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User:BD2412/Tax protesters - the role of courts

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The role of the judicial system

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Inscription on the wall of the Supreme Court Building from Marbury v. Madison, in which Chief Justice John Marshall (statue, foreground) outlined the concept of judicial review.

Legal commentator Daniel B. Evans has stated:

I am often asked, “Why do you always assume that the courts are right and the tax protesters are wrong?” Or, “Couldn’t the courts be wrong about what the Constitution means?” Those questions demonstrate that the questioner doesn’t really understand what is meant by “law” or the “rule of law.”
Law is not some kind of abstraction that floats in the air, free from any connection to people or events. “The law” is what legislatures, courts, and governments do, and the real test of what the law “is” shows in how the law is applied in actual cases.
So when lawyers talk about what “the law” is, they are talking about how a judge will rule. Not how the judge should rule, or might rule, but will rule. As Justice Oliver Wendell Holmes once explained, “the only definition of law for a lawyer’s purposes is something which the Court will enforce.” Letter to Sir Frederick Pollock, 7/3/1874. Or, more famously: “The prophecies of what the courts will do in fact and nothing more pretentious are what I mean by the law.” The Paths of the Law (1897).
[ . . . ]when the courts, the legislatures, and the voters all agree on what the law is, then that is what the law is. The fact that some people believe that the law should be different that what courts have said it is doesn’t mean that the law is different from what the courts have said, but only that they should argue their positions within the political system and attempt to change the results.
In the case of the income tax, there is no conflict. The judicial, executive, and legislative branches of our government, and a majority of the voters, have all agreed for more than 90 years that (1) an income tax is constitutional, (2) it applies to wages, and (3) every citizen and resident of every state is required to file a tax return and pay the tax [ . . . ][1]

Material to incorporate:

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Participants in the so-called "tax protest movement" have gone to any and all extremes to impede the orderly administration of the American taxation system. Quite commonplace is the repeated litigation by non-filers of tax deficiencies in the Tax Court, and the imposition of frivolous arguments and rationale for defeating taxes.[2]

Tax protesters have been known to take even more extreme and vexatious actions.[3]

Commentators note that:

Courts have expressed frustration with a perceived deluge of weak tax appeals".[4] "For example, in Hatfield v. Commissioner,[5] the court recognized the detrimental effect that duplicative and meritless tax appeals have on the court's function:"[6]

In recent times, this Court has been faced with numerous cases, such as this one, which have been commenced without any legal justification but solely for the purpose of protesting the Federal tax laws. This Court has before it large number of cases which deserve careful consideration as speedily as possible, and cases of this sort needlessly disrupt our consideration of those genuine controversies.[7]

In fact, the Sixth Circuit has twice issued loud rules related to arguments made in tax appeals. In Perkins v. Commissioner,[8] the court stated:

Litigants are warned that in future cases in which the lower court has clearly explained, as it has here, the frivolous nature of the taxpayers' claim that earned income is not taxable, we will not hesitate to award actual attorney fees to the Commissioner under Rule 38 as it has been uniformly construed. [9]

Each year hundreds of thousands of taxpayers use abusive schemes to avoid paying some or all of their federal income taxes.[10]

Tax avoidance schemes include abusive tax shelters, fraudulent transactions, and approaches based on an erroneous belief that the federal tax system either is illegitimate or is inapplicable to certain taxpayers.[11]

Those who believe that the tax system is illegal or inapplicable are commonly referred to as tax protestors.[12]

As the number of tax protestors increases, the costs associated with collecting their taxes and prosecuting their tax avoidance also increase. To prevent compliant taxpayers from unfairly bearing these costs, these costs should be shifted back to the tax protestors. Although this approach would be inappropriate if it was applied to all tax disputes, it is nevertheless appropriate to shift the costs to tax protestors whose truly frivolous positions waste administrative and judicial resources.[13]

There is little data on the effect that civil penalties generally have on tax compliance. However, case after case demonstrates that the current penalties do not deter the tax-protestor arguments. That the current penalties do not adequately deter tax protestors is demonstrated by the fact some tax protestors engage in multiple litigations, undeterred by prior failed litigation. Even summary disposition of these cases imposes significant systemic cost.[14]

References

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  1. ^ Evans, Daniel B. "The Tax Protester FAQ". Retrieved 2008-02-01.
  2. ^ Kenneth H. Ryesky, Of Taxes and Duties: Taxing the System with Public Employees' Tax Obligations, 31 Akron L. Rev. 349, 377 (1998).
  3. ^ Kenneth H. Ryesky, Of Taxes and Duties: Taxing the System with Public Employees' Tax Obligations, 31 Akron L. Rev. 349, 377-78 (1998), citing United States v. Ekblad, 732 F.2d 562 (7th Cir. 1984) (tax protester had filed liens against the property personally owned by certain IRS employees); United States v. Thomas, 819 F. Supp. 927 (D. Colo. 1993); United States v. Hart, 545 F. Supp. 470 (D. N.D. 1982), aff'd & sanctions imposed for frivolity, 701 F.2d 749 (8th Cir. 1983) (tax protester enjoined from performing his threatened posse comitatus arrests of individual IRS agents); United States v. Lorenzo, 995 F.2d 1448 (9th Cir. 1993) cert. denied sub nom., Brown v. United States, 510 U.S. 882 (1993) (tax protesters submitted false Forms 1099 to IRS showing false taxable income supposedly earned by certain IRS agents and judges, causing such IRS agents and judges to suffer consequent entanglement with IRS concerning their personal tax affairs).
  4. ^ David Coale and Wendy Couture, Loud Rules, 34 Pepp. L. Rev. 715, 721 (2007)
  5. ^ Hatfield v. Commissioner, 68 T.C. 895 (1977).
  6. ^ David Coale and Wendy Couture, Loud Rules, 34 Pepp. L. Rev. 715, 722 (2007)
  7. ^ Hatfield v. Commissioner, 68 T.C. 895, 899 (1977).
  8. ^ Perkins v. Commissioner, 746 F.2d 1187 (6th Cir. 1984).
  9. ^ Perkins v. Commissioner, 746 F.2d 1187, 1188-89 (6th Cir. 1984).
  10. ^ Danshera Cords, Tax Protestors and Penalties: Ensuring Perceived Fairness and Mitigating Systemic Costs, 2005 B.Y.U.L. Rev. 1515 (2005).
  11. ^ Danshera Cords, Tax Protestors and Penalties: Ensuring Perceived Fairness and Mitigating Systemic Costs, 2005 B.Y.U.L. Rev. 1515-16 (2005).
  12. ^ Danshera Cords, Tax Protestors and Penalties: Ensuring Perceived Fairness and Mitigating Systemic Costs, 2005 B.Y.U.L. Rev. 1515, 1516 (2005).
  13. ^ Danshera Cords, Tax Protestors and Penalties: Ensuring Perceived Fairness and Mitigating Systemic Costs, 2005 B.Y.U.L. Rev. 1515, 1518 (2005).
  14. ^ Danshera Cords, Tax Protestors and Penalties: Ensuring Perceived Fairness and Mitigating Systemic Costs, 2005 B.Y.U.L. Rev. 1515, 1564 (2005).
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