Some people misinterpret the law, but some go a little further and make up fictional laws. They contest the IRS using these frivolous arguments and even go to court. The result of using fictional legal bases can only be disastrous. Using such arguments before the courts can not only hurt your case, but even lead to penalties. The IRS shares some of the most used frivolous arguments where a fictional law was created to avoid paying taxes or to claim a refund.
- The Internal Revenue Service is not an agency of the United States
Some people erroneously believe that the IRS is not an agency of the United States, that it is a private corporation because it was not created by positive law (i.e., an act of Congress). And as a private corporation, the agency cannot enforce the Internal Revenue Code.
The truth is that the constitutional and statutory authority establishes that the IRS is an agency of the United States. The Supreme Court has stated that, [T]he Internal Revenue Service is organized to carry out the broad responsibilities of the Secretary of the Treasury under § 7801(a) of the 1954 Code for the administration and enforcement of the internal revenue laws.
- African Americans can claim a special tax credit as reparations for slavery and other oppressive treatment
It has been claimed that African Americans can claim a non-existing Black Tax Credit on their income tax returns as a compensation for slavery and other oppressive treatment. The same is claimed for Native Americans.
The law states that there is no provision in the Internal Revenue Code that allows taxpayers to claim a Black Tax Credit or a credit for Native American reparations. Black Tax Credit does not exist and is purely fictional.
- Taxpayers are entitled to a refund of the Social Security taxes that they paid during their lifetime
Many scammers and inciters spread false information among taxpayers. Among them is that taxpayers can claim a refund of the Social Security taxes that they paid during their lifetime. They advocate that the refund can be claimed if the taxpayer waives all rights to his or her Social Security benefits. Some scammers even encourage taxpayers to claim a charitable contribution deduction for the gift, i.e. the Social Security benefits that the taxpayer is giving to the United States.
Taxpayers are advised to conduct their own research before taking action. Also, they should never share their personal or tax information with unknown or unverified persons and organizations. In case of disagreements with the IRS, it is advisable to consult a legitimate and trusted tax service.
- Through a trust or an untaxing package, you can legally and permanently avoid filing and paying income tax
Some people float this idea that creating a trust or an untaxing package is a legal way to permanently avoid filing and paying income tax.
The truth is that creation of a trust or an untaxing package does not make a taxpayer immune from tax filing and payment. These are tax-evasion schemes that are 100% illegal. The IRS has warned that taxpayers may not eliminate their federal income tax liability by attributing income to a trust and claiming expense deductions related to that trust.
Promoters of such illegal tax-evasion schemes are subject to criminal penalties for their actions. Taxpayers who have been duped by such scammers have also paid civil penalties for the failure to file and pay their income tax in time.
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