“Many a man stumbles across the truth, then picks himself up and hurries on as though nothing had happened.”
-Winston Churchill
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Regarding The Paperwork Reduction Act (PRA), And The Use Of Government-Printed Forms (Such As 1040s)
(This issue just will not go away! The following discussion of the specific legal effects of signing a 'U.S. Individual Income Tax Return' were first posted in a series of June Newsletter editions in response to the excited and misinformed reaction in certain quarters of the "tax honesty" community to the DOJ dismissal of tax-related criminal charges against Robert Lawrence. These "tax honesty" folks insist on treading water in the hope that a "silver-bullet" miracle-cure, by means of which tax agencies will be pre-emptively barred from reacting to evidence that these folks have engaged in taxable activities, even when that evidence is given to the agencies in the form of sworn affidavits-- which is the equivalent of the power to take stuff from their neighbor's garage whenever they wish, and being immune to any legal process to compel them to pay for this behavior...)
I Hate Having To Say This, But... “Many a man stumbles across the truth, then picks himself up and hurries on as though nothing had happened.”
This past week-and-a-half has been distinguished by a widespread mischaracterization of the recent dismissal of failure-to-file charges against Robert Lawrence (along with tax evasion charges which appear to have been relying on the failing-to-file case-- improperly, since evasion cannot be established by an act of omission...). I'm very pleased for Mr. Lawrence's victory. However, what is being made of it reveals that far too many in the "tax honesty" community continue to wildly misunderstand the truth; and instead continue to harbor, and promote, "silver-bullet" fantasies which serve to distract themselves and others from the reality of the "income" tax scheme.
In this case, what is being seized upon with a triumphant, "AHA!" is Lawrence's challenge, as a component of his defense, of the validity of the Form 1040 he was charged with not filing. The challenge involved a requirement under the Paperwork Reduction Act (PRA) that certain types of forms must bear current OMB numbers. Accompanying that requirement is the provision that no penalty can be imposed for failing to complete forms which lack current numbers. Lawrence argued-- as part of a wider-ranging defense-- that he couldn't be penalized for failure-to-file, because the Form 1040 had borne an expired OMB number during the years for which he was charged. As soon as the charges against Lawrence were dropped, every "tax honesty" guru heavily invested in pushing and/or practicing "non-filing", and especially those who have embraced versions of the "OMB number argument" (the patriarch of which is discussed here), popped champagne corks and flooded the internet with hyperbolic crowings that, "You see? No one can be required to file a 1040! The end of The Evil Empire is at hand!"
Sorry, but, no.
I'll forego discussing the ease with which the government can address the provision of the PRA that Lawrence argued, because whether it bothers to do so or not is beside the point. As was briefly noted on this page last week, even if this defense argument WAS what carried the day for Robert Lawrence (the government denies this), the very most this means for the next non-filer is the possibility of thwarting a $500 failure-to-file penalty (and perhaps a misdemeanor charge as well) in his own trial. However, the satisfaction of this victory would be small compensation for the loss of his dignity, his paycheck, his bank account, and/or his house which will likely have taken place already BECAUSE HE HAD FAILED TO FILE, and thus left the allegations underlying a tax liability stand unanswered.
The fact is that for most Americans, the question of whether anyone can be required to file a 1040 is entirely irrelevant. Indeed, it is worse-- it is a harmful distraction from understanding and addressing the reality of the "income" tax scheme. For most Americans, the real "file-or-not-file" question is, "Do I file a return for my own good (voluntarily), or do I not file and instead accept liability for a tax I don't really owe, and kiss a whole lot of money, power and integrity good-bye?"
I have expressed-- and demonstrated-- the reality of the "income" tax so many times, and in so many different ways, that it is beyond me how people with an interest in this subject can still not get it. I think part of the issue is that too many, even those sincerely interested in this critically important subject, simply are out of the habit of reading studiously. Instead, they are impatient readers, who skim, make assumptions about their own knowledge and about what is being presented, and seldom get to the end of anything longer than the written equivalent of a TV news sound-bite. Such "students" of the subject seem to imagine that they will grasp the nuances of a complex statutory scheme which was decades in the making by engaging in ten or fifteen minutes of light and hasty reading.
Others don't even attempt a pretense of study, and aren't reading at all. They're just "mad as hell, and aren't going to take it anymore", and figure that "attitude" alone is enough. I applaud that attitude, but it isn't enough. Understanding what is really going on in the "income" tax scheme is critical to "not just taking it (in the shorts) anymore".
