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Posts Tagged ‘Tax Protesters’

Lacking the Wisdom To Pay Taxes

April 18th, 2012 1 comment

The Doctor of Philosophy (Ph.D) typically takes several years for one to acquire. The term “philosophy” is in reference to its Greek meaning, “love of wisdom.”

Apparently, not all Ph.D recipients have the widsom to pay their taxes. Earlier this week, the Department of Justice announced its charges brought against David Gilmartin, an economist with a Ph.D, including tax evasion, obstruction of the IRS, failure to file a tax return, and failure to pay taxes.

From the DOJ press release:

Despite being paid compensation for every year between 1989 and 2010, Gilmartin failed to file tax returns with the IRS as required, and failed to pay more than $500,000 that he owed in taxes. As alleged, Gilmartin took various steps to evade his tax obligations and obstruct the IRS’s ability to collect back taxes, including:

  • Submitting IRS forms to certain employers in which he falsely and fraudulently claimed to be exempt from taxes, in order to cause the employers not to withhold taxes;
  • Providing someone else’s Social Security number to his employer and representing that it was his;
  • Refusing to provide an employer with his Social Security number, citing a purported “religious objection,” in an attempt to prevent the employer from withholding taxes;
  • Causing checks paid to him as compensation to be made payable to a finance company, in order to pay down a personal line of credit and to prevent the IRS from seizing, pursuant to bank levies, the funds paid to him as compensation;
  • Causing checks that were paid to him as compensation to be cashed against a personal bank account rather than be deposited; and
  • Causing checks paid to him as compensation to be endorsed directly to a bank rather than deposited in a personal bank account, in order to pay outstanding balances on his credit card with that bank and to prevent the IRS from seizing, pursuant to bank levies, the funds paid to him as compensation.

Of course, Mr. Gilmartin is presumed innocent unless proven guilty. You may view the indictment detailing the charges here.

The indictment alleges Gilmartin refused to provide an employer his social security number, citing a purported “religious objection.” We may have a tax protester before us. Cases involving tax protesters do not end in the taxpayers’ favor.

Hat tip: TaxProf Blog

Sovereignty Over a Jail Cell

October 27th, 2011 No comments

“Sovereign citizens” genuinely believe that there are two types of citizens: (1) “Fourteenth Amendment citizens” who are subject to federal, state, and local statutes and proceedings; and (2) “Sovereign citizens” who are subject only to the “common law.” Sovereign citizens claim the common law means a citizen possesses absolute power over all her property. A corollary to this power is that sovereign citizens are free from taxation. Individuals holding this position are also known as “tax protesters.”

“Tax protesters” refuse to pay federal or state tax. After the IRS or state tax agency comes calling for its share, sometimes the tax protester will go to court in dispute. Such was the case for Brian Steven Richmond in U.S. Tax Court, and the court’s decision was filed today.

Mr. Richmond’s income in 2008 was $38,915. He submitted his 2008 tax return, as required. Problem was, it was a “zero” income tax return. He listed no income, and claimed a refund of $3,447. Under established law, a “zero” income tax return is treated as if the return was not actually filed.

The IRS prepared a substitute for return for Mr. Richmond, and then sent a notice of deficiency for the amount owed. Mr. Richmond filed a petition to challenge the deficiency in court.

What were Mr. Richmond’s arguments? He claimed that he is a citizen of the “Sovereign State of Kansas” and not a citizen of the United States. As a result, he argued, federal income taxes are optional. Of course, the court rejected this argument. In ruling in favor of the IRS, the court also sustained penalties for the taxpayer’s failure to timely file a tax return. In addition, Mr. Richmond may very well face criminal charges for his acts.

Another self-proclaimed “sovereign citizen,” Samuel Davis, already has. As reported by the Las Vegas Review-Journal, Mr. Davis was sentenced to 54 months in prison earlier today for money laundering. Authorities described Davis as a national leader of the “sovereign citizen” movement, traveling around the country to preach his drivel philosophies. Davis won’t be spreading his words anytime soon.

Stories involving tax protesters never end well. Not that we expect them to. I just don’t follow the logic of these folks. Then again, there is no logic to follow.

Case: Richmond v. Commissioner, T.C. Memo 2011-251.

Categories: Tax Court, Tax Fraud Tags:

Examples of “Tax Protesters”

March 10th, 2011 No comments

Peter Pappas is a fellow tax attorney and tax blogger in Orlando, FL.  He’s been doing the blog thing for quite some time.  And he does it well.  As a result, his blog has attracted a large following.  But not all followers “get it”:

John

It’s quite simple. Not all taxes violate the 13th Amendment. Yet some do. Any taxes taken from one American to directly benefit another constitute involuntary servitude. All programs like Social Security, Medicare, Medicaid and any Welfare, individual or corporate that are funded from taxes violate the 13th Amendment. Now, for those who say even if we’re right, we’ll lose. We’ll see about that. If it takes a massive tax revolt… we will take our country back from the thieves and slave masters.

Peter’s post contains a response to John, as well as Peter’s responses to various other commenters.  I admire Peter for taking on these “tax protester” positions, and calmly and coherently responding.

A “tax protester” is considered an individual who takes frivolous tax positions.  And some pay the price for their outspokenness.  Wesley Snipes is currently sitting behind bars for his “tax protester” behavior.  Snipes is seeking review of his case by the U.S. Supreme Court, but it’s very unlikely the Court will hear the case.

For more commentary about “tax protesters,” the penalties associated with taking these frivolous positions, and how to avoid being considered a “tax protester,” check out this Forbes piece by tax attorney Robert W. Wood.

Categories: IRS, Tax Fraud Tags:
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