In denial: Why file tax returns?

At the risk of spoiling the plot, it does not matter what the strategy is, it is easy to evaluate:  I's just plain wrong. Taxes are legal, the IRS’s right to collect them is legal, and taxpayers who willingly dodge their tax liability may face the full wrath of the IRS. That includes confiscation of homes, cars, saving and checking accounts and the garnishing of wages. And that is just the game plan for paying what is owed.  Jail time may also figure in.

Adkisson does think the denier movement may have peaked about five years ago, due in large part to what he views as increased IRS action against the promoters. “It has driven attendance at the tax protest rallies into the dozens from the thousands,” he says.

But Robert McKenzie, a tax attorney with Arnstein & Lehr, LLP in Chicago who has represented people who bought into various forms of tax protest since 1978, has seen a steady flow of clients throughout the years. “Every year, I see several new clients. I’m just one tax attorney. There have to be thousands and thousands who are still trying this,” he observes.

What keeps the scams alive, even if they are playing to smaller audiences, seems to be a combination of creativity, the inherent nature of human gullibility and relatively short jail sentences.

“It reminds me of a game of ‘Whack-a-Mole.’ As soon as one promoter is imprisoned, another one seems to pop up or is released after serving his time,” says McKenzie, adding that a history of multiple convictions is not uncommon in this area.

And that is only if the promoters are even convicted. Adkisson points out that many avoid serving time by invoking their right to free speech under the First Amendment — in this case, their right to say or write tax fantasies and sell them to wishful thinkers. Also, he asserts not all promoters are drinking their own Kool-Aid. They may be avoiding prosecution by actually filing their returns and paying all of their income tax each year.

Staring at a stack of 1099s, it is understandable to wonder if the IRS is really going to notice one less return this year. But when Benjamin Franklin wrote of there being only two certainties in life — death and taxes — the man was offering sound financial and legal advice.

MORE FROM TAX TACTICS

Tax Tactics Section Front

Senate panel hears about European tax havens House OKs alternative minimum tax relief IRS raises the amount deductible for mileage IRS says up to 350,000 tax rebate checks wrong Taxpayers with foreign spouses miss rebates Amazon suing New York state over sales tax law Retailers entice shoppers to spend rebates Paying taxes costs $207 and a day of work Fewer big companies getting audited by IRS States crack down on tax-free online purchases Tax Tactics Section Front   Add Tax Tactics headlines to your news reader: