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Just Render Unto Caesar Already: The IRS and Frivolous Tax Arguments
Just Render Unto Caesar Already: The IRS and Frivolous Tax Arguments
Sep 23, 2024 1:28 AM

In an attempt to trap Jesus, some Pharisees and Herodians asked him, “Is it lawful to pay taxes to Caesar, or not? Should we pay them, or should we not?” In response, Jesus said,

“Why put me to the test? Bring me a denarius and let me look at it.” And they brought one. And he said to them, “Whose likeness and inscription is this?” They said to him, “Caesar’s.” Jesus said to them, “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.”

The Pharisees and Herodians “marveled” at Jesus answer, but had they asked an agent of the Roman IRS they likely would have been given a similar answer.

Governments have always had to contend with citizens who make what are considered “frivolous tax arguments” to plying with tax laws. Such arguments rarely work (it’s usually not effective to try to present a creative interpretation of tax law to the people who interpret tax laws) but people keep trying.

The IRS has an entire list of responses to the mon frivolous tax arguments. Here are four of my favorites:

1. Contention: The filing of a tax return is voluntary.

Some taxpayers assert that they are not required to file federal tax returns because the filing of a tax return is voluntary. Proponents of this contention point to the fact that the IRS tells taxpayers in the Form 1040 instruction book that the tax system is voluntary. Additionally, these taxpayers frequently quote Flora v. United States, 362 U.S. 145, 176 (1960), for the proposition that “[o]ur system of taxation is based upon voluntary assessment and payment, not upon distraint.”

The Law: The word “voluntary,” as used in Flora and in IRS publications, refers to our system of allowing taxpayers initially to determine the correct amount of tax plete the appropriate returns, rather than have the government determine tax for them from the outset. The requirement to file an e tax return is not voluntary and is clearly set forth in sections 6011(a), 6012(a), et seq., and 6072(a)

2. Contention: Federal Reserve Notes are not e.

Proponents of this contention assert that Federal Reserve Notes currently used in the United States are not valid currency and cannot be taxed because Federal Reserve Notes are not gold or silver and may not be exchanged for gold or silver. This argument misinterprets Article I, Section 10 of the United States Constitution. The courts have rejected this argument on numerous occasions.

The Law: Congress is empowered “[t]o coin Money, regulate the value thereof, and of foreign coin, and fix the Standard of weights and measures.” U.S. Const. Art. I, § 8, cl. 5. Article I, Section 10 of the Constitution prohibits the states from declaring as legal tender anything other than gold or silver, but does not limit Congress’ power to declare the form of legal tender. See 31 U.S.C. § 5103; 12 U.S.C. § 411. In an opinion affirming a conviction for willfully failing to file a return and rejecting the argument that Federal Reserve Notes are not subject to taxation, the court stated that “Congress has declared federal reserve notes legal tender . . . and federal reserve notes are taxable d

3. Contention: Taxpayers can refuse to pay e taxes on religious or moral grounds by invoking the First Amendment.

Some individuals or groups claim that taxpayers may refuse to pay federal e taxes based on their religious or moral beliefs, or an objection to the use of taxes to fund certain government programs. These persons mistakenly invoke the First Amendment in support of this frivolous position.

The Law: The First Amendment to the United States Constitution provides that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” The First Amendment, however, does not provide a right to refuse to pay e taxes on religious or moral grounds or because taxes are used to fund government programs opposed by the taxpayer. The First Amendment does not mercial speech or speech that aids or incites taxpayers to unlawfully refuse to pay federal e taxes, including speech that promotes abusive tax avoidance schemes.

4. Contention: The “United States” consists only of the District of Columbia, federal territories, and federal enclaves.

Some individuals and groups argue that the United States consists only of the District of Columbia, federal territories (e.g., Puerto Rico, Guam, etc.), and federal enclaves (e.g., American Indian reservations, military bases, etc.) and does not include the “sovereign” states. According to this argument, if a taxpayer does not live within the “United States,” as so defined, he is not subject to the federal tax laws.

The Law: The Internal Revenue Code imposes a federal e tax upon all United States citizens and residents, not just those who reside in the District of Columbia, federal territories, and federal enclaves. The Supreme Court has “recognized that the sixteenth amendment authorizes a direct nonapportioned tax upon United States citizens throughout the nation, not just in federal enclaves.” United States v. Collins, 920 F.2d 619, 629 (10th Cir. 1990) (citing Brushaber v. Union Pac. R.R., 240 U.S. 1, 12-19 (1916)). This frivolous contention has been uniformly rejected by the courts, and the IRS warned taxpayers of the consequences of making this frivolous argument. Rev. Rul. 2006-18, 2006-1 C.B. 743.

“Like moths to a flame, some people find themselves irresistibly drawn to the tax protester movement’s illusory claim that there is no legal requirement to pay federal e tax. And, like moths, these people sometimes get burned,” said a federal court in the case of United States v. Sloan. Burned, indeed: If you file a frivolous tax return you can be fined up to $100,000 and imprisoned up to five years.

So if you’re ever tempted e up with a creative reason for avoiding paying federal taxes, you’re better off just following Jesus advice and “render unto Caesar” before Caesar renders unto you.

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