I recently got back from the IRS Nationwide Tax Forum. It’s a three-day intensive conference that provides different seminars on IRS updates and practice tips.
I will highlight some of the great things that I learned from the conference this week, but I first wanted to address a related issue that I’ve encountered with a new client.
He’s violating my number one rule about dealing with the IRS: you have to acknowledge that you must pay income tax.
It may sound a little funny, but plenty of people take the stance that the IRS doesn’t have proper, legal authority to collect tax, and therefore they aren’t required to pay it.
Before you laugh and dismiss this theory as something that a crazy or uneducated person might say, my new client has multiple doctorates and at one time made over $250,000 per year.
The client wanted me to prove to him that the IRS was created under legal authority, so I sent him the following information detailing the history of the IRS and its authority.
The History of the IRS
I started with a brief history of the IRS that appears on its website.
The roots of the IRS started during the Civil War President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later. Congress revived the income tax in 1894, but the Supreme Court ruled it unconstitutional the following year.
However, in 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.
In the 1950s, the agency was renamed into the Internal Revenue Service. The IRS commissioner and chief counsel are selected by the President and confirmed by the Senate.
It’s Not the First Time These Arguments Have Come Up
I also pointed out to my client that he’s not the first person to broach these arguments. A long history exists of what the IRS considers frivolous arguments. (The IRS used to use the word “protestors” for proponents of these arguments, but they no longer do.)
The IRS has compiled a 62-page document discussing every argument and giving the legal authority in response to each claim.
Bottom Line: The IRS Will Take Your Stuff
Whether the history and legal authority that I gave to my client convinces him he must pay income tax really isn’t my concern. I provided the information as a courtesy to him and to address his desire for legal reasoning. But in the end, he faces a much bigger challenge.
His continued obstinence has put him a couple of weeks away from having to go before a district court judge and possibly being held in contempt of court. After that, the IRS will proceed with taking any assets they can find of his to pay his liability, which is very substantial.
The bottom line is your disbelief in the IRS’ authority will not prevent them from collecting the amount of money you owe them. And when you get to that point, there is only so much lawyers like me can do to help you.