Tax Schemes by Don Fitch CPA (877)CPA-Help www.paylesstax.com

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Beware of IRS Employment Tax Schemes
(Information provided by the IRS)

Currently, the same arguments concerning the legality of the tax system are being used in an attempt to convince employers they do not have to withhold employment taxes. Employment tax evasion schemes have serious consequences not only for the employers but the employees as well. Employers are subject to both criminal and civil sanctions but employees also suffer because as a result of their employer’s actions they may not qualify for social security, Medicare, or unemployment benefits (or they may qualify for reduced benefits). These programs provide important benefits to many citizens and will continue to grow as more citizens reach retirement age. The health of these programs depends on everyone paying their fair share.

Just the Facts

unemployment tax schemes frivolous nonfiler Scams The United States Constitution, Article 1, Section 8, Clause 1, states "The Congress shall have the power to lay and collect taxes, duties, imposts and excises to pay the debts and provide for the common defense and general welfare of the United States."

unemployment tax schemes frivolous nonfiler Scams The Internal Revenue Service (IRS) was established on July 1, 1862, by an act of Congress.

unemployment tax schemes frivolous nonfiler Scams Congress has charged the IRS with the responsibility of administering and enforcing the Internal Revenue Code and related statutes. Congress enacts the law, IRS enforces it.

unemployment tax schemes frivolous nonfiler Scams The courts have unanimously held there are no Constitutional or legal grounds for failure to file tax returns or failure to pay taxes.

unemployment tax schemes frivolous nonfiler Scams The term voluntary compliance means that each of us is responsible for filing a tax return when required and for determining and paying the correct amount of tax.

unemployment tax schemes frivolous nonfiler Scams Failure to file required tax returns and failure to pay taxes may result in criminal and/or civil penalties.

unemployment tax schemes frivolous nonfiler Scams All United States citizens have the right to appeal their taxes through the U.S. court system. However, you do not have the right to violate and disobey the tax laws.

Persons who are considering involving themselves in these anti-taxation "programs" should consider the consequences. Tax evasion is a serious crime punishable by imprisonment, fines and the imposition of civil penalties. During the last four fiscal years (1997, 1998, 1999, & 2000), there have been 2249 convictions relating to tax and financial-related crimes. Of those convicted, 80.9% were sentenced to prison time, home confinement, electronic monitoring, or a combination thereof.

Arguments

Complicated arguments against the American tax system are built by stringing together unrelated ideas plucked from widely conflicting court rulings, dictionary definitions, government regulations and other sources. Some of the most popular arguments include:

Constitutional Argument - Filing a Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy.

The Truth: The courts have consistently held that disclosure of the type of routine financial information required on a tax return does not incriminate an individual or violate the right to privacy

Sixteenth Amendment Argument - The Constitutional Amendment establishing the basis for income tax was never properly ratified.

The Truth: The Sixteenth Amendment was ratified on February 3, 1913, and it states "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

Religious Arguments - Use the Freedom of Religion clause of the First Amendment by taking a vow of poverty or fraudulently claiming charitable contributions of 50% or more of your adjusted gross income.

The Truth: Taking a purported vow of poverty or claiming fraudulent contributions to filter your money through a church is not legal. Fraudulent religious organizations use funds for personal expenses.

Internal Revenue Code Arguments - (1) There is no Internal Revenue Code that imposes taxes; (2) only "individuals" are required to pay taxes; or (3) IRS can only assess taxes against people who file returns.

The Truth: The tax law is found in Title 26 of the United States Code. Section 6012 of the Code makes clear that only people whose income falls below a certain level do not have to file returns. Section 6201 of the Code states that the Secretary of the Treasury is required to make assessments "of all taxes imposed by this title [Title 26]."

Forming a Trust Argument: - Forming a business trust to hold your income and assets will avoid taxes. A family estate trust will allow you to reduce or eliminate your tax liability.

The Truth: Establishing a trust, foreign or domestic, for the sole purpose of hiding your income and assets from taxation is illegal and will not absolve you of your tax liability. See IRS Publication 2193, "Should Your Financial Portfolio Include 'Too Good To Be Trusts?'"

Some American citizens use these and other clever arguments advocating non-compliance with the tax laws. Don’t be misled. Inspect their promotional material carefully. Aside from being false and misleading, you will notice that it often contains elaborate disclaimers such as "this report is offered as vehicle for discussion and debate and for general informational purposes only. It does not constitute legal or professional advice and should not be relied on as a substitute for proper research and inquiries into original sources of authority." You will also find that many of these "tax experts" don’t even follow their own advice but choose to pay their own taxes.

The IRS is will: (1) To assist taxpayers who have been misled to correct their filing status, and (2) To vigorously pursue prosecution and prison sentences for individuals who violate the tax laws.

Tax Schemes by Don Fitch CPA (877)CPA-Help www.paylesstax.com