Frederick Focke Mischler, Attorney

Tax Evasion Arguments

Here's a post from the National Association of Tax Professionals, that says it as well as I think I can.  Most of these arguments are good for a chuckle or two.  It continually amazes me how people can put forth these ideas and appear to sincerely believe them.  But, I guess that is all a testament to human nature, greed, and that we tend to believe what we want to hear.   -- FM

Lawsuit-Happy Tax Protesters Tax the Legal System

The Verdict – Pay What You Owe

National Association of Tax Professionals (NATP) Appleton, WI – Paying taxes violates the first amendment (or the fifth or thirteenth or fifteenth…); I am a citizen of my state, not of the United States; the war goes against my religious beliefs so my taxes should not fund it; if I don’t file a tax return, the government is responsible for filing for me; because I am disabled or a minority, I am exempt from paying taxes; my assets are in a trust not subject to taxation. All of these arguments to protest paying taxes, plus many more, have floated around for years, and every year there’s a new twist on the old story. Currently there are over 40 general categories of tax evasion arguments, none of which are successful. Instead, buying into these false ideas is a good way to lose money.

The courts have little patience for those who avoid paying their fair share of taxes, but they see plenty of cases. The outcomes are almost always the same – defendants must pay the taxes they owe and often with civil penalties of 20 to 75 percent of the underpaid tax and fines of up to $25,000. Some evaders are imprisoned. Yet every year a new crop of tax evaders think they have the magic reason, legitimate grounds, to not pay, and they clog the court system with frivolous cases.

“Taxpayers need to avoid being taken in by groundless theories suggesting that they don’t have to pay taxes or file returns,” said IRS Commissioner Mark W. Everson. “The truth about these frivolous arguments is simple: They don’t work.”

Bruce Hicks, a professional NATP tax preparer at Freedom Income Tax in Nashville, TN says, “Friends, family, and your golf buddies, despite meaning well, are the worst sources of information on your taxes. As a tax professional a lot of my time is spent debunking the myths that people have heard from others. Another problem is that promoters of these tax evasion schemes will take a percentage of your refund (if they prepared the return) and then disappear when the IRS shows up.”

“Remember, your fair share does not mean ‘overpaying’ your taxes because you do not claim ‘legitimate’ deductions, etc. Rather, it means taking every deduction, deferment, etc. that is legitimately available to you,” adds NATP professional preparer Ken Morales of Lexington, KY. “Our taxation system is a self-imposed system, where the taxpayer is expected to avail themselves of every tax benefit. There is a difference between tax savings and tax evasion, one being legitimately avoiding tax, the other illegally evading taxes. Your professional tax preparer is trained, and in many instances has years of experience, to properly advise you on this difference. And, the bottom line is that the taxpayer is responsible for his or her tax return and the facts contained therein.”

According to NATP member Doug H. Moy, Lake Oswego, OR, who is a consulting specialist in estate/gift taxation and planning, abusive trust tax shelters rank high on the IRS list of "Dirty Dozen" tax scams. "The proliferation and use of sham trusts in estate planning is remarkable in view of the fact that not one single taxpayer who has used a sham trust has prevailed against the government."

If you bought into a scheme to hide your income from the government, no matter how legitimate the method may have sounded, seek the help of a professional tax preparer and make things right. There is no defense to not fulfill your obligations to the government. Don’t get taken in by falsehoods; pay your fair share and really think about what those tax dollars buy for you and your family. If you have any questions about the tax system or for help in legally minimizing your tax burden, consult a professional tax preparer who is an expert that keeps up on tax law changes year-round.

Stuff to Keep

We get inundated with documents and things in life.  Some of us are better than others, either we are better at staying uncluttered, or we are better at finding new places to keep new stuff that "needs" to be kept.

Either way, there's a fundemental recognition that there are some things that should be kept.  Here's a list of documents and information that you should have on file some where accessible to at least one other person who will know what to do with it (even if that means to give it to someone who will handle it).

Keep a list of important names and contact information: your lawyer, your accountant, your financial advisor, your insurance agent, the boat house manager where you keep your boat or the airport manager where you have your airplane, etc.  Name, address, telephone, fax, email and any other relevant info (directions to get there, perhaps).

Keep your will and other estate plan documents (trust agreement, health care power of attorney, living will, durable power of attorney for finances, etc.) in a safe place.

Be sure your health care power and living will is on file with your current primary physician and any health facility you use or expect to use in the future.

Insurance policies: health, life, property.  If you have a house, have the policy in a safe place; the same goes for any assets you have that are insured.  Life policies need to be easily accessible when the time comes for them to be handled. 

Real estate and other titles to property.  (car, boats, etc.)

Safe deposit location and key should be in a secure place.

Marriage certificates, birth certificates, military papers, naturalization documents, divorce documents, separation agreement, shared custody papers, adoption documents, etc.

Passports, social security cards and records, etc.

List out all your bank accounts, investment accounts, retirement savings, etc.  Need account numbers and contact information for person to help manage the account.

There are probably a few things I have not mentioned here.  In short, consider anything you have in your life that has value.  Certainly all your property and assets, but also, your family members, and their health, safety and welfare.  Keep in a safe place all the information and documents that are in any way related to these things and people.  It will be a much easier process to handle life's events when the necessary documents and information is available to you when you need it.