[5][clarification needed] In the United States, the term "protest" as applied to a tax generally means "a declaration by a payer, esp.
[6] Similarly, Black's Law Dictionary defines a tax protest as: The formal statement, usually in writing, made by a person who is called upon by public authority to pay a sum of money, in which he declares that he does not concede the legality or justice of the claim or his duty to pay it, or that he disputes the amount demanded; the object being to save his right to recover or reclaim the amount, which right would be lost by his acquiescence.
[8] Under the current Internal Revenue Code of 1986, as amended, the taxpayer's failure to protest does not deprive the taxpayer of the right to file an administrative claim with the Internal Revenue Service (IRS) for a refund and, if the claim is not allowed by the IRS, to sue for a tax refund in Federal district court.
While there have been people throughout history who challenged the assessment of taxes as beyond the power of the government, the modern tax-protester movement began after World War II.
One of the first people to fit this description was Vivien Kellems, a Connecticut industrialist and political activist who specifically protested monthly tax withholding.
She brought suit against them and, in a book she wrote, asserted that she won,[12] although she did not challenge the constitutionality of tax withholding itself.
These ideas have been put forth, for example, in the broader Posse Comitatus, Christian Patriot and sovereign citizen movements, which generally assert that the Constitution has been usurped by the federal government.
Warman originated the so-called "Detaxer" movement, which reused sovereign citizen pseudolegal concepts, including the strawman theory, and argued the illegitimacy of Canadian income tax law.
Warman's theories were adapted by other Canadian Detaxer activists, including Russell Porisky and David Kevin Lindsay.
[16][14][17] In 1986, the Seventh Circuit observed: Some people believe with great fervor preposterous things that just happen to coincide with their self-interest.
"Tax protesters" have convinced themselves that wages are not income, that only gold is money, that the Sixteenth Amendment is unconstitutional, and so on.
[18]Arguments made by tax protesters in the United States generally fall into several categories: that the Sixteenth Amendment was never properly ratified; that the Sixteenth Amendment does not permit the taxation of individual income, or particular forms of individual income; that other provisions of the Constitution such as the First, Fifth, or a "Missing Thirteenth Amendment" eliminate an obligation to file a return; that citizens of the states are not also citizens of the United States; that the statutes enacted by the United States Congress pursuant to their constitutional taxing power are defective or invalid; that the tax code does not apply to inhabitants of U.S. territories; and that the government and the courts engage in various conspiracies to conceal the above deficiencies.
However, a number of offenses arise from failing to pay taxes that are due, and from repeating arguments that have previously been invalidated by the courts.
The United States Congress has, however, enacted Internal Revenue Code section 6702 "in an effort to deter tax protesters from filing frivolous returns."
[23] Shauna Henline, Senior Technical Coordinator of the Frivolous Return Program at the Internal Revenue Service,[24] has testified that the IRS receives about 20,000 to 30,000 frivolous tax returns per year, and that approximately 100,000 related letters and other documents are received each year.
The current version of section 6673 (in the 1986 Code) provides that frivolous arguments may result in a penalty in U.S. Tax Court of up to $25,000.
[36] In one 2007 case, for example, the Seventh Circuit issued an order giving such an attorney "14 days to show cause why he should not be fined $10,000 for his frivolous arguments", based, in part, on Rule 38.
[37] The "Guiding Light of God Ministries," a tax protester group organized by Eddie Ray Kahn, filed about 2,000 official misconduct complaints against employees of the IRS.
Some tax agents reported that these complaints had influenced their supervisors to order them to back off from audits and collection efforts against members of the group.
"[39] The IRS has not released records indicating whom the agency defined as "illegal tax protesters" (coded as TC-148).
[41] By contrast, subsection (b) of section 3707 provides: "An officer or employee of the Internal Revenue Service may designate any appropriate taxpayer as a nonfiler, but shall remove such designation once the taxpayer has filed income tax returns for 2 consecutive taxable years and paid all taxes shown on such returns.
"[44] The Department of Justice may obtain a federal court ruling to the effect that a specific tax-protester activity constitutes the promotion of an illegal tax shelter under Internal Revenue Code section 6700 (26 U.S.C.
§ 7408, as it did in the case of United States v. Robert L. Schulz, We the People Foundation for Constitutional Education, Inc., and We the People Congress, Inc..[48] The Tax Division of the U.S. Department of Justice prosecutes violations of the federal criminal tax statutes, generally after an investigation and referral of a case by the Criminal Investigation division of the Internal Revenue Service.
"[44] According to a Bloomberg News report, the U.S. government has a 97 percent conviction rate in criminal tax denier cases.
In response to Mr. Cheek's arguments on appeal, the Court stated: Claims that some of the provisions of the tax code are unconstitutional are submissions of a different order.
[52]The Court continued: We do not believe that Congress contemplated that such a taxpayer, without risking criminal prosecution, could ignore the duties imposed upon him by the Internal Revenue Code and refuse to utilize the mechanisms provided by Congress to present his claims of invalidity to the courts and to abide by their decisions.
As we see it, he is in no position to claim that his good-faith belief about the validity of the Internal Revenue Code negates willfulness or provides a defense to criminal prosecution under 7201 and 7203.