Well, I'll say it again, as simply as I can: The reason you (anyone) are presumed to be, and are legally treated as, liable for the tax, is that somebody has said that you engaged in a taxable activity (conventionally expressed by saying you "received income"). Period. That is the case regardless of whether you really did engage in a taxable activity, because it is only by way of such an assertion-- either made by someone who paid you, by you yourself, or by some contrivance of circumstantial evidence presented by a bureaucrat or a prosecutor-- that "the system" which enforces such liabilities can be made legally aware of the possibility that you might owe a tax.
If that assertion stands unanswered, "the system" which enforces the associated liabilities IS ENTITLED TO ENFORCE THEM, AND WILL DO SO. Look at it this way. When someone says you did something which, if true, would mean that you owe a debt, and you stand mute, you're going to be held to owe the debt. Judgment goes to the alleged creditor by default. What part of this is hard to understand?
Filing a proper, truthful and accurate return is the means provided by law for the definitive affirmation, or correction, of allegations about having engaged in an "income" taxable activity.
I said "the definitive affirmation, or correction,..." and that's exactly what I meant. Until a return is made, any presumptions favorable to any tax agency's desire to claim your money will be sustained. But once a return is made, that return rules, legally. The perfect demonstration of this simple but profound reality is the current DOJ/IRS PR campaign "lawsuit" against me and my wife. Those who have bothered to read through the government's "complaint" and our answers (which I suppose will not include the "non-studious" folks discussed above) are aware that the government has been reduced to begging the court to abandon the law and attempt to command us to change the testimony on our returns. This is because unless that testimony is changed, the government has no claim to any of our money. The return rules.
The government's "prayer" cannot be granted, of course, and it knows this. But, having weighed the downside of exhibiting the legal primacy of a return-- and thus acknowledging a key lesson taught in CtC-- in a place and manner it can comfortably assume only the studious will read far enough to discover (and only the already-educated will not scratch their heads over and ultimately erase from their consciousness as not consistent with what they think they know about the law), versus the upside of discouraging the non-studious from filing proper, accurate and truthful returns for as long as this farce can be dragged out, the government found the choice relatively easy.
The studious are in the minority, and most reporters and "tax professionals" are not among them; further, the government is nothing if not an expert at "spin", and has faith in its ability to mislead the masses if put to the question. On the other hand, anyone who goes ahead and files a timely proper, accurate and truthful return is immediately, and irretrievably, a lost blood-meal. There may sometimes be a toothless effort to get such a filer to change his return by way of threatening letters and unsigned "notices", and in some cases where withheld or paid-in property is being reclaimed, some serious foot-dragging might be engaged in-- even to the point of a, "You want your money back? Sue us!" demeanor (as long as no individual government worker has to take personal responsibility for it). But, legally, that filer has left the plantation.
OOPS!!
There I go again-- writing stuff longer than a TV-news sound-bite! I guess I'll wrap this up now, and just hope that some of the "non-studious" have hung in there and made it this far. I'll finish by mentioning that Robert Lawrence himself recently pointed out in a forum in which he participates that no one should jump to conclusions about his victory, and that in presenting his defense he explicitly demurred to all evidence relied upon by the prosecution, including bank records and W-2s. Better late than never. But not nearly as good as setting the evidentiary record straight from the get go, by way of a proper, accurate and truthful return...
I Hate Having To Say This, cont...
The responses of a few readers to the above comments on the widespread mischaracterization of the recent dismissal of charges against Robert Lawrence have reminded me of a particular filing-related misunderstanding which hinders all too many members of the "tax honesty" community from acting to secure their legal standing by filing returns appropriately. Instead, these folks are bamboozled into silence-- and thus, self-imposed legal infirmity-- year after year. This debilitating refusal to act is based on the mistaken belief that the filing of a return-- particularly a 1040--, by itself, and without regard to the contents of the testimony thereon, constitutes the making of damaging admissions about the filer. I've discussed this subject a bit elsewhere, but perhaps it is time for a little elaboration.
I'll start by clarifying something for the benefit of those who have not actually read CtC, but have instead gotten what they imagine to be a sense of its lessons by way of the descriptions or explanations of others (which in some cases, at least, means from others who wish to discourage the reading of the book): What is taught about the law in CtC has nothing to do with any particular forms (or any particular formal procedures) as such. The discussion of certain treasury department forms in the book, such as 1040s, 4852s, etc., takes place not because these forms are integral to its message, but because the existence, nature and declared purposes of these forms help communicate that message.
CtC explains what is subject to the "income" tax, and why; how it is that much that is NOT subject to the tax is made to appear as though it were (and comes to be treated by the law as though it were); that there are, of necessity, remedies to the misapplication of the law; and why the whole subject is critically important. That part of the book which deals with remedies to the misapplication of the law discusses the basic principles of due process, and the inherent right of anyone being made the subject of a legal proceeding-- such as someone about whom tax-related allegations have being made-- to introduce his or her own testimony into the proceedings at a legally meaningful time and in a legally meaningful manner. The fact that the government itself produces and makes available instruments such as 1040s and 4852s by which this right can be readily exercised, and specifies the use of these instruments for this purpose, helps to make clear that this fundamental principle of law is fully integrated into the tax structure. That integration is not dependent on the existence of such forms, of course. One's rights remain fully intact, whether a ready means of exercising them has been helpfully provided by government or not.
Nor does the existence of forms like 4852s and 1040s limit or shape the right to testify. Such forms simply facilitate the exercise of that right. That is to say, one's right to testify is not dependent on the use, or controlled by the format, of some prescribed or pre-printed form or another. If erroneous testimony has been made on a W-2, for instance, the victim of the offense could rebut that testimony on a napkin or a piece of birch-bark with just as much fundamental legal significance as doing so on a "Form 4852", as long as all pertinent assertions are meaningfully addressed. The same is true of the broader testimony typically submitted by way of a 1040. There are only a few "rules" about the validity of a tax return: That the instrument purports to be a return; that it contains sufficient information by which a tax liability can be calculated; that it represents an honest effort to abide by the tax laws; and that it be executed under penalties of perjury. These simple requirements can be met without the use of a "Form 1040":
However, the practical utility of testimony submitted on napkins or birch-bark is pretty obviously compromised, in the sense that any bureaucratic recipient of such testimony will be unable to handle it in the routine manner. Further, and more importantly, the chances of any home-made version of a testimonial form actually comprehending all the aspects of the law to which it is intended to relate are remote. If this IS accomplished, the home-made form will end up being identical in every significant respect to the form being spurned, making the effort a pointless exercise.
To summarize, then: No aspect of the provisions of law involved in rebutting, or otherwise responding to, "income" allegations discussed in CtC rely upon, or inherently relate to, forms such as 1040s, 4852s, etc.. But when such forms are prescribed and provided, obvious benefits accompany their informed, accurate and truthful deployment.
Can Anyone Be Required To Accept A Legal Infirmity In Order To Exercise A Right?
It should be clear without extended explanation that under no circumstances can the exercise of a right be the occasion of the diminishment, or impairment, of any other right. For purposes of this discussion, this means that the exercise of one's right to answer the testimony of others about one's receipts, and to assert one's claim for the recovery of property put into the hands of a government against the possibility of the arising of a tax liability during the relevant period, cannot result, in and of itself, in any legal infirmity.
The exchange of evidence by way of returns (information returns and 1040s, etc..) IS the "meaningful time and manner" involved in the "income" tax, so much so that a $500 penalty can be imposed on someone about whom an information return is created by someone else, should that person fail to file a response. Further, the testimony of that information return will be taken as true even when doing so significantly disadvantages its silent subject.
So, no burden or punishment, either civil or criminal, can attend the exercise of one's right to testify by way of a tax return, with the sole and indirect exception being that the testimony submitted, like all testimony, must be affirmed under oath. The statutory structure provided by Congress fully complies with this fundamental legal principle, ensuring that timely testimony to whatever is true, complete and correct to the best of the knowledge and belief of the filer invites no adverse consequences whatsoever. (See Responding To The Assault for some relevant discussion.)
Indeed, as has been pointed out on this page before, to attempt to burden, punish, prevent, discourage or even merely influence such testimony without direct personal knowledge of the matter being attested to, is criminalized-- as a misdemeanor at least, if not a felony. For instance:
(The filing of a tax return, particularly one which involves rebutting the testimony of another filer, is every bit an "official proceeding"-- but even if doubts were entertained in that regard, the testimony made on a return is unquestionably relevant to, and anticipatory of, more formal judicial contests of several varieties, and Congress has thoughtfully provided that,
I'll say it one more time: However much some may have convinced themselves to the contrary, no criminal or civil penalty, loss of rights or property, alienation of citizenship or other civil diminishment, obligatory assumption of contract, or infirmity of any other kind whatsoever is, or can be, attendant upon the making of an honest tax return as a response to an information return created by another or to claim the return of one's property; rather, the precise opposite is true-- one or more of these ill effects can result from FAILING to respond. (See 'A Special Note To Non-Filers'.)
