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It’s tax scam season again

As April 15 draws near, you will inevitably hear about all kinds of hare-brained tax avoidance schemes. Many of them, like those mentioned in this article, are scams being proffered by con artists. Quite a few of them rest on ridiculous and long-discredited legal arguments. I wish this article had spent a bit more time on that, but since it didn’t I will.

I’ve already discussed one particular case (see here, here, here, and here), and it bears examining because it’s representative of many such schemes. Basically, someone comes up with a convoluted argument that says that the federal income tax is illegal, or only applies to “federal” citizens, or is voluntary, or whatever, and for a small but reasonable fee the person peddling this scheme will tell you the secrets of how you, too, can legally not pay your taxes. I highly recommend you read the Tax Protesters FAQ for a thorough discussion of these arguments and what can happen to the poor souls who try using them.

One of the ironies of the tax-avoidance industry is that the people who hold the biggest grudges against the government for its policies are often the easiest marks for this sort of thing, almost always by people who claim to be one of them. For example, the so-called “Patriot” movement of the 1990s was quickly followed by the “Pure Trust” scam, in which supposed “Patriot” sympathizers preyed on the true faithful who really wanted to believe that they could stop paying taxes.

A horse of a different color is the anti-war movement, which has long railed about the percentage of taxes that goes to the military. They continue to advocate partial or complete nonpayment of income taxes as a protest against it. They do at least seem to realize that there are potential legal consequences to this, and I respect them for that. It’s still quixotic, but at least it’s not a plan to separate some fool from his money.

Finally, a more recent but clearly popular idea is that there’s a tax credit for slavery reparations. As with the “Pure Trust” scheme, the scammers target members of their own communities, banking on the trust that people give to friends and neighbors:

Noting that the promoters appear to be targeting church congregations, the IRS has urged churches in the African-American community to be on the alert for the scam. “Good people are getting caught up in this scam,” [IRS Commissioner Charles O.] Rossotti said.

Perhaps some of the legal victories that the feds have won against these scammers will help to shut them down, though I doubt it.

Forewarned is forearmed, people. Now get to work on those 1040s.

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