Tax protesting Utahns face criminal, financial penalties
While many Carbon County residents are finishing up 2002 state income returns, some Utahns will argue anything to avoid paying taxes.
For example, an executive earning approximately $200,000 a year plus $600,000 in additional compensation claimed wages were not income and refused to pay taxes, indicated the Utah Attorney General's Office.
The Utah Court of Appeals rejected the executive's arguments and ordered the individual to pay an appropriate amount in state income taxes.
A civil bench warrant was issued for the subject's arrest and the tax protesting executive was required to post a bond.
The attorney general office's tax and revenue division files complaints against about 25 protesters per year.
The protesters are wasting taxpayers money and time in court, pointed out assistant attorneys general Laron Lind and Tim Bodily.
"The public would be outraged if they knew what these people were doing," noted Lind.
Popular, but baseless arguments to avoid paying taxes include:
The United States Internal Revenue Code does not define income as including wages.
The right to labor is protected by the U.S. Constitution so wages cannot be subject to income tax.
The 16th Amendment giving the U.S. Congress the right to collect income taxes was improperly enacted.
Wages are a return of capital and cannot be considered taxable
Some Utahns have also tried to transfer property and assets into trusts or church organizations to circumvent taxes, added the attorney general's office. But the transfer will not stop the courts from seizing property and assets donated to a church with the taxpayer as the sole member and contributor.
"None of their arguments have ever been sustained," noted Bodily. "The old adage applies: If it sounds too good to be true, it isn't true.'
After legal arguments are rejected, tax protesters face severe consequences. Utah law imposes penalties of 10 percent for failure to file and 10 percent for failure to pay. The protestors could be fined $500 for filing a frivolous return and assessed a 100 percent penalty when there is fraud with intent to evade the tax.
Utahns intentionally or willfully attempting to evade paying taxes or sending returns could also be charged with a second degree felony offense and sentenced from one to 15 years in prison.
"The taxpayers who present these arguments always lose and ultimately risk criminal prosecution and the loss of the property. When these frivolous arguments are presented, the state is the ultimate winner because of the additional revenue from interest and penalties," concluded Lind.