Hello, and welcome to Legal Lad’s Quick and Dirty Tips for a More Lawful Life. I’m your host, Adam Freedman.

But first, your daily dose of legalese: This podcast does not create an attorney-client relationship with any listener. In other words, although I am a lawyer, I’m not your lawyer. In fact, we barely know each other. If you need personalized legal advice, contact an attorney in your community.

Today, with the memory of April 15 still fresh, we take a look at Taxes.

Do I Really Have to Pay Taxes?

When you filed your tax return this year, did you hear a little voice asking “is this really necessary?” If so, you’re not alone. Brandon from Louisiana asks:

Is there a law stating that I have to pay federal income taxes?  If so, where is it in writing?

Well done, Brandon – it’s time that somebody had the nerve to ask that question. And I’m glad it wasn’t me. I think I can shed some light on this topic, even though the short answer is if you earn income, you probably have to pay federal income tax.

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This Code’s No DaVinci

Back to the issue.

Brandon: the obligation to pay federal tax is, in fact, written down. It’s called… the Tax Code! To be exact, it’s the Internal Revenue Code, which is Title 26 of the United States Code. Granted, the bit about individuals having to pay tax is buried in section . . ., well, it’s actually in the very first section of the Code. But hey, who besides a lawyer has a copy of the US Code handy?

Generally, if your gross income exceeds a certain level – and the level depends on your age and marital status – you will have to file a tax return. More information is available on the IRS website, and you’ll want to consult with an accountant if you have questions about your tax status.

Avoiding or Evading?

Now, nobody likes paying taxes, but there’s an important distinction to be made. One the one hand, there’s “tax avoidance,” which is the strategy of reducing your tax bill as much as legally possible. There’s nothing wrong that – that’s what people pay CPAs for. But then there’s “tax evasion,” which is the deliberate flouting of tax laws. Tax evasion can expose you to criminal and civil liability.

The problem is that there are many strategies for tax evasion masquerading as lawful tax avoidance. People dress them up in creative legal arguments hoping to get some judge to buy it. Basically, it never works, but the arguments are amusing so I’ll share some with you.

Is the Income Tax Unconstitutional?

For example, some people argue that the Internal Revenue Code is unconstitutional because of Article One’s requirement that “direct taxes” be apportioned among the states on the basis of population, rather than on the basis of individual income. The only tiny flaw in this argument is that the Sixteenth Amendment to the Constitution, ratified in 1913, specifically grants Congress the power to tax individual incomes without any apportionment. Over the years countless tax protestors have tried to persuade federal judges that the Sixteenth Amendment was not properly ratified, but such arguments are routinely tossed out of court.

What About the Old Unlawful Money Argument?

Another perennial loser is the argument that the tax code doesn’t apply because the prevailing form of currency in the US – Federal Reserve Notes – is not lawful money. In 1980, for example, a Kansas man named Gary Rickman declared that he had no taxable income whatsoever, despite the fact that he had admittedly been employed as a mathematics instructor at a community college. At his trial, Rickman explained that his income was zero “dollars,” because all he had earned were measly Federal Reserve Notes. For the purposes of tax law, Rickman contended, one’s earnings must be either gold or silver coin as supposedly required by the Constitution.

Rickman bolstered his argument by pointing out that the Form 1040 uses the dollar sign ($) which, as everyone knows, is a symbol that refers exclusively to coins, not notes. The idea, it seems, is that the dollar sign comes from the old Spanish Dollar, or piece of eight, which was a silver coin at the time that the “dollar” was adopted as the unit of American currency. The federal court of appeals referred to this theory as “the height of absurdity” and upheld his conviction for tax evasion.

Procrastinators Unite!

Finally, if you really, really intended to file your tax return but just haven’t gotten around to it, you might be suffering from late-filing syndrome.

This was the argument made by Charles O’Byrne, a top aide to New York Governor David Paterson who admittedly failed to file tax returns for five years despite being highly-educated and having ample income.

Although it sounds like a bad joke, late-filing syndrome has been invoked by tax lawyers for years under various labels, including failure-to-file syndrome. According to experts, tax scofflaws who can show that they suffer from the syndrome stand a better chance of avoiding criminal sanctions.

A 1994 article in New York Law Journal co-authored by Elliot Silverman, a lawyer, and Dr. Stephen J. Coleman, a practicing psychiatrist, described the condition in detail, including the intriguing hypothesis that people who routinely fail to file taxes are “perfectionists.” Well, why not? A zero tax liability would satisfy most people’s idea of perfection.

If you feel a case of late filing syndrome coming over you, be sure to consult some combination of physician, lawyer, and CPA – and maybe a priest or rabbi for good measure.

Thank you for listening to Legal Lad’s Quick and Dirty Tips for a More Lawful Life.  Be sure to check out the free GoToMyPC trial at GoToMyPC.com/podcast. 

Also, if you have dog – or are thinking of getting one – you’ll want to check out the latest addition to the Quick and Dirty Tips lineup: The Dog Trainer, who offers quick and dirty tips for teaching and caring for your four-legged friend. Listen to the Dog Trainer’s latest episode on iTunes.

You can send questions and comments to legal@quickanddirtytips.com or call them in to the voicemail line at 206-202-4LAW.  Please note that doing so will not create an attorney-client relationship and will be used for the purposes of this podcast only.