No Liability: The IRS Agrees With Me! (On some issues)

Thursday, February 23, 2006

The IRS Agrees With Me! (On some issues)

Post 4 of 11

There are a few pertinent facts that even the IRS would agree with me on: First, when you file a tax return you are thereby obligated to abide by all of the IRS’s rules and regulations. Think about it like this, if you decide to buy a lottery ticket then you are implicitly agreeing to play by the rules that were set-up in order to play the game. The lottery is another voluntary tax that has been quite successful. The Supreme Court stated the principle of voluntarily assuming obligations in the following way based on the obligation of a water company to provide water. The case arose from the failure of the Greensboro Water Supply Company to supply sufficient water to extinguish a fire that destroyed the property of a Mr. Fisher. The argument was convincingly made that when the company undertook the contractual obligation to supply water to the city of Greensboro it also volunteered to take on all the obligations that are thereby implied (including the obligation to supply adequate water to the city firefighters). Meaning that they became liable to all parties who receive the water, not just the city that signed the contract with the company to provide the water.

"An individual may be under no obligation to do a particular thing, and his failure to act creates no liability; but if he voluntarily attempts to act and do a particular thing, he comes under an implied obligation in respect to the manner in which he does it."

Guardian T&D Co. v. Fisher, U.S. Supreme Court, 200 US 57 (1906)

There is uniform agreement among the authors of books and articles about the IRS (including former IRS agents, journalists and members of congress that their strategies are very predictable. Paul Strassels, a former IRS Agent who wrote All You Need to Know About the IRS: a Taxpayers Guide gives some valuable insights into those strategies. First, they will not tell you, the enemy, any of their secrets. They have no interest in or intention to inform you of your rights, what your options are, who they really are, nor what they can and cannot do. Second, once you are under their power you are their tool. They choose audit victims for they’re ability to inspire others to comply. Or, occaisonally, they will force people to defend every single line of their return for statistical data to increase the efficiency of their computers ability to choose appropriate audit victims. One person’s money is secondary in their quest to inspire compliance through fear. But they are not about to ignore an individual, either. When they decide to investigate someone they are going to wield their “authority” over institutions like banks in ways that may not be legal, but which they get away with because the bank is not going to risk incurring the wrath of the IRS for a minor account.

Another fact is that filing a return is far more likely to land you in jail than not filing. In criminal cases, which are relatively rare due to the expense, there are only two possible crimes you can commit when you are not filing a return. If they choose to pursue a non-filer, they will charge the person with both crimes every time, but they cannot prove one until after they prove the other. The crimes are “willful failure to file” and “willful failure to pay.” If they cannot prove you were required to file, then they automatically cannot prove you were required to pay. The strategy I deal with most here is to structure your affairs so you are not required to file income tax returns. In considering whether or not my suggestions might lead to a criminal act, consider the fact that violation of these particular laws must be “willful.” If you can prove that you hold a “good faith belief” that you are not required to file, they cannot prove you acted “willfully.” I suggest that if you consider the strategy I outline in this book, that you personally conduct research into every case I cite and document your process of studying the law to determine your rightful tax status.

The IRS is reluctant to get involved in criminal prosecution because in criminal prosecutions they are forced, for the first time in their bureaucratic process, to abide by the innocent until proven guilty doctrine. Proving guilt is far more expensive than assuming guilt, they know that and do not like it, therefore they are going to pursue their enemies by bureaucratic means whenever possible. This means that if you are resistant to their threats and coercion they may attempt to invoke their suspiciously tyrannical power to confiscate, seize, or garnish your past, present and future assets and earnings. Their confiscatory power is the most substantial threat they have in their bag of tricks. Fortunately, they are true bureaucrats and will be communicating with you long before they ever resort to such crass violence. According to Paul Strassels the IRS is not capricious with their administrative power because they do not want to have it taken away by Congress. They, theoretically, try to have some modicum of justification before they confiscate. Thus, Paul Strassels advice, and my own is, do not ignore the IRS, they are dangerous if you do.