Posted on 07/15/2007 7:25:50 AM PDT by badgerlandjim
Then they are on borrowed time.
Well, if they die while awaiting arrival of the IRS people, I guess they've won, in a sense. If it takes 10 years for the agency to really get serious, I have a hunch some folks would be far ahead to simply stop complying. Point out the error of my thinking, please.
Maybe; maybe not.
What will you say if the IRS doesn’t go after Cryer in a civil proceeding? Not saying they won’t, but I’d be a bit surprised if the IRS choses to let sleeping dogs lie.
Aren’t you ignoring the question ?
The question is whether WAGES are INCOME. The argument is that just as selling something for the same price you paid for it does not constitute INCOME, neither do wages, since you have simply sold your labor for something of equal value.
Having no INCOME other than WAGES, your INCOME would be zero and you would have no tax due and no requirement to file a tax return.
However, if I come over to your place and paint your garage in exchange for you coming over to my place and tuning my piano, we are each supposed to declare that as income. Something seems to be fundamentally amiss here. Wonder how the IRS would regard the participants in a good old barn-raising.
10 years is the statute of limitations. As they get closer to that date they ramp up collection actions. They have nothing to lose by waiting because the interest and penalties rack up and it is a pretty good return on their money.
There is to have a civil proceeding to establish a liability for taxes and late filing and late payment penalties. Cryer would have to pay his taxes due then sue for a refund if he wants to argue his tax liability.
Among the penalties related to filing returns and paying tax that may be imposed are: (1) the penalty for late filing imposed by Code Section 6651. See Section 606.3(b). (2) the penalties for failure to pay tax imposed by Code Section 6651. See Section 606.3(c). (3) the accuracy-related penalties imposed by Code Section 6662. See Section 606.4. (4) the civil fraud penalty imposed by Code Section 6663. See Section 606.5. (5) the penalty for filing a frivolous income tax return imposed by Code Section 6702. See Section 606.6. (6) the penalty for paying with a dishonored check imposed by Code Section 6657. See Section 606.10. (7) the penalties imposed on tax return preparers under Code Section 6694. See Section 620.7. (8) the penalty imposed for failure to sign returns or furnish identification numbers imposed on preparers by Code Section 6695. See Section 620.3. (9) the penalty for failure to file a partnership return or the failure to include information required to be shown on a partnership return imposed by Code Section 6698. See Section 402.8. (10) the penalty for aiding and abetting an understatement imposed by Code Section 6701. See Section 620.7.
Then if the IRS want to go for the works could attempt civil fraud
An important issue for the civil fraud penalty is the effect of a prior conviction or acquittal of a tax crime. Generally the IRS will pursue a taxpayer on criminal charges first and thereafter pursue civil penalties because otherwise the taxpayer could assert during the civil investigation his Fifth Amendment privilege against incrimination. In a situation involving criminal proceedings followed by civil proceedings, the legal doctrine of collateral estoppel may apply. Collateral estoppel provides that an issue necessarily decided in a previous proceeding (the first proceeding) will determine the issue in a subsequent proceeding (the second proceeding) but only as to the matters in the second proceeding that were actually presented and determined in the first proceeding. There exists for tax fraud, however, a significant difference between the first criminal fraud proceeding and the second civil fraud penalty proceeding, and that difference is the burden of proof to establish fraud. In a criminal proceeding, the government must establish fraud beyond a reasonable doubt, which is a difficult burden of proof to meet. In contrast, in a civil fraud penalty case, fraud need be proved by only clear and convincing evidence, which is less than the beyond a reasonable doubt standard, but clear and convincing evidence is more than the mere preponderance of the evidence standard. Because of the differences in the burden of proof, the following operating rules apply: (1) Conviction for tax evasion collaterally estops the taxpayer from contesting the existence of fraud for purposes of the civil fraud penalty because a finding of criminal fraud beyond a reasonable doubt necessarily establishes proof of civil fraud by clear and convincing evidence. [30] (2) Acquittal of tax evasion does not collaterally estop the government from proving civil fraud by clear and convincing evidence because the acquittal established that proof of fraud did not exist beyond reasonable doubt, but that does not mean that proof of fraud by clear and convincing evidence does not exist. Helvering v. Mitchell, 303 U.S. 391 (1938). (3) Acquittal or conviction of filing a false return or statement or of aiding or assisting in the preparation of a false return is not dispositive for purposes of the civil fraud penalty because intent to evade tax, which is an element of the fraud penalty, is not an element of either crime under Code Section 7206(1) or 7206(2). [31] Above is extracted from a tax reference book
http://www.quatloos.com/taxscams/meaning_of_income.htm
The Meaning of Income:
Taxable Income and Gross Income
The Tax Scam Artist’s Lie: Wages, tips, and other compensation received for personal services are not income.
