They refuse to pay taxes
They refuse to pay taxes.
And they claim they're getting away with it.
The day of reckoning has come.
Income Tax Day every year, as sure as spring, it arrives.
And every year, millions of Americans fill out countless tax forms, sending
them off, often begrudgingly, in time to beat the deadline.
It is simply a way of life.
But what if you didn't owe the U.S. government a dime?
A growing number of Americans say they don't owe and won't pay federal
income taxes. And not because they don't make any money, they say, but
because no law requires them to give any of their earnings away.
Arthur L. Farnsworth, an elected auditor in West Rockhill and chairman of
the Bucks County Libertarian Party, hasn't paid federal income taxes since
Joseph Schiaffino, a Perkasie councilman, hasn't filed a return in four
years; the one-time Republican candidate for the U.S. House or
Representatives is now enmeshed in a legal battle to keep his employer from
withholding income taxes from his paycheck.
Schiaffino estimates that as many as 50 million Americans almost one in
five people are no longer paying the federal income tax. An IRS
spokeswoman said non-filers are "part of a whole area that we don't have
Then there are those like Kenneth Krawchuk, an Abington Libertarian who is
seeking his party's nomination for vice president in the national election.
After years of his own research, Krawchuk became convinced that he and
most Americans don't have to pay the federal income tax. He agrees with
Farnsworth and Schiaffino that the entire system is "an art of deception."
But, Krawchuk says, he's afraid of the Internal Revenue Service and what
might happen to him if he stops filing returns. For now, he says, he'll
continue to pay the tax.
"Sometimes I feel like Columbus," he said. "It's like I'm saying the Earth
isn't flat, it's round."
There are other possibilities, of course. They could all be crazy, or
wrong, or both.
In literature expounding the need to pay your fair share of the $830
billion or so collected in personal income taxes, the IRS calls such
advocates of noncompliance "unscrupulous" the bearers of "false,
misleading, or unorthodox tax advice."
Farnsworth, Schiaffino, Krawchuk and others with similar views all echo a
similar response: Don't just take our word for it. Do the research. Find
out for yourself.
"Trust no one's opinion but your own," Krawchuk said. "The law isn't hard
to understand, or else lawyers wouldn't be able to write it." The argument
of non-taxpayers while not as confusing as Title 26, the U.S. tax code
itself is something of a patchwork.
Essentially, they contend, the code's first subtitle (which deals with
income taxes) is circular. It repeatedly refers to "any person made liable
for any tax imposed by this title," without saying who is liable for the tax.
No clause establishes specific liability in the way that other subtitles of
the code establish taxation on alcohol, tobacco and gambling. The income
tax regulations impose a tax simply on "taxable income" defined as "gross
income" minus any allowable deductions. But never is the word "income"
In other words, Schiaffino says, once you've deciphered the U.S. tax
code's thousands of pages, you'll find that "it just doesn't apply to most
Americans." And, the story goes, once you stop voluntarily paying the
federal income tax, you become not a "tax evader" (as the IRS may brand
you) but an entirely different beast a "non-taxpayer."
You escape the circle.
Non-taxpayers also contend that the 16th Amendment regarding income
taxation didn't materially change the U.S. Constitution. The amendment
was ratified in 1913, 18 years after the Supreme Court struck down an
income tax passed by Congress.
Article I of the Constitution gives Congress the power to levy various
kinds of taxes. However, it requires that so-called direct taxes be
applied to the states according to their relative populations. Such taxes
are laid directly on individuals and thus are considered "unavoidable."
Other taxes excises, duties and imposts are called indirect because they
tax certain "avoidable" activities. Such activities include the
manufacture or importation of commercial goods.
Income tax supporters say the 16th Amendment changed Article I by allowing
Congress to lay an income tax "from whatever source derived, without
apportionment among the several States, and without regard to any census or
Opponents say the amendment merely "clarified" that the income tax is an
excise, and not a direct, tax. They cite standing Supreme Court rulings
that the word "income" refers only to "corporate income" or profits on
capital gains, like money made off stocks and bonds.
The IRS calls such claims frivolous.
"The courts have consistently ruled on the validity of the tax system and
on the appropriateness of the way income taxes are collected," IRS
spokesman William Cressman said. "We're not trying to be tricky or talk in
circles at all."
Schiaffino who challenged Rep. Jim Greenwood for the Republican
nomination in the 8th Congressional District in 1998 and lost by a
2-1 margin suggests revenue officials choose their battles very carefully.
"You have to read the cases they're citing," Schiaffino said. "The
majority of those cases were won because the people (accused) didn't know
the law was on their side. Those are the people the IRS beats. People like
myself and Art Farnsworth, they don't take us to court."
Actually, the IRS more often than not resolves disputes before they reach a
federal courtroom, Cressman said.
He said taxpayers who fail to file returns are subject to an internally
prepared return in lieu of a voluntary one. If they are found to have a
balance due, a bill will be issued. If the bill isn't paid, the government
can take action by seizing a taxpayer's property or other assets. The
agency recommends criminal proceedings only in a few serious cases.
"It's a fairly standardized process," Cressman said, "and there are
opportunities for taxpayers to appeal along the way."
Farnsworth hasn't had to defend himself in court, but he has had his share
of scuffles with the IRS. And they may not be over.
On his 15,000-word Internet site (http://users.vrinter.net/ArthurF/), he
documents a series of exchanges with the Pennsylvania district office of
It began in earnest in February of last year, when the IRS notified him
that his "zero returns" of 1997 and 1998 contradicted earnings reported by
his former employer, a defense electronics firm.
Farnsworth had filed returns with straight zeros in the "income" blanks on
the IRS 1040 form and received a full refund of his taxes for those
years. He also included several pages explaining his reasons for doing so,
citing his own legal research. He says he was entitled to report zero
income because he didn't have income as the courts have defined it.
To each letter from the IRS warning him of his debt, Farnsworth replied by
referring the agency to the explanation found in his original filings. The
IRS finally issued Farnsworth a "notice of deficiency," or an official
declaration that he must pay up or go to court.
He responded in late January of this year by asking the IRS to supply
statutory reasons for its determination. The agency acknowledged receipt
of his last letter and promised to contact him by March 17.
He said he hasn't heard anything yet.
He also said he knows of other non-taxpayers who, at this stage of the
game, received a message like this: "Dear taxpayer, we are closing your
case since the notice of deficiency has expired."
Farnsworth who is now independently employed and doesn't file returns at
all can only hope to receive such a letter.
And even if he does, what does that mean? Are his and other non-taxpayers'
claims, in the end, legitimate? Or have they merely found an income tax
loophole leaving themselves bound to be discovered and prosecuted?
"It's not a loophole," Farnsworth claims. "A loophole, in my opinion, is
something of this nature: You have to pay a tax on boats, but you happen to
have a canoe and they didn't properly define the tax on your type of boat.
"I am basing my argument on the absence of a law that establishes federal
income tax liability."
All the same, the very man who inspired Farnsworth and other non-taxpayers,
author and anti-income-tax advocate Irwin Schiff, was convicted of tax
evasion in the 1980s and spent four years in federal prisons.
Schiff now operates a Las Vegas publishing outfit called Freedom
Books. Staffer Shane Godfrey said Schiff's most regarded work, "The
Federal Mafia," reads like an instructional text on non-compliance with the
federal income tax.
"We show you how to do it," Godfrey said. "We now recommend filing a zero
return. We have a response for everything the IRS tells you. 'The Federal
Mafia' is all you need. "
The book, he said, sells for $38 a copy.