The above being true, is it possible that honest, good-faith use of a form prescribed by the Secretary of the Treasury for the making of a return, can, secretly or otherwise, impose or establish a criminal or civil penalty, loss of rights, alienation of citizenship or other civil diminishment, obligatory assumption of contract, or infirmity of any other kind whatsoever? Obviously not.
Is A 1040 A "Tax Return For A U.S. Individual" Or A "U.S. Tax Return For An Individual"? Does It Matter?
I deliberately included the expression "good-faith" in the last paragraph because a portion of those to whom these words are addressed do their mental stumbling over the issue of WHICH form to use, even if they recognize their unencumbered right to make a return. These folks have been convinced to forego the exercise of their rights by the proposition that the form they use in that exercise imposes upon them the status or legal characteristics of some class of persons which is bureaucratically intended to use that form. That is, if there is a class of persons of unique or specialized legal status known as "U.S. Individuals", for instance, and one uses a form specified as being for the use of "U.S. Individuals", one thus adopts the status (and related infirmities, if any) of a "U.S. Individual".
However, even if a form bore an unambiguous specification as to those for whose use it is intended, it's not that easy to change one's legal status, and, in any case, the law does not favor complicated and irrational presumptions over the simple and obvious. If one were to use a form intended exclusively for the use of some group or class to which one did not actually belong, all it would presumptively mean is that one had made a mistake. That the use of the wrong form is/was an inadvertent mistake would be self-evident if that use caused membership in a special group, attendant upon which is some legal infirmity to which the filer is not already subject. No one in their right mind would do such a thing, and one who did so, having self-evidently been ignorant of the legal import of their actions, would be relieved of the consequences of those actions. One cannot be bound by a legal process undertaken in ignorance of the consequences. If the mistake was not thus self-evident (because no ill consequences are attendant upon the use of the form), it would be readily established by declaration, if necessary, although I have yet to see a single case in which anyone has ever been accused, or even notified, of "Using The Wrong Form" in the fashion or context being discussed here.
As noted in the subtitle above, the intended use of the "Form 1040 U.S. Individual Income Tax Return is certainly not unambiguously confined to "U.S. Individuals"-- which is not, in any case, a defined category of persons-- even if it being so would raise one's hackles. Looking at the specifications for its use relevant to most Americans:
(There IS an alternative version of the 1040, known as "Form 1040NR", which is particularly adapted to special provisions of the law regarding the taxation of "income" received under certain circumstances by "non-resident aliens". However, while the IRS instructions for "non-resident aliens" specify the use of that form in lieu of a standard 1040 when those special provisions are being exploited, or for non-resident aliens who are "engaged in a trade or business in the United States, or have any other U.S. source income on which the tax was not fully paid by the amount withheld", the same instructions merely say that a return must be filed, without specification as to version, when a refund is being sought.)
Furthermore, the positions adopted by the IRS Office of Chief Counsel (OCC) regarding the content of a legitimate, valid 1040 (OCC memoranda about which have long been posted on this site for the benefit of anyone not too busy haring off after the latest "silver-bullet" distraction) make clear that a 1040 has no hidden agenda or effect. The OCC has admitted that any document merely purporting to be a "return", containing sufficient information by which a tax liability can be calculated, representing an honest effort to abide by the tax laws, and signed as an affidavit serves as a fully sufficient substitute for a 1040; by the same token a 1040 itself need have nothing more than these same characteristics to be a fully valid return, sufficient for all purposes for which the form is designed.
The OCC has also acknowledged that the addition of a declaration to the signature area on a 1040 to the effect that by signing, the filer is not to be taken as waiving any rights or accepting any legal infirmity has no effect on the validity of the form. That is, a 1040 serves as a legitimate and fully functional tax return even when suspected secret agenda or hidden legal effects have been pre-emptively nullified.
Because there are none...
More material relevant to this subject will be found at 'A New Snake-Oil Warning', 'Citizenship And The Fourteenth Amendment', Regarding "The OMB Control Number" Misunderstanding and 'Responding To The Assault' |
Comments On Other Common "Tax Protestor"/"Tax Honesty" Misunderstandings