This argument asserts that wages, tips, and other compensation received for personal services are not income, because there is allegedly no taxable gain when a person “exchanges” labor for money. Under this theory, wages are not taxable income because people have basis in their labor equal to the fair market value of the wages they receive; thus, there is no gain to be taxed.
Some take a different approach and argue that the Sixteenth Amendment to the United States Constitution did not authorize a tax on wages and salaries, but only on gain or profit.
The Truth:
For federal income tax purposes, “gross income” means all income from whatever source derived and includes compensation for services. I.R.C. § 61. Any income, from whatever source, is presumed to be income under section 61, unless the taxpayer can establish that it is specifically exempted or excluded. In Reese v. United States, 24 F.3d 228, 231 (Fed. Cir. 1994), the court stated, “an abiding principle of federal tax law is that, absent an enumerated exception, gross income means all income from whatever source derived.
The Sixteenth Amendment provides that Congress shall have the power to lay and collect taxes on income, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration. U.S. Const. amend. XVI. Furthermore, the U.S. Supreme Court upheld the constitutionality of the income tax laws enacted subsequent to ratification of the Sixteenth Amendment in Brushaber v. Union Pacific R.R., 240 U.S. 1 (1916). Since that time, the courts have consistently upheld the constitutionality of the federal income tax. For a further discussion of the constitutionality of the federal income tax laws, see section IV. of this outline.
All compensation for personal services, no matter what the form of payment, must be included in gross income. This includes salary or wages paid in cash, as well as the value of property and other economic benefits received because of services performed, or to be performed in the future.
Furthermore, criminal and civil penalties have been imposed against individuals relying upon this frivolous argument.
Relevant Case Law:
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-30 (1955) - referring to the statute’s words “income derived from any source whatever,.
the Supreme Court stated, “this language was used by Congress to exert in this field ‘the full measure of its taxing power.’ . . . And the Court has given a liberal construction to this broad phraseology in recognition of the intention of Congress to tax all gains except those specifically exempted.
Commissioner v. Kowalski, 434 U.S. 77 (1977) - the Supreme Court found that payments are considered income where the payments are undeniably accessions to wealth, clearly realized, and over which a taxpayer has complete dominion.
United States v. Connor, 898 F.2d 942, 943-44 (3d Cir.), cert. denied, 497 U.S. 1029 (1990) - the court stated that “[e]very court which has ever considered the issue has unequivocally rejected the argument that wages are not income.
Lonsdale v. Commissioner, 661 F.2d 71, 72 (5 th Cir. 1981) - the court rejected as “meritless” the taxpayer’s contention that the “exchange of services for money is a zero-sum transaction . . . .
McCoy v. United States, 88 A.F.T.R.2d (RIA) 7116, 2001 U.S. Dist. LEXIS 18986 (N.D. Tex. Nov. 16, 2001) - the court rejected the taxpayer’s argument that wages received were not income and described this position as meritless.
Cheek v. United States, 498 U.S. 192 (1991) - the Supreme Court reversed and remanded Cheek’s conviction of willfully failing to file federal income tax returns and willfully attempting to evade income taxes solely on the basis of erroneous jury instructions. The Court noted, however, that Cheek’s argument, that he should be acquitted because he believed in good faith that the income tax law is unconstitutional, “is unsound, not because Cheek’s constitutional arguments are not objectively reasonable or frivolous, which they surely are, but because the [law regarding willfulness in criminal cases] does not support such a position.” Id. (emphasis added). On remand, Cheek was convicted on all counts and sentenced to jail for a year and a day. Cheek v. United States, 3 F.3d 1057 (7 th Cir. 1993), cert. denied, 510 U.S. 1112 (1994).
Reading v. Commissioner, 70 T.C. 730 (1978), aff’d, 614 F.2d 159 (8 th Cir. 1980) - the court said the entire amount received from the sale of one’s services constitutes income within the meaning of the Sixteenth Amendment.
