be more and more common around here, so people might be
trigger happy.