United States v. Richards, 723 F.2d 646, 648 (8 th Cir. 1983) - the court upheld conviction and fines imposed for willfully failing to file tax returns, stating that the taxpayer’s contention that wages and salaries are not income within the meaning of the Sixteenth Amendment is “totally lacking in merit.
United States v. Romero, 640 F.2d 1014, 1016 (9 th Cir. 1981) - the court affirmed Romero’s conviction for willfully failing to file tax returns, finding, in part, that “[t]he trial judge properly instructed the jury on the meaning of [’income’ and ‘person’]. Romero’s proclaimed belief that he was not a ‘person’ and that the wages he earned as a carpenter were not ‘income’ is fatuous as well as obviously incorrect.
Abrams v. Commissioner, 82 T.C. 403, 413 (1984) - the court rejected the argument that wages are not income, sustained the failure to file penalty, and awarded damages of $5,000 for pursuing a position that was “frivolous and groundless . . . and maintained primarily for delay.
Cullinane v. Commissioner, T.C. Memo. 1999-2, 77 T.C.M. (CCH) 1192, 1193 (1999) - noting that “[c]ourts have consistently held that compensation for services rendered constitutes taxable income and that taxpayers have no tax basis in their labor,” the court found Cullinane liable for the failure to file penalty, stating that “[his] argument that he is not required to pay tax on compensation for services does not constitute reasonable cause
Isn't this wonderful? Yet another TP who has no clue.
Looked at from a transactional standpoint, your cost basis in your labor is zero. You then exchange your labor, in which you have a cost basis of zero, for something of value, usually money. All of the money (or other things of value) you receive in exchange for your labor is "profit" or gross income.
And, no, you may not deduct your personal living expenses, as deductions from gross income are a matter of legislative grace, and the legislature has not seen fit to make personal living expenses either deductible from gross income or attributable to the basis of anything for tax purposes.
It's much easier to understand that income is "all income from whatever source derived" and that income means any clearly realized accession to wealth. You can then rather easily deduce that all TP clap-trap and voodoo magic words are just that.
But, good luck to all of you who think you are flying under the radar based on whatever goofy theory you subscribe to today or next month or next year, you're gonna need it. In over 90 years, NONE, that is exactly zero, of the dozens of stupid TP "arguments" have succeeded in court in defeating tax or penalties or interest.
3 or 4 TPs out of thousands have avoided federal prison based on a Cheek "I was too stupid to know any better" defense. They still have to pay the tax, penalty and interest, not to mention their criminal defense attorney and often their divorce attorney.
By Larry Neumeister
Associated Press Writer
New York
Tuesday, July 17, 2007 05:05:28 AM PT
A federal judge dismissed charges Monday against 13 former KPMG employees in what the government had described as the largest criminal tax case in U.S. history, saying the prosecutors prevented them from presenting their defenses.
U.S. District Judge Lewis A. Kaplan said the dismissal was necessary because the government coerced KPMG to limit and then cut off its payment of the onetime employees' legal fees.
(for link see: http://marketplace.publicradio.org/apheadline_detail.php?story_id=D8QDQ37G0&group=ap.online.headlines.business)
This is one good reason the tax protesters rail and struggle against the IRS. Once the agency trains its guns on you you're pretty much screwed. Whether you are right or wrong you simply don't have the means to defend yourself. The TPs fervently believe that we have an out of control tax situation in this country and are determined to stand against it, no matter that they are almost certainly sure to be defeated. For what it's worth, I'm on their side and applaud them for their efforts.
Yeah, that’s nice. The government screwed up. What else is new?
It has nothing whatsoever to do with the fact that the multitude of bogus TP “arguments” are ALL frivolous.
Every single idiotic TP “argument” advanced on this thread will do nothing other than buy the subscriber a lot of financial and personal pain.
But it doesn't even kick in until your tax return is filed.
So if you wait nine years before filing, the 10 year statute
kicks in at that time, giving the IRS 10 years to go after you then.
Yes, but technically it is after the assessment date which can follow the filing date by several weeks.
I am talking about the cases that truly would set a standard for change! I am talking about the small group of people that have courage and a vision to stand up and fight for whats right! If we continue to ignore the facts of life here we will not be living free much longer!!! Read the constitution, Bill of rights, and the proclamation of independance and show me where personal income tax is legal? It only talks about corporate tax NOT PERSONAL! Bias rulings or not we all as americans are obligated to make sure our courts are run with our free rights in place first!No gray areas!!